Table of Contents
Executive Summary
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- Top takeaways
- Impact of COVID-19 on foodservice coffee and tea
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- Figure 1: Short, medium and long term impact of COVID-19 on foodservice coffee and tea, July 2021
- Opportunities and challenges
- Morning traffic will decline due to the rise of remote work
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- Figure 2: Anticipated AFH coffee/tea purchases post-pandemic, April 2021
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- Figure 3: Reasons for purchasing coffee/tea less often compared to prepandemic, by anticipated work situation, April 2021
- Remote workers will purchase premium drinks
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- Figure 4: AFH coffee and tea purchases, 2019 vs 2021, May 2019 and April 2021
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- Figure 5: Foodservice coffee and tea attitudes, by anticipated work situation, any agree, April 2021
- Keep it cool for Gen Z
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- Figure 6: AFH coffee purchases, by generation, April 2021
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- Figure 7: Foodservice coffee/tea visitation motivators, by generation, April 2021
- Café design will evolve
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- Figure 8: Foodservice café concept interest, by anticipated work situation, April 2021
- Premium food options can draw in consumers
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- Figure 9: Foodservice coffee/tea visitation motivators, by coffee/tea segment visitors, April 2021
The Market – Key Takeaways
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- Home-sourced beverages pose a larger competitive threat
- Expect rising prices due to coffee supply chain issues
- Economic conditions are favorable for the AFH coffee/tea market
Target Audience by the Numbers
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- Generations and AFH coffee/tea
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- Figure 10: Population by generation, 2016-26
Market Factors
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- Changes in work paradigms challenge the AFH coffee market but also create opportunities
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- Figure 11: Anticipated work situation for the remainder of 2021, April 2021
- Consumers upgraded their home coffee/tea options during the pandemic
- Supply chain disruptions and weak output sends coffee prices soaring
- Consumers have extra disposable income for their favorite drinks
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- Figure 12: Disposable Personal Income change from previous period, January 2017-April 2021
- Figure 13: Financial health tracker, March 2020-May 2021
Companies and Brands – Key Takeaways
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- Cold coffee will become the norm and plant-based milks will proliferate
- Largest chains adapt to changing consumer preferences
- Chains will need to attract consumers outside traditional morning hours
Competitive Strategies
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- Plant power
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- Figure 14: Milk types used in coffee and tea drinks, change in menu incidence, Q1 2018-Q1 2021
- Figure 15: Non-dairy milk types used in coffee and tea drinks, change in menu incidence, Q1 2018-Q1 2021
- The Big Three coffee providers adjust to changing consumer preferences
- Starbucks promotes ethics and drives coffee innovation
- Dunkin’ becomes a Gen Z favorite
- McDonald’s outperforms during the pandemic but breakfast lags
- C-stores need to rethink their coffee strategy
- Coffee shops go green
- Foodservice coffee and tea menu trends
- Coffee declines but gets colder and more flavorful
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- Figure 16: Change in incidence of coffee drinks on menus, Q1 2018-Q1 2021
- Figure 17: Change in incidence of coffee drink flavors on menus, top 15 flavors, Q1 2018-Q1 2021
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- Figure 18: Change in incidence of coffee preparation methods, Q1 2018-Q1 2021
- Operators simplify their tea selection
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- Figure 19: Change in incidence of tea drinks on menus, top 10 drink types, Q1 2018-Q1 2021
- Figure 20: Change in incidence of tea drink flavors on menus, top 15 flavors, Q1 2018-Q1 2021
Market Opportunities
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- Cold drinks are critical
- Make it a meal
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- Figure 21: Snack daypart frequency, mid-morning, by generation, October 2020
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- Figure 22: Snack daypart frequency, afternoon, by generation, October 2020
- Timing is everything
- Functionality will eventually come to the foodservice coffee market
- Coffee shop design will evolve in a post-pandemic world
The Consumer – Key Takeaways
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- Remote workers will order drinks less often but treat themselves to premium beverages
- Gen Z becomes a key coffee/tea consumer group
- Develop unique drinks that can’t be recreated at home
- The future of café design is both big and small
- Keep it cool
Trended AFH Coffee and Tea Purchases
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- Consumers ditch brewed coffee for more premium options
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- Figure 23: AFH coffee and tea purchases, 2019 vs 2021, May 2019 and April 2021
- Nearly half of Gen Z consumers order iced coffee AFH
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- Figure 24: AFH coffee purchases, by generation, April 2021
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- Figure 25: AFH tea purchases, by generation, April 2021
- Older Hispanic consumers are key brewed coffee consumers
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- Figure 26: AFH coffee/tea purchases, by age and Hispanic origin, April 2021
Trended Coffee and Tea Foodservice Visitation
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- Pandemic hits FSRs the hardest
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- Figure 27: AFH coffee and tea purchase location, 2019 vs 2021, May 2019 and April 2021
- Entice remote workers by offering premium beverages
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- Figure 28: AFH coffee and tea purchase location, by anticipated work situation, April 2021
- C-stores must offer budget-friendly cold beverages
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- Figure 29: AFH coffee and tea purchase location, by age and Hispanic origin, April 2021
- Figure 30: AFH coffee and tea purchase location, c-store, by HHI, April 2021
AFH Coffee and Tea Purchase Frequency: Pre-pandemic and During Pandemic
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- Purchase frequency significantly dropped during the pandemic
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- Figure 31: Coffee/tea foodservice purchase frequency, prepandemic vs during pandemic, April 2021
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- Figure 32: Coffee/tea foodservice purchase frequency, prepandemic vs during pandemic, by anticipated work situation, April 2021
Post-Pandemic Anticipated AFH Coffee and Tea Purchases
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- Chains will need to actively draw in remote workers
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- Figure 33: Anticipated AFH coffee/tea purchases post-pandemic, April 2021
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- Figure 34: Purchases post-pandemic anticipated, AFH coffee and tea, by select demographics, April 2021
Reasons for Purchasing Coffee/Tea Less Often Post-Pandemic
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- Consumers grow accustomed to new coffee/tea habits established during the pandemic
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- Figure 35: Reasons for purchasing coffee/tea less often compared to prepandemic, by anticipated work situation, April 2021
- Young consumers will respond to premium BFY beverages
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- Figure 36: Reasons for purchasing coffee/tea less often compared to prepandemic, by age, April 2021
- Enhance affluent consumers’ home coffee experience
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- Figure 37: Reasons for purchasing coffee/tea less often compared to prepandemic, by HHI, April 2021
Coffee/Tea Behaviors During Pandemic
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- New coffee/tea experiences trialed during the pandemic may stick
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- Figure 38: Coffee/tea pandemic behaviors, by anticipated work situation, April 2021
- Stock home options for Millennial consumers
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- Figure 39: Coffee/tea pandemic behaviors, by generation, April 2021
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- Figure 40: Coffee/tea pandemic behaviors, by age and HHI, April 2021
- CHAID analysis – Specialty coffee consumers upgraded home options
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- Figure 41: CHAID analysis – Coffee/tea pandemic behaviors, April 2021
Foodservice Café Concept Interest
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- Café design diversification is necessary
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- Figure 42: Foodservice café concept interest, by anticipated work situation, April 2021
- Gen Z are beginning their careers in the new era of remote work
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- Figure 43: Foodservice café concept interest, by generation, April 2021
Foodservice Coffee/Tea Visitation Motivators
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- Deals, meals and serve it chilled
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- Figure 44: Foodservice coffee/tea visitation motivators, April 2021
- Functional drinks appeal to a unique set of consumers
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- Figure 45: TURF analysis – Foodservice coffee/tea visitation motivators, April 2021
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- Figure 46: Table – TURF analysis – Visitation motivators, April 2021
- Gen Z consumers want cold, flavor-forward drinks
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- Figure 47: Foodservice coffee/tea visitation motivators, by generation, April 2021
- C-stores should upgrade their food options
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- Figure 48: Foodservice coffee/tea visitation motivators, by coffee/tea segment visitors, April 2021
Foodservice Coffee and Tea Attitudes
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- Home options can’t replace foodservice quality beverages
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- Figure 49: Foodservice coffee and tea attitudes, any agree, April 2021
- Cold brew is worth the upcharge
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- Figure 50: Foodservice coffee and tea attitudes, attitudes toward cold brew, any agree, April 2021
- Remote workers will venture from their homes for premium drinks and for a change of pace
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- Figure 51: Foodservice coffee and tea attitudes, by anticipated work situation, any agree, April 2021
- Local claims appeal to high-income consumers
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- Figure 52: Foodservice coffee and tea attitudes, any agree, by age and HHI, April 2021
- QSRs and C-stores should focus on indulgent flavors
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- Figure 53: Foodservice coffee and tea attitudes, by chain and segment visitation, April 2021
Appendix – Data Sources and Abbreviations
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- Data sources
- Consumer survey data
- Abbreviations and terms
- Abbreviations
- Terms
Appendix – The Consumer
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- TURF methodology
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