Table of Contents
Overview
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- What you need to know
- Definition
- Coffee wave definitions
Executive Summary
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- The issues
- Major coffee players experience a slowdown
- Lapsed consumers unlikely to start buying more coffee
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- Figure 1: Reasons for buying coffee AFH less often, May 2018
- The opportunities
- Consumers are experimenting with new coffee drinks
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- Figure 2: Reasons for buying coffee AFH more often, May 2018
- Build lasting brand loyalty among iGens through cold drinks
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- Figure 3: AFH coffee consumption: most ordered, by generation, May 2018
- Make third wave coffee a treat for Millennial parents
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- Figure 4: AFH coffee attitudes, by Millennial parent breaks, May 2018
- What it means
The Market – What You Need to Know
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- Consumers have a few extra dollars for coffee
- Coffee shops go green
Market Perspective
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- RTD coffee: friend or foe?
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- Figure 5: RTD coffee interest, May 2018
- Energy drinks compete with iced coffee for afternoon occasion
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- Figure 6: Reasons for usage of energy drinks/energy shots, March 2017
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- Figure 7: Top five energy drinks with highest purchase intent score; T2B-five point scale
Market Factors
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- Coffee, it prevents Parkinson’s, heart attacks, and causes cancer?
- Starbucks puts a lid on straws; Dunkin’ shifts to paper
- Strong economy benefits coffee shops
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- Figure 8: Consumer sentiment index, January 2007-May 2018
- Figure 9: Unemployment and underemployment, January 2007-April 2018
- Healthy bean harvest in Brazil and Colombia
Key Players – What You Need to Know
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- Competition causes slowdown for coffee chains
- The future of coffee is cold, functional, and colorful
What’s Working?
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- JAB continues to build its coffee empire
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- Figure 10: US coffee and foodservice companies owned by JAB
- Coffee shops become high tech
- Starbucks Rewards 2.0?
- Starbucks launches its credit card
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- Figure 11: Starbucks email, “Earn 2,500 Bonus Stars”, sent 2/16/2018
- Figure 12: Starbucks email, “Introducing the Starbucks Rewards Visa Card”, sent 2/7/2018
- Non-dairy milks gain penetration in coffee shops
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- Figure 13: Coffee and tea additions, non-dairy milk, by generation, March 2018
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- Figure 14: Change in incidence of non-dairy milk as an ingredient in coffee drinks, Q1 2015 – Q1 2018
- Figure 15: Change in incidence of non-dairy milk as an ingredient in tea drinks, Q1 2015-Q1 2018
- Coffee and tea gets boozy
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- Figure 16: coffee and tea used in alcoholic beverages, Q1 2018
What’s Struggling?
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- Starbucks’s US growth slows
- Frappuccino falls victim to consumer health concerns
- Dunkin’ focuses on its strengths
What’s Next?
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- Cold drinks and the afternoon become key battlegrounds
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- Figure 17: AFH coffee consumption by daypart, among drinkers, September 2016
- Starbucks’ three prong approach to the afternoon
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- Figure 18: Online Ad, “Afternoon Made at Starbucks”
- Dunkin’ releases nitro, focuses on flavor
- Dunkin’ drops the donuts with new unit design
- Juice/coffee blends gain wider acceptance
- Drinks with shades of functionality
- No more room for independent third wave coffee?
MMI Analysis
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- Cold coffee drinks experience strong growth
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- Figure 19: Change in incidence of coffee drinks on menus, Q1 2015-Q1 2018
- Figure 20: Change in incidence of coffee drinks on menus, by segment, Q1 2015-Q1 2018
- Figure 21: incidence of iced coffee/cold brew coffee on menus, by segment, Q1 2015-Q1 2018
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- Figure 22: Incidence of cold brewed coffee on menus, Q1 2015-Q1 2018
- Coffee flavor trends
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- Figure 23: Coffee flavors with strong directional growth, Q1 2015-Q1 2018
- Specialty tea drinks gain a presence on menus
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- Figure 24: Change in incidence of top 20 tea types on menus, Q1 2015-Q1 2018
- Figure 25: Change in incidence of tea drinks on menus, by segment, Q1 2015-Q1 2018
- Tea flavor trends
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- Figure 26: tea flavors with strong directional growth, Q1 2015-Q1 2018
The Consumer – What You Need to Know
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- Primary coffee drinks vary among consumers
- Capture Gen X with third wave coffee
- Consumers are experimenting with new drinks
- Bring consumers in the door with new flavors
Restaurants Visited for Coffee: Most Visited vs Also Visit
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- Starbucks leads the AFH coffee market
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- Figure 27: restaurants visited for coffee: most vs also visit, May 2018
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- Figure 28: restaurants visited for coffee, number of restaurants visited, May 2018
- Strong cross-visitation among the big three coffee chains
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- Figure 29: Locations also visited for coffee, among chains visited for coffee (most often), May 2018
- iGens/Millennials visit multiple locations for coffee
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- Figure 30: restaurants visited for coffee, any visitation, by generation, May 2018
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- Figure 31: restaurants visited for coffee, number of restaurants visited, three or more locations, by generation, May 2018
- Venue preferences of multicultural consumers
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- Figure 32: restaurants visited for coffee, most visited, by race/ethnicity indexed against all consumers, Top five locations, May 2018
AFH Coffee Consumption: Most Ordered vs Also Order
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- Cold coffee drinks are an “also” beverage
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- Figure 33: AFH coffee consumption: most vs also order, May 2018
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- Figure 34: AFH coffee consumption, number of different drinks ordered, May 2018
- iGens enter the coffee market through flavored cold drinks
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- Figure 35: AFH coffee consumption: most ordered, by generation, May 2018
- Figure 36: AFH coffee consumption, number of different drinks ordered, four or more drink types, by generation, May 2018
- Starbucks consumers love specialty drinks
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- Figure 37: AFH coffee consumption: most ordered, by chain visitors (most visited), May 2018
- Flavored cold drinks appeal to Hispanic consumers
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- Figure 38: AFH coffee consumption: most ordered, by race and ethnicity, May 2018
Changes in AFH Coffee Consumption
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- Consumers drinking coffee AFH more often
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- Figure 39: Changes in AFH coffee consumption, May 2018
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- Figure 40: Changes in AFH coffee consumption, by select demographics, May 2018
Reasons for Drinking Coffee AFH More
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- Innovative cold drinks drive increased consumption
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- Figure 41: Reasons for buying coffee AFH more often, May 2018
- Increased cold coffee consumption among Gen X
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- Figure 42: Reasons for buying coffee AFH more often, by age, May 2018
Reasons for Drinking Coffee AFH Less
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- Coffee shops will have difficulty reengaging lapsed consumers
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- Figure 43: Reasons for buying coffee AFH less often, May 2018
Coffee and Tea Tracker
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- Strong growth in AFH iced tea consumption
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- Figure 44: Change in coffee/tea drinks consumed AFH, April 2017-March 2018
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- Figure 45: Change in coffee/tea drinks consumed AFH, by generation, April 2017-March 2018
AFH Coffee Attitudes
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- There’s a diverse set of coffee drinkers
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- Figure 46: AFH coffee attitudes, May 2018
- Third wave coffee can’t ignore Gen X
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- Figure 47: AFH coffee attitudes, by generation, May 2018
- Make coffee a treat for parents
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- Figure 48: AFH coffee attitudes, by Millennial parent breaks, May 2018
- Dunkin’ can keep the flavors rolling
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- Figure 49: AFH coffee attitudes, by chain visitors (most visited), May 2018
Premium Coffee Perception
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- Third wave coffee will continue to grow
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- Figure 50: AFH premium coffee perception, May 2018
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- Figure 51: Premium coffee definition, May 2018
- Target Millennial and Gen X coffee lovers
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- Figure 52: AFH premium coffee perception, by generation, May 2018
- Convince older consumers premium coffee is worth the price
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- Figure 53: AFH premium coffee perception, by food and drink shopper segmentation, May 2018
Coffee Shop Visitation Motivators
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- Opportunity for increased flavor innovation
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- Figure 54: Coffee shop visitation motivators, May 2018
- Improvements may not attract lapsed consumers
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- Figure 55: Coffee shop visitation motivators, by changes in AFH coffee consumption, May 2018
- Function and color appeal to iGens
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- Figure 56: Coffee shop visitation motivators, by generation, May 2018
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- Figure 57: CHAID analysis – Coffee shop visitation motivators
- Third wave fits with Starbucks
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- Figure 58: Coffee shop visitation motivators, by chain visitors (most visited), May 2018
Appendix – Data Sources and Abbreviations
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- Data sources
- Consumer survey data
- Mintel Menu Insights
- Purchase Intelligence
- Mintel Food and Drink Shopper Segmentation
- Abbreviations and terms
- Abbreviations
- Terms
Appendix – The Consumer
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- Figure 59: TURF analysis – Coffee shop visitation motivators
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