Table of Contents
Introduction
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- Definition
- Excluded
- Abbreviations
Executive Summary
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- The market
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- Figure 1: Sales and forecast of value sales of in-home coffee, 2005-15
- Market factors
- Companies, brands and innovation
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- Figure 2: Brand market share of the in-home coffee market, in value sales, 2010
- The consumer
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- Figure 3: Attitudes towards coffee pods, February 2011
- What we think
Issues in the Market
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- Is in-home coffee a mature market?
- What is the impact of volatile commodity prices on the market?
- What is the future of the in-home coffee market compared to coffee shops?
- Are there major generational differences in coffee drinking habits?
- How much potential do coffee pods have?
Future Opportunities
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- Re-teching the Past
- Extend my Brand
Internal Market Environment
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- Key points
- UK coffee prices are being forced up
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- Figure 4: Annual percentage change in RPI (Retail Price Index) for coffee and other hot drinks, 2000-10
- Rising prices will be a particular problem in 2011
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- Figure 5: Average commodity price for Arabica and Robusta coffee beans, January 2009 -February 2011
- The quality of in-home coffee products is rising…
- …but price remains a barrier at the upper end
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- Figure 6: Estimated cost per serve of coffee, by coffee product, March 2011
- UK drinkers educated to consume better-quality coffee in home
- Coffee fulfils consumer demand for functionality
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- Figure 7: UK value sales of energy and sports drinks, 2004-10
- Fair trade provides the coffee category with a ‘halo effect’
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- Figure 8: Estimated retail sales of fair trade-certified products in the UK, hot beverages versus all products, 1998-2009
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- Figure 9: Trends in agreement with selected lifestyle statements, 2006-10
- Nespresso patent case has implications for the pod market
Broader Market Environment
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- Key points
- Rising inflation means that incomes are becoming ever more squeezed…
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- Figure 10: RPI and average weekly earnings, 2005-11
- …however, this may play to in-home coffee’s advantage
- There is currently a sharp growth in 25-34-year-olds
- A more educated society demanding better-quality goods
Competitive Context
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- Key points
- Fewer people are drinking hot beverages at home
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- Figure 11: Trends in UK penetration of hot beverages, 2005-09
- Coffee shops are essentially a positive for in-home coffee
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- Figure 12: Trends in competing products, 2005-10
- Soft drinks dominate UK ‘share of throat’
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- Figure 13: Retail value sales in non-alcoholic drinks, by major category, 2005-09
- Figure 14: Per capita consumption of coffee in selected countries, 2005 and 2009
Strengths and Weaknesses in the Market
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- Strengths
- Weaknesses
Who’s Innovating?
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- Key points
- Focus of innovation is increasingly on instant
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- Figure 15: Proportion of new product development for in-home coffee, by format type, 2008-10
- Ethical remains key but convenience claims are on the rise
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- Figure 16: Proportion of new product development for in-home coffee, by main product claims, 2008-10
- Coffee shops increasingly targeting in-home market
- Own-label steps up 2010 product renovation
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- Figure 17: Proportion of new product development for in-home coffee – own-label versus branded, 2008-10
Market Size for In-home Coffee
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- Key points
- The 2010 recovery has been built on discounting
- Volume sales will remain stagnant over the next five years…
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- Figure 18: Volume and value sales for the in-home coffee market, 2005-15
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- Figure 19: Sales and forecast of value sales of in-home coffee, 2005-15
- …but higher prices will fuel a 15% increase in value sales
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- Figure 20: Cost per value of UK in-home coffee, 2005-15
- Forecast methodology
Market Segmentation for In-home Coffee
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- Key points
- Instant coffee still accounts for 80% of the market
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- Figure 21: Value share of the in-home coffee market, by coffee type, 2010
- …however, the UK market is steadily moving towards better-quality coffee
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- Figure 22: Value sales of the in-home coffee market, by coffee type, 2009 and 2010
Market Share
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- Key points
- Nestlé dominates but is not without its problems
- Kraft is aggressively pursuing UK market growth
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- Figure 23: Brand market share of the in-home coffee market, in value sales, 2008-10
- Own-label is capitalising on the growth of ground/roasted coffee
- Positive signs for Starbucks Via
Companies and Products
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- Key points
- Cafédirect
- Douwe Egberts
- Kraft Foods
- Lavazza UK
- Nestlé
- Starbucks
Brand Research
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- Brand map
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- Figure 24: Attitudes towards and usage of coffee brands, January 2011
- Brand attitudes
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- Figure 25: Attitudes, by coffee brand, January 2011
- Brand personality
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- Figure 26: Coffee brand personality – macro image, January 2011
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- Figure 27: Coffee brand personality – micro image, January 2011
- Correspondence analysis
- Brand experience
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- Figure 28: Coffee brand usage, January 2011
- Figure 29: Satisfaction with various coffee brands, January 2011
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- Figure 30: Consideration of coffee brands, January 2011
- Figure 31: Consumer perceptions of current coffee brand performance, January 2011
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- Figure 32: Coffee brand recommendation – Net Promoter Score, January 2011
- Brand index
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- Figure 33: Coffee brand index, January 2011
- Figure 34: Coffee brand index vs. recommendation, January 2011
- Target group analysis
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- Figure 35: Target groups, January 2011
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- Figure 36: Coffee brand usage, by target groups, January 2011
- Group One – The Conformists
- Group Two – Simply the Best
- Group Three – Shelf Stalkers
- Group Four – Habitual Shoppers
- Group Five – The Individualists
Brand Communication and Promotion
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- Key points
- Investment continues despite tough economic context
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- Figure 37: Topline advertising spend for the total in-home/out-of-home coffee market, 2006-10
- Return of the Nescafé Gold Blend couple
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- Figure 38: Media advertising spend for the top five in-home coffee advertisers and their share of total coffee spend (ie including coffee shops), 2008-10
- Kenco offers consistent above-the-line support
- Battle of the premium instant brands
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- Figure 39: Media advertising spend for the top ten coffee brands, 2008-10
- Dolce Gusto is the first UK brand to use product placement
Consumer Usage of In-home Coffee
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- Key points
- Instant coffee’s user base is in decline…
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- Figure 40: Trends in frequency of drinking instant coffee, 2005-09
- …as consumers trade up...
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- Figure 41: Trends in frequency of drinking fresh ground coffee, 2005-09
- ...but drinking of instant coffee remains deeply embedded
- Younger people are gravitating more to fresh ground coffee…
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- Figure 42: UK consumption of instant and fresh ground coffee, in volume, by gender and age, 2009
- …while over-65s are falling out of the instant category
- Coffee pods were drunk by a tenth of the population in 2010
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- Figure 43: UK consumption of coffee, February 2011
- Pods are proving a hit in London – but size is a potential barrier
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- Figure 44: Index of UK consumption of coffee, by coffee type and demographics, February 2011
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- Figure 45: Agreement with the statement ‘I am put off buying a coffee pod machine for my home because it will take up too much space’, by region, February 2011
- Difficult to kick the instant habit
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- Figure 46: Crossover in usage of drinkers of instant, fresh and pod coffee, February 2011
Consumer Attitudes towards In-home Coffee
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- Key points
- Convenience and price trump quality for the mainstream UK coffee drinker
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- Figure 47: Attitudes towards drinking coffee at home, February 2011
- Coffee provides a welcome energy boost for urban types
- Younger consumers are looking for different things…
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- Figure 48: Attitudes towards drinking coffee at home – 16-34-year-olds compared to all drinkers, February 2011
- …and for different (high street) brands
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- Figure 49: Agreement with ‘I would trust branded coffee shops (eg Starbucks and Caffé Nero) to make better-quality in-home coffee than established supermarket brands like Nescafé and Kenco’, by age, February 2011
Consumer Attitudes towards the Potential of Coffee Pods
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- Key points
- The high price of pod machines is holding back the market
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- Figure 50: Attitudes towards coffee pods, February 2011
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- Figure 51: Trends in ownership of filter coffeemakers and espresso machines, 2007-10
- UK consumers are not rational purchasers of coffee
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- Figure 52: Use of coffee shops to sit in or take away, by age, 2010
- Rich potential for young drinkers attracted by quality, convenience and style…
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- Figure 53: How younger consumers differ from older consumers in their attitudes towards coffee pods, February 2011
- …and put off by coffee shop prices
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- Figure 54: Attitudes towards buying coffee in home versus out of home -16-34s, February 2011
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- Figure 55: Attitudes towards buying coffee in home versus out of home, by UK consumption of coffee, February 2011
Appendix – Internal Market Environment
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- Figure 56: Agreement with selected lifestyle statements, by demographics, 2009
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Appendix – Broader Market Environment
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- Figure 57: GDP, PDI, consumer expenditure and savings, at constant 2010 prices, 2005-15
- Figure 58: Trends in the age structure of the UK population, 2005-15
- Figure 59: Forecast adult population trends, by socio-economic group, 2005-15
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Appendix – Brand Communication and Promotion
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- Figure 60: Media advertising spend for the top ten coffee advertisers, 2008-10
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Appendix – Consumer Usage of In-home Coffee
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- Figure 61: UK instant coffee consumption in volume, by demographics, 2009
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- Figure 62: UK fresh ground coffee consumption in volume, by demographics, 2009
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- Figure 63: Frequency of drinking instant coffee, by demographics, 2009
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- Figure 64: Frequency of use of instant coffee, by demographics, 2009
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- Figure 65: Frequency of drinking fresh ground coffee, by demographics, 2009
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- Figure 66: Frequency of use of fresh ground coffee, by demographics, 2009
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- Figure 67: Most popular UK consumption of coffee, by demographics, February 2011
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- Figure 68: Next most popular UK consumption of coffee, by demographics, February 2011
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- Figure 69: Other UK consumption of coffee, by demographics, February 2011
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- Figure 70: Most popular UK consumption of coffee, by demographics, February 2011
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- Figure 71: Next most popular UK consumption of coffee, by demographics, February 2011
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- Figure 72: Other UK consumption of coffee, by demographics, February 2011
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- Figure 73: Over-65s as a proportion of the total adult population, 2005-15
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Appendix – Consumer Attitudes towards In-home Coffee
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- Figure 74: Most popular attitudes towards drinking coffee at home, by demographics, February 2011
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- Figure 75: Next most popular attitudes towards drinking coffee at home, by demographics, February 2011
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Appendix – Consumer Attitudes towards the Potential of Coffee Pods
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- Figure 76: Most popular attitudes towards coffee pods, by demographics, February 2011
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- Figure 77: Next most popular attitudes towards coffee pods, by demographics, February 2011
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- Figure 78: Most popular attitudes towards buying coffee in home versus out of home, by demographics, February 2011
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- Figure 79: Next most popular attitudes towards buying coffee in home versus out of home, by demographics, February 2011
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