Foodservice Coffee and Tea - US - 2021

OVERVIEW
What you need to know 
Key issues covered in this Report
Definition 
COVID-19: US context
EXECUTIVE SUMMARY 
Top takeaways 
Impact of COVID-19 on foodservice coffee and tea
Figure 1: Short, medium and long term impact of COVID-19 on foodservice coffee and tea, July 2021
Opportunities and challenges
Morning traffic will decline due to the rise of remote work
Figure 2: Anticipated AFH coffee/tea purchases post-pandemic, April 2021
Figure 3: Reasons for purchasing coffee/tea less often compared to prepandemic, by anticipated work situation, April 2021
Remote workers will purchase premium drinks 
Figure 4: AFH coffee and tea purchases, 2019 vs 2021, May 2019 and April 2021
Figure 5: Foodservice coffee and tea attitudes, by anticipated work situation, any agree, April 2021
Keep it cool for Gen Z
Figure 6: AFH coffee purchases, by generation, April 2021
Figure 7: Foodservice coffee/tea visitation motivators, by generation, April 2021
Café design will evolve
Figure 8: Foodservice café concept interest, by anticipated work situation, April 2021
Premium food options can draw in consumers
Figure 9: Foodservice coffee/tea visitation motivators, by coffee/tea segment visitors, April 2021
THE MARKET – KEY TAKEAWAYS
Home-sourced beverages pose a larger competitive threat
Expect rising prices due to coffee supply chain issues
Economic conditions are favorable for the AFH coffee/tea market
TARGET AUDIENCE BY THE NUMBERS 
Generations and AFH coffee/tea
Figure 10: Population by generation, 2016-26
MARKET FACTORS 
Changes in work paradigms challenge the AFH coffee market but also create opportunities
Figure 11: Anticipated work situation for the remainder of 2021, April 2021
Consumers upgraded their home coffee/tea options during the pandemic
Supply chain disruptions and weak output sends coffee prices soaring
Consumers have extra disposable income for their favorite drinks
Figure 12: Disposable Personal Income change from previous period, January 2017-April 2021
Figure 13: Financial health tracker, March 2020-May 2021
COMPANIES AND BRANDS – KEY TAKEAWAYS 
Cold coffee will become the norm and plant-based milks will proliferate
Largest chains adapt to changing consumer preferences
Chains will need to attract consumers outside traditional morning hours
COMPETITIVE STRATEGIES
Plant power
Figure 14: Milk types used in coffee and tea drinks, change in menu incidence, Q1 2018-Q1 2021
Figure 15: Non-dairy milk types used in coffee and tea drinks, change in menu incidence, Q1 2018-Q1 2021
The Big Three coffee providers adjust to changing consumer preferences
Starbucks promotes ethics and drives coffee innovation 
Dunkin’ becomes a Gen Z favorite
McDonald’s outperforms during the pandemic but breakfast lags
C-stores need to rethink their coffee strategy
Coffee shops go green
Foodservice coffee and tea menu trends 
Coffee declines but gets colder and more flavorful
Figure 16: Change in incidence of coffee drinks on menus, Q1 2018-Q1 2021
Figure 17: Change in incidence of coffee drink flavors on menus, top 15 flavors, Q1 2018-Q1 2021
Figure 18: Change in incidence of coffee preparation methods, Q1 2018-Q1 2021
Operators simplify their tea selection
Figure 19: Change in incidence of tea drinks on menus, top 10 drink types, Q1 2018-Q1 2021
Figure 20: Change in incidence of tea drink flavors on menus, top 15 flavors, Q1 2018-Q1 2021
MARKET OPPORTUNITIES 
Cold drinks are critical
Make it a meal
Figure 21: Snack daypart frequency, mid-morning, by generation, October 2020
Figure 22: Snack daypart frequency, afternoon, by generation, October 2020
Timing is everything
Functionality will eventually come to the foodservice coffee market
Coffee shop design will evolve in a post-pandemic world 
THE CONSUMER – KEY TAKEAWAYS  
Remote workers will order drinks less often but treat themselves to premium beverages
Gen Z becomes a key coffee/tea consumer group
Develop unique drinks that can’t be recreated at home
The future of café design is both big and small
Keep it cool
TRENDED AFH COFFEE AND TEA PURCHASES
Consumers ditch brewed coffee for more premium options
Figure 23: AFH coffee and tea purchases, 2019 vs 2021, May 2019 and April 2021
Nearly half of Gen Z consumers order iced coffee AFH
Figure 24: AFH coffee purchases, by generation, April 2021
Figure 25: AFH tea purchases, by generation, April 2021
Older Hispanic consumers are key brewed coffee consumers
Figure 26: AFH coffee/tea purchases, by age and Hispanic origin, April 2021
TRENDED COFFEE AND TEA FOODSERVICE VISITATION
Pandemic hits FSRs the hardest
Figure 27: AFH coffee and tea purchase location, 2019 vs 2021, May 2019 and April 2021
Entice remote workers by offering premium beverages
Figure 28: AFH coffee and tea purchase location, by anticipated work situation, April 2021
C-stores must offer budget-friendly cold beverages
Figure 29: AFH coffee and tea purchase location, by age and Hispanic origin, April 2021
Figure 30: AFH coffee and tea purchase location, c-store, by HHI, April 2021
AFH COFFEE AND TEA PURCHASE FREQUENCY: PRE-PANDEMIC AND DURING PANDEMIC
Purchase frequency significantly dropped during the pandemic
Figure 31: Coffee/tea foodservice purchase frequency, prepandemic vs during pandemic, April 2021
Figure 32: Coffee/tea foodservice purchase frequency, prepandemic vs during pandemic, by anticipated work situation, April 2021
POST-PANDEMIC ANTICIPATED AFH COFFEE AND TEA PURCHASES 
Chains will need to actively draw in remote workers
Figure 33: Anticipated AFH coffee/tea purchases post-pandemic, April 2021
Figure 34: Purchases post-pandemic anticipated, AFH coffee and tea, by select demographics, April 2021
REASONS FOR PURCHASING COFFEE/TEA LESS OFTEN POST-PANDEMIC
Consumers grow accustomed to new coffee/tea habits established during the pandemic
Figure 35: Reasons for purchasing coffee/tea less often compared to prepandemic, by anticipated work situation, April 2021
Young consumers will respond to premium BFY beverages
Figure 36: Reasons for purchasing coffee/tea less often compared to prepandemic, by age, April 2021
Enhance affluent consumers’ home coffee experience
Figure 37: Reasons for purchasing coffee/tea less often compared to prepandemic, by HHI, April 2021
COFFEE/TEA BEHAVIORS DURING PANDEMIC
New coffee/tea experiences trialed during the pandemic may stick 
Figure 38: Coffee/tea pandemic behaviors, by anticipated work situation, April 2021
Stock home options for Millennial consumers
Figure 39: Coffee/tea pandemic behaviors, by generation, April 2021
Figure 40: Coffee/tea pandemic behaviors, by age and HHI, April 2021
CHAID analysis – Specialty coffee consumers upgraded home options
Figure 41: CHAID analysis – Coffee/tea pandemic behaviors, April 2021
FOODSERVICE CAFÉ CONCEPT INTEREST
Café design diversification is necessary
Figure 42: Foodservice café concept interest, by anticipated work situation, April 2021
Gen Z are beginning their careers in the new era of remote work
Figure 43: Foodservice café concept interest, by generation, April 2021
FOODSERVICE COFFEE/TEA VISITATION MOTIVATORS
Deals, meals and serve it chilled
Figure 44: Foodservice coffee/tea visitation motivators, April 2021
Functional drinks appeal to a unique set of consumers
Figure 45: TURF analysis – Foodservice coffee/tea visitation motivators, April 2021
Figure 46: Table – TURF analysis – Visitation motivators, April 2021
Gen Z consumers want cold, flavor-forward drinks
Figure 47: Foodservice coffee/tea visitation motivators, by generation, April 2021
C-stores should upgrade their food options
Figure 48: Foodservice coffee/tea visitation motivators, by coffee/tea segment visitors, April 2021
FOODSERVICE COFFEE AND TEA ATTITUDES
Home options can’t replace foodservice quality beverages
Figure 49: Foodservice coffee and tea attitudes, any agree, April 2021
Cold brew is worth the upcharge
Figure 50: Foodservice coffee and tea attitudes, attitudes toward cold brew, any agree, April 2021
Remote workers will venture from their homes for premium drinks and for a change of pace
Figure 51: Foodservice coffee and tea attitudes, by anticipated work situation, any agree, April 2021
Local claims appeal to high-income consumers
Figure 52: Foodservice coffee and tea attitudes, any agree, by age and HHI, April 2021
QSRs and C-stores should focus on indulgent flavors
Figure 53: Foodservice coffee and tea attitudes, by chain and segment visitation, April 2021
APPENDIX – DATA SOURCES AND ABBREVIATIONS
Data sources
Consumer survey data
Abbreviations and terms
Abbreviations
Terms
APPENDIX – THE CONSUMER
TURF methodology