Table of Contents
Introduction
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- Definition
- Abbreviations
Executive Summary
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- The market
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- Figure 1: Market size and forecast for the total UK take-home coffee market, in volume sales, 2006-16
- Market factors
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- Figure 2: Annual changes in price (in Retail Prices Index) of coffee/other hot drinks (excl. tea) and all items, Q1 2008-Q4 2011
- Companies, brands and innovation
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- Figure 3: Market size of top five take-home instant coffee brands in 2011, by value, and value growth rate between 2009 and 2011
- The consumer
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- Figure 4: Most important attributes when choosing to buy one in-home coffee brand over another, February 2012
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- Figure 5: Attitudes towards coffee, February 2012
- What we think
Issues in the Market
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- How can manufacturers combat rising commodity prices?
- Does instant coffee have a future with younger consumers?
- Which competitors are coffee pods stealing share from?
- How much impact can Starbucks make in the retail sector?
Future Opportunities
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- The Real Thing
- Slow It All Down
Internal Market Environment
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- Key points
- Increased price volatility hits instant coffee the hardest
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- Figure 6: Annual changes in price (in Retail Prices Index) of coffee/other hot drinks (excl. tea) and all items, Q1 2008-Q4 2010
- Premiumisation is the best strategy to counter price volatility
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- Figure 7: Monthly weighted average price of coffee beans on world markets, by coffee bean type, January 2010-February 2012
- Gourmet coffee is now part of the national psyche
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- Figure 8: Visits to coffee shops in the last 12 months, 2007-11
- Consumers want convenience and quality
- There is not enough innovation geared to attracting younger drinkers…
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- Figure 9: Trends in agreement with company ethics lifestyle statements, 2007-11
- …nor is the branding engaging enough
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- Figure 10: Proportion of 16-24-year-olds who think each retail coffee brand is ‘boring’ compared to all adults, February 2012
Broader Market Environment
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- Consumer spend has been under severe pressure
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- Figure 11: Change in average weekly earnings compared to inflation, January 2007-January 2012*
- Tentative signs that 2012 will be a more prosperous year
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- Figure 12: GfK NOP Consumer Confidence Index, January 2007-January 2012
- Rise in ABC1s underpins the continued importance of premiumisation
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- Figure 13: Forecast adult population trends, by socio-economic group, 2006-16
- An ageing population means instant still remains a big revenue driver
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- Figure 14: Forecast adult population trends, by age, 2006-16
Competitive Context
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- Key points
- Chilled drinks are stealing share from hot beverages
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- Figure 15: Market value (£ millions) and share of the UK take-home non-alcoholic drinks market, chilled beverages versus hot drinks, 2000-10
- Evidence that take-home coffee is stealing share from hot rivals
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- Figure 16: UK take-home volume sales of hot beverages, by product type, 2009-11
- Coffee shops helping to drive take-home sales rather than stealing share
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- Figure 17: Market size and forecast of UK coffee shops, 2006-16
- Coffee can be much more aggressive in challenging energy/sports drinks
Strengths and Weaknesses in the Market
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- Strengths
- Weaknesses
Who’s Innovating?
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- Key points
- Instant coffee replaces ground in the innovation stakes
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- Figure 18: Product launches within the UK coffee market, by main format types, 2008-11
- Convenience claim as prevalent as ethical in 2011
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- Figure 19: Proportion of new take-home coffee product launches, by claims category, 2008-11
- Flavour innovation remains the rarity when it should be the norm
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- Figure 20: Proportion of new take-home coffee product launches within the UK that are flavoured, 2008-11
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- Figure 21: Examples of flavoured new product launches within the UK coffee market, 2011
- Marketing the benefits of intensity
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- Figure 22: Examples of new product launches within the UK coffee market which market themselves around intensity/energy
- Fitness Coffee Antioxidant Blend for consumers with healthy lifestyles
Market Size and Forecast
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- Key points
- The coffee market has stagnated in recent times
- Coffee prices are spiralling upwards
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- Figure 23: Market size and forecast for the total UK take-home coffee market, in volume and value sales, 2006-16
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- Figure 24: Value sales and forecast for the UK take-home coffee market, 2006-16
- Forecast methodology
Market Segmentation
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- Key points
- Premium segments are driving growth as instant clings on
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- Figure 25: Coffee volume and value sales and share in the take-home sector, by coffee type, 2009-11
Market Share
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- Key points
- Nescafé successfully protects its share from Kenco
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- Figure 26: Top ten instant coffee brands in the take-home instant coffee sector, by value sales, 2009-11
- Kenco and Nescafé increasingly focusing on two areas: youth and quality
- Own-label suffers from trend towards premiumisation
Companies and Products
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- Key points
- Cafédirect
- Costa
- Douwe Egberts
- Kraft Foods
- Lavazza UK
- Nestlé
- Starbucks
Brand Research
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- Brand map
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- Figure 27: Attitudes towards and usage of brands in the coffee sector, February 2012
- Correspondence analysis
- Brand attitudes
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- Figure 28: Attitudes, by coffee brand, February 2012
- Brand personality
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- Figure 29: Coffee brand personality – macro image, February 2012
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- Figure 30: Coffee brand personality – micro image, February 2012
- Brand experience
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- Figure 31: Coffee brand usage, February 2012
- Figure 32: Satisfaction with various coffee brands, February 2012
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- Figure 33: Consideration of coffee brands, February 2012
- Figure 34: Consumer perceptions of current coffee brand performance, February 2012
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- Figure 35: Coffee brand recommendation – Net Promoter Score, February 2012
- Brand index
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- Figure 36: Coffee brand index, February 2012
- Figure 37: Coffee brand index vs. recommendation, February 2012
- Target group analysis
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- Figure 38: Target groups, February 2012
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- Figure 39: Coffee brand usage, by target groups, February 2012
- Group One – Conformists
- Group Two – Simply the Best
- Group Three – Shelf Stalkers
- Group Four – Habitual Shoppers
- Group Five – Individualists
Brand Communication and Promotion
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- Key points
- Coffee sees a steady increase in investment
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- Figure 40: Above-the-line media advertising spend for the total coffee market, 2009-11
- Nestlé and Kraft invest over £50 million in three years
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- Figure 41: Above-the-line media advertising spend on coffee, by advertiser, 2009-11
- Brand spend reflects the fragmented nature of the market
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- Figure 42: Above-the-line media spend on coffee, by brand, 2009-11
Consumer Usage
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- Key points
- Premiumisation or not, the UK remains a nation of instant coffee drinkers
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- Figure 43: Consumption of coffee in the home over the past year, February 2012
- Growth lies in the more niche coffee sectors
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- Figure 44: Consumption of different types of coffee in home, 2011 versus 2012, in order of the greatest change in penetration
- Pods and chilled coffee are attracting a younger, richer audience
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- Figure 45: Index of usage for different coffee types drunk in home, by gender, age and gross annual income, February 2012
- The British find instant coffee a hard habit to let go
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- Figure 46: Crossover in usage between instant coffee, ground/whole bean coffee and pods, February 2012
- Instant loyalists tend to be ‘middle-aged’, from the North and low income
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- Figure 47: Solus instant coffee drinkers, by demographics, February 2012
Consumer – Most Important Factors When Buying In-home Coffee
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- Key points
- Consumers put emphasis on a rich and smooth taste when buying brands
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- Figure 48: Most important attributes when choosing to buy one in-home coffee brand over another, February 2012
- Brand loyalty remains strong
- Demand for premiumisation is widespread, not particular to certain groups
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- Figure 49: Those for whom ‘the best-quality coffee’ is the most important attribute when choosing to buy one in-home coffee brand over another, by demographics, February 2012
- Energy is a big selling point for the new generation of in-home coffee drinkers
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- Figure 50: Index of most important attributes when choosing to buy one in-home coffee brand over another, 16-24s versus over-55s, February 2012
- Men go for quality, women for price and ethics
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- Figure 51: The most significant differences in the most important attributes when choosing to buy one in-home coffee brand over another, by gender, February 2012
Consumer – Attitudes towards Different Types of In-home Coffee
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- Key points
- Premiumisation is important but convenience is still king
- Awareness of pods remains low
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- Figure 52: Attitudes towards different coffee types that can be drunk at home, February 2012
- Young consumers crave flavour and chilled coffee innovations
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- Figure 53: Net difference in attitudes towards different coffee types that can be drunk at home, 16-24-year-olds versus all adults, February 2012
Consumer – General Attitudes towards Coffee
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- Key points
- Four in five drinkers love the taste of coffee
- Coffee fulfils a variety of consumer needs
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- Figure 54: Attitudes towards coffee, February 2012
- The younger generation favour functionality over taste
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- Figure 55: Net difference in attitudes towards coffee, 16-24-year-olds compared to all users, February 2012
- Female coffee drinkers see it as more indulgent and comforting
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- Figure 56: Net difference in attitudes towards coffee, by gender, February 2012
Appendix – Market Size and Forecast
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- Figure 57: Value sales and forecast for the UK take-home coffee market, 2006-16
- Figure 58: Market size and forecast for the total UK take-home coffee market, in volume sales, 2006-16
- Figure 59: Best- and worst-case scenarios for value forecast of coffee, 2011-16
- Figure 60: Best- and worst-case scenarios for volume forecast of coffee, 2011-16
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Appendix – Brand Research
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- Figure 61: Brand usage, February 2012
- Figure 62: Brand commitment, February 2012
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- Figure 63: Brand momentum, February 2012
- Figure 64: Brand diversity, February 2012
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- Figure 65: Brand satisfaction, February 2012
- Figure 66: Brand recommendation, February 2012
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- Figure 67: Brand attitude, February 2012
- Figure 68: Brand image – macro image, February 2012
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- Figure 69: Brand image – micro image, February 2012
- Figure 70: Profile of target groups, by demographics, February 2012
- Figure 71: Psychographic segmentation, by target group, February 2012
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- Figure 72: Brand usage, by target groups, February 2012
- Brand index
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- Figure 73: Brand index, February 2012
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Appendix – Brand Communication and Promotion
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- Figure 74: Above-the-line media advertising spend on coffee, 2009-11
- Figure 75: Above-the-line media advertising spend on coffee, by brand, 2009-11
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Appendix – Consumer Usage
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- Figure 76: Most popular consumption of coffee in the past year, by demographics, February 2012
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- Figure 77: Next most popular consumption of coffee in the past year, by demographics, February 2012
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- Figure 78: Most popular consumption of coffee in the past year, by demographics, February 2012
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- Figure 79: Next most popular consumption of coffee in the past year, by demographics, February 2012
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- Figure 80: Consumption of coffee in the past year, by demographics, February 2012
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Appendix – Consumer: Most Important Factors When Buying In-home
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- Figure 81: Most popular factors when choosing to buy in-home coffee brands, by demographics, February 2012
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- Figure 82: Next most popular factors when choosing to buy in-home coffee brands, by demographics, February 2012
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Appendix – Consumer: Attitudes towards Different Types of In-home Coffee
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- Figure 83: Most popular attitudes to different coffee types that can be drunk at home, by demographics, February 2012
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- Figure 84: Next most popular attitudes to different coffee types that can be drunk at home, by demographics, February 2012
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Appendix – Consumer – General Attitudes towards Coffee
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- Figure 85: Agreement with the statements ‘Coffee provides a much-needed energy boost’ and ‘Drinking coffee makes a nice break’, by demographics, February 2012
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- Figure 86: Agreement with the statements ‘I tend to drink coffee out of habit’ and ‘Drinking coffee is comforting’, by demographics, February 2012
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- Figure 87: Agreement with the statements ‘I love the taste of coffee’ and ‘Coffee helps wake me up in the morning’, by demographics, February 2012
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- Figure 88: Agreement with the statements ‘A coffee makes a nice treat’ and ‘Coffee goes nicely with certain foods (ie breakfast, biscuits, chocolate)’, by demographics, February 2012
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- Figure 89: Agreement with the statements ‘Coffee is warming in the colder months’ and ‘Coffee is one of the healthier drink options’, by demographics, February 2012
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- Figure 90: Agreement with the statements ‘Drinking coffee helps me not to over-eat’, by demographics, February 2012
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