Table of Contents
Overview
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- What you need to know
- Definition
- Coffee wave definitions
Executive Summary
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- Coffee houses will experience steady growth
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- Figure 1: Total US sales and forecast of coffee shops, at current prices, 2011-21
- The issues
- RTD coffee is one of the fastest growing non-alcoholic beverages
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- Figure 2: Total US retail sales and forecast of ready-to-drink coffee, at current prices, 2012-22
- Independents lose market share
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- Figure 3: Number of coffee house units, 2015-16
- The opportunities
- Coffee/tea beverages satisfy unique occasions
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- Figure 4: Correspondence analysis – Beverage occasions, May 2017
- Consumers are extremely satisfied with mobile ordering
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- Figure 5: Mobile ordering satisfaction, May 2017
- Consumers want innovative offerings
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- Figure 6: Coffee/tea innovation interest, any location, May 2017
- What it means
The Market – What You Need to Know
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- Sales grow while new unit count slows
- RTD coffee and tea threaten coffee houses
- Young consumers are savvy social media users
Market Size and Forecast
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- Coffee house sales grow YOY
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- Figure 7: Total US sales and forecast of coffee shops, at current prices, 2011-21
- Figure 8: Total US sales and forecast of coffee shops, at current prices, 2011-21
- Unit growth slows
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- Figure 9: Total number of coffee houses in the US, 2011-21
- Figure 10: Total number of coffee houses in the US, 2011-21
Market Breakdown
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- Independents experience steepest unit decline
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- Figure 11: Number of coffee house units, 2015-16
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- Figure 12: Share of coffee house units, multiples vs independents, 2015-16
Market Perspective
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- RTD coffee gets nitro
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- Figure 13: Total US retail sales and forecast of ready-to-drink coffee, at current prices, 2012-22
- High at-home penetration for coffee makers
- RTD tea gets premium
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- Figure 14: Total US retail sales and forecast of canned/bottled RTD tea, at current prices, 2012-22
Market Factors
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- Smartphone adoption is nearly universal
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- Figure 15: Smartphone and tablet ownership, April 2015 vs January 2017
- Sugar concerns grow but does it affect coffee/tea?
- YouTube, Facebook, and Instagram are top social media channels for young consumers
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- Figure 16: Social media platform usage, at least daily usage, June 2016-May 2017
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- Figure 17: Social media platform usage, at least daily usage, among 18-24-year-olds, June 2016-May 2017
Key Players – What You Need to Know
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- The Big Three players have different growth strategies
- Foodservice-branded coffees outperform in the retail market
- Food remains a pain point for coffee houses
- The importance of social media will continue to grow
What’s Working?
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- A year in review: Starbucks and Dunkin’ Donuts
- Starbucks: food
- Starbucks: drinks
- Dunkin’ Donuts: food
- Dunkin’ Donuts: drinks
- McDonald’s may find success with coffee promotions
- Nitro goes mainstream
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- Figure 18: Major coffee house testing nitro coffee
- C-stores see growth of coffee sales
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- Figure 19: US convenience store foodservice sales, at current prices, hot dispensed beverages, 2011-16
- Figure 20: Convenience store coffee drinks
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- Figure 21: C-store coffee offering interest, December 2016
- Consumers want their favorite foodservice brands at home
What’s Struggling?
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- Rocky start to Starbucks mobile ordering
- Coffee shops struggle with food
- Starbucks to close all Teavana stores
What’s Next?
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- Blending brands
- Social media becomes the birthplace of trends
- Cold brew coffee becomes more accessible
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- Figure 22: Flavored cold brew coffee drinks, LTOs and permanent menu items
- Cooking with coffee
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- Figure 23: Coffee as an ingredient in meat dishes
- Kombucha continues to trend
MMI Analysis
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- Coffee trends
- Coffee types and preparation methods
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- Figure 24: Top 10 coffee types offered at restaurants, incidence and penetration change, Q1 2015-Q1 2017
- Figure 25: Top 10 coffee preparation methods at restaurants, incidence and penetration change, Q1 2015-Q1 2017
- Coffee flavors
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- Figure 26: Flavor matrix, top 10 menued coffee flavors, Q1 2015-Q1 2017
- Figure 27: Flavor matrix, top 10 growing coffee flavors, Q1 2015-Q1 2017
- Tea trends
- Tea types
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- Figure 28: Top 10 tea types offered at restaurants, incidence and penetration change, Q1 2015-Q1 2017
- Tea flavors
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- Figure 29: Flavor matrix, top 10 menued tea flavors, Q1 2015-Q1 2017
- Figure 30: Flavor matrix, top 10 growing menued tea flavors, Q1 2015-Q1 2017
The Consumer – What You Need to Know
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- Focus on the iGens
- Identify what needs a drink satisfies
- Consumers enjoy the ease and convenience of mobile ordering
- Consumers most interested in flavored roasts but other areas of opportunity exist
Chain/Segment Visitation – Trended
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- Starbucks is the only chain to experience visitation growth
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- Figure 31: Chain/segment visitation for coffee/tea, trended, May 2017
- iGens are now the sought-after consumer group
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- Figure 32: Chain/segment visitation for coffee/tea, May 2017
- Chain/segment visitation trended: a focus on 18-24-year-olds
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- Figure 33: Chain/segment visitation for coffee/tea, trended among 18-24-year-olds, May 2017
- Millennials are visiting fewer locations for coffee/tea
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- Figure 34: Repertoire analysis, locations visited by millennials, 2016 vs 2017
- Chain/segment cross-utilization
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- Figure 35: Chain/segment cross-utilization, May 2017
- Figure 36: Chain/segment cross-utilization, continued, May 2017
- Chain/segment visitor profiles
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- Figure 37: Select visitor profiles index against all AFH coffee/tea drinkers
Coffee/Tea Flavor Interest
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- Indulgent, fruity flavors most popular
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- Figure 38: Coffee/tea flavor interest, May 2017
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- Figure 39: Coffee/tea LTOs
- iGens/Millennials drive interest in coffee/tea flavors
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- Figure 40: Coffee/tea flavor interest, by generation, May 2017
- Flavor interest lowest in Midwest
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- Figure 41: Coffee/tea flavor interest, by census region, May 2017
- Certain flavors appeal to Hispanic audience
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- Figure 42: Coffee/tea flavor interest, by Hispanic origin, May 2017
- Flavor offerings may drive independent coffee house visitation
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- Figure 43: Coffee/tea flavor interest, by segment/chain visitation, May 2017
Coffee/Tea Flavor Interest – TURF Analysis
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- Methodology
- Various flavors can bring in unduplicated consumers
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- Figure 44: TURF analysis – Coffee/tea flavor interest, May 2017
Coffee/Tea Beverage Occasions – Correspondence Analysis
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- Methodology
- Certain beverages satisfy unique needs
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- Figure 45: Correspondence analysis – Beverage occasions, May 2017
Coffee/Tea Beverage Occasions – Generational Deep Dive
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- Hot coffee
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- Figure 46: Beverage occasions, hot coffee, by generation, May 2017
- Qualitative analysis: how consumers develop coffee drinking habits
- Iced coffee
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- Figure 47: Beverage occasions, iced coffee, by generation, May 2017
- Specialty coffee
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- Figure 48: Beverage occasions, specialty coffee, by generation, May 2017
- Frozen blended coffee
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- Figure 49: Beverage occasions, specialty coffee, by generation, May 2017
- Hot tea
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- Figure 50: Beverage occasions, hot tea, by generation, May 2017
- Iced tea
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- Figure 51: Beverage occasions, iced tea, by generation, May 2017
Mobile Order Usage
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- Figure 52: Mobile order usage, May 2017
- Usage highest among men, Millennials, Hispanics, and urbanites
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- Figure 53: Mobile order usage, have used, by select demographics, May 2017
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Mobile Order Satisfaction
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- Consumers are overwhelmingly satisfied with mobile ordering
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- Figure 54: Mobile ordering satisfaction, May 2017
Mobile Order Satisfaction – Qualitative Analysis
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- Convenience drives mobile ordering satisfaction
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- Figure 55: Mobile order satisfaction reasons, top 10 coded free text responses, May 2017
Non-mobile Order Users
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- Many don’t see value in mobile ordering
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- Figure 56: Reasons for not using mobile ordering, May 2017
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- Figure 57: Reasons for not using mobile ordering, by age, May 2017
Mobile Order Motivators – Qualitative Analysis
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- Most non-users aren’t interested in mobile ordering
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- Figure 58: Mobile order motivators, top 10 coded free text responses, May 2017
Coffee/Tea Innovation Interest
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- Consumers want a variety of coffee/tea innovations
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- Figure 59: Coffee/tea innovation interest, any location, May 2017
- Appeal to iGens/Millennials with new options
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- Figure 60: Coffee/tea innovation interest, any location, by generation, May 2017
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- Figure 61: Coffee/tea innovation interest, any location, by age and income, May 2017
- Hispanics are interested in new coffee/tea options
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- Figure 62: Coffee/tea innovation interest, any location, by Hispanic origin, May 2017
- Urbanites most open to new offerings
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- Figure 63: Coffee/tea innovation interest, any location, by area, May 2017
- Consumers are interested in innovations regardless of segment
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- Figure 64: Coffee/tea innovation interest, by segment, May 2017
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- Figure 65: Coffee/tea innovation interest, by segment, May 2017
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
- Social media methodology
- Abbreviations and terms
- Abbreviations
- Terms
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