Table of Contents
Overview
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- What you need to know
- Definition
Executive Summary
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- The issues
- Coffee and tea are most often sourced at home
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- Figure 1: Coffee/tea drinks consumed AH vs AFH, October 2016
- A third of consumers are non-spenders
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- Figure 2: Factors consumers would pay more for, September 2016
- Most consumers visit only a few coffee/tea locations
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- Figure 3: Repertoire analysis – Locations visited, September 2016
- The opportunities
- The coffee house market is growing
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- Figure 4: Total US sales and forecast of coffee shops, at current prices, 2010-20
- iGen/Millennials want innovation
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- Figure 5: Coffee/tea drink interest, by generation, September 2016
- Court the third wave consumers
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- Figure 6: Factors consumers would pay more for, by HH income, September 2016
- What it means
The Market – What You Need to Know
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- Coffee house segment has sales over $20 billion annually
- Foodservice faces competition from innovative CPG products
- A new coffee movement on the horizon
- Coffee prices set to increase
Market Size and Forecast
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- Coffee house sales exceed $20 billion annually
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- Figure 7: Total US sales and forecast of coffee shops, at current prices, 2010-20
- Figure 8: Total US sales and forecast of coffee shops, at current prices, 2010-20
- New coffee houses continue to enter the market
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- Figure 9: Total number of coffee houses in the US, 2010-20
Market Breakdown
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- Starbucks dominates coffee house market
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- Figure 10: Share of coffee house units, 2015
- Independent coffee houses lose market share
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- Figure 11: Number of coffee house units, 2014-15
- Figure 12: Share of coffee house units, multiples vs independents, 2014-15
Market Perspective – Mintel Defines Coffee’s “Waves”
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- The history of coffee, defined by waves
- The first wave
- The second wave
- The third wave
- Third wave evolution – what’s next
Retail Beverages
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- RTD coffee is the fastest growing retail coffee type
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- Figure 13: Percent change in total US retail sales of coffee, by segment, at current prices, 2012-21
- RTD tea sales boost the entire tea category
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- Figure 14: Percent change in total US retail sales of tea, by segment, at current prices, 2012-21
- Energy drinks continue to experience strong growth
Market Factors
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- Younger generation are core AFH beverage drinkers
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- Figure 15: Population by generation, 2011-21
- Coffee price forecast to increase
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- Figure 16: US imports of coffee, trended 2010-14, November 2015
- US tea imports on the rise
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- Figure 17: US imports of tea and mate, 2010 to 2014
- Non-dairy creamers are on the rise
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- Figure 18: Non-dairy milk consumption habits, January 2016
Key Players – What You Need to Know
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- Coffee and tea are growing on menus
- Innovation abounds in coffee shops
- Starbucks and Dunkin’ go premium, JAB makes moves
What’s Working?
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- Starbucks continues to drive innovation
- Starbucks: Food
- Starbucks: Drinks
- Starbucks: Other changes
- Dunkin’ goes premium
- Changes by other companies
Emerging Third Wave Beverages
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- Coffee drinks
- Coffee and tonic
- Flash brewed coffee
- Specialty coffee on tap
- Coffee meets booze
- Waste not want not
- Tea drinks
- Matcha mania continues
- Mellow kava, man
- 3.5 wave processing
- Fermented coffee
- Smoked coffee
- Aged and barrel-aged
Third Wave Coffee and Social Media
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- Rival IQ methodology
- In the land of social media, Instagram is king
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- Figure 19: Total audience on social media by platform, November 11th 2016
- Figure 20: Total activity on social media by platform in the last 90 days, November 11th 2016
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- Figure 21: Total social engagement on social media by platform in the last 90 days, November 11th 2016
- Figure 22: Average engagement per social media post in the last 90 days, November 11th 2016
MMI Analysis
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- Coffee beverages
- Coffee continues to grow on menus
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- Figure 23: Growth in incidence of the top 10 coffee beverages on menus, Q3 2015-Q3 2016
- Figure 24: Percent of restaurants with any coffee beverage on the menu, by segment, Q3 2016
- Sweet and “spicy” flavors are trending; overall flavors are down
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- Figure 25: Top 10 coffee beverage flavors, growth in incidence on menus, Q3 2015-Q3 2016
- Tea beverages
- Trendy teas
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- Figure 26: Percent of restaurants with any tea beverage on the menu, by segment, Q3 2016
- Figure 27: Growth in incidence of the top 10 tea beverages on menus, Q3 2015-Q3 2016
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- Figure 28: Top 10 tea beverage flavors, growth in incidence on menus, Q3 2015-Q3 2016
What’s Next?
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- Aussie and Asian shops shape the market
- JAB ties it all together
- Starbucks goes third wave
- Golden wellbeing
The Consumer – What You Need to Know
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- AFH coffee/tea consumption varies by demos
- Opportunity for unique processing
- Young consumers want functional drinks
- Keep it convenient
Chain/Segment Visitation
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- Starbucks, McDonald’s, and Dunkin’ are the Big Three
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- Figure 29: Chain/segment visitation for coffee/tea, September 2016
- Men are an important coffee-drinking segment
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- Figure 30: Chain/segment visitation for coffee/tea, by gender, September 2016
- Millennials primary consumers for coffee houses and tea shops
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- Figure 31: Chain/segment visitation for coffee/tea, by generation, September 2016
- Hispanics are frequent location visitors
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- Figure 32: Chain/segment visitation for coffee/tea, by ethnicity and race, September 2016
- Coffee/tea visitation scales with income
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- Figure 33: Chain/segment visitation for coffee/tea, by income, September 2016
- Coffee culture varies by geography
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- Figure 34: Chain/segment visitation for coffee/tea, by census region, September 2016
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- Figure 35: Chain/segment visitation for coffee/tea, by area, September 2016
Repertoire Analysis
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- Majority of consumers visit only a few locations
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- Figure 36: Repertoire analysis – Locations visited, September 2016
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- Figure 37: Chain visitation breakdown of single location customers, September 2016
- Number of locations visited by select demographics
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- Figure 38: Repertoire analysis – Locations visited, by gender and by age, September 2016
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- Figure 39: Repertoire analysis – Locations visited, by Hispanic origin, income, and parental status, September 2016
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- Figure 40: Repertoire analysis – Locations visited, by census region and by area, September 2016
Coffee/Tea Tracker
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- Methodology
- AH vs AFH coffee and tea consumption
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- Figure 41: Coffee/tea drinks consumed AH vs AFH, October 2016
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- Figure 42: Coffee/tea drinks consumed AFH, October 2016
- AFH coffee and tea consumption by select demos
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- Figure 43: Coffee/tea drinks consumed AFH, by gender and by generation October 2016
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- Figure 44: Coffee/tea drinks consumed AFH, October 2016
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- Figure 45: Coffee/tea drinks consumed AFH, October 2016
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- Figure 46: Coffee/tea drinks consumed AFH, October 2016
Satisfaction Drivers by Big Three Chains
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- Methodology
- Understanding satisfaction drivers of the Big Three
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- Figure 47: Key drivers of satisfaction with coffee houses, September 2016
- KDA: Starbucks
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- Figure 48: Key drivers of satisfaction with Starbucks, September 2016
- KDA: McDonald’s
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- Figure 49: Key drivers of satisfaction with McDonald’s, September 2016
- KDA: Dunkin’ Donuts
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- Figure 50: Key drivers of satisfaction with Dunkin’ Donuts, September 2016
Emerging Drink Interest
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- The tap is where it’s at
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- Figure 51: Coffee/tea drink interest, September 2016
- Drink interest falls into gender lines
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- Figure 52: Coffee/tea drink interest, by gender, September 2016
- Adventurous Millennials and the “45 cliff”
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- Figure 53: Coffee/tea drink interest, by generation, September 2016
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- Figure 54: Pour-over and nitro interest, by age, September 2016
- The affluent are third wave customers
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- Figure 55: Coffee/tea drink interest, by HH income, September 2016
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- Figure 56: Organic tea interest, by age and HH income, September 2016
- Appeal to the “super spenders”
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- Figure 57: Coffee/tea drink interest, by spender types, September 2016
Factors Consumers Would Pay More for
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- Many consumers aren’t willing to spend more for unique drinks
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- Figure 58: Factors consumers would pay more for, September 2016
- Understanding spender types
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- Figure 59: Spender type breakdown, September 2016
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- Figure 60: Spender type index against those who have purchased a coffee/tea beverage from a foodservice establishment in the past three months, September 2016
- Men will pay more for a unique drink
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- Figure 61: Factors consumers would pay more for, by gender, September 2016
- Half of Boomers wouldn’t pay more for any special beverage
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- Figure 62: Factors consumers would pay more for, by generation, September 2016
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- Figure 63: Desired coffee functionality, June 2016
- Attract Hispanics with non-dairy milk
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- Figure 64: Factors consumers would pay more for, by Hispanic origin, September 2016
- Appealing to the most affluent consumers
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- Figure 65: Factors consumers would pay more for, by HH income, September 2016
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- Figure 66: Factors consumers would pay more for, by HH income >$75K, September 2016
Coffee and Tea Daypart Consumption
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- Hot drinks in the morning, cold in the afternoon
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- Figure 67: AFH coffee consumption by daypart, among drinkers, September 2016
- Opportunity for night time herbal teas
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- Figure 68: AFH tea consumption by daypart, among drinkers, September 2016
Reasons for Visiting Coffee/Tea Establishments
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- Convenience drives a majority of coffee/tea purchases
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- Figure 69: Reasons for visiting last location for a coffee/tea drink, September 2016
- Men driven by quality and experimentation
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- Figure 70: Reasons for visiting last location for a coffee/tea drink, by gender, September 2016
- iGens seek deals, are creatures of habit
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- Figure 71: Reasons for visiting last location for a coffee/tea drink, by generation, September 2016
- Loyalty programs appeal to the affluent
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- Figure 72: Reasons for visiting last location for a coffee/tea drink, by HH income, September 2016
- Parents want variety
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- Figure 73: Reasons for visiting last location for a coffee/tea drink, by parental status, September 2016
Appendix – Data Sources and Abbreviations
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- Data sources
- Sales data: Mintel Market Sizes
- Consumer survey data
- Consumer qualitative research
- Mintel Menu Insights
- Abbreviations and terms
- Abbreviations
- Terms
Appendix – Key Driver Analysis
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- Interpretation of results
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- Figure 74: Level of satisfaction with Starbucks, McDonald’s, and Dunkin’ Donuts—Key driver output, September 2016
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- Figure 75: Level of satisfaction with Starbucks—Key driver output, September 2016
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- Figure 76: Level of satisfaction with McDonald’s—Key driver output, September 2016
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- Figure 77: Level of satisfaction with Dunkin’ Donuts—Key driver output, September 2016
Appendix – Coffee/Tea Tracker
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- Figure 78: Coffee/Tea Additions, October 2016
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Appendix – Social Media
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- Figure 79: Total audience on social media by platform, Nov. 11, 2016
- Figure 80: Total activity on social media by platform in the last 90 days, Nov. 11, 2016
- Figure 81: Total social engagement on social media by platform in the last 90 days, Nov.11, 2016
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Appendix – Market
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- Figure 82: Total number of coffee houses in the US, 2010-20
- Figure 83: Share of coffee house units, multiples vs independents, 2014-15
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Appendix – Consumer
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- Figure 84: Population by race and Hispanic origin, 2012-22
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- Figure 85: Median household income, by race and Hispanic origin of householder, 2015
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- Figure 86: Household income distribution, 2015
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