Coffee - US - October 2011

SCOPE AND THEMES
What you need to know
Definition
Data sources
Sales data
Consumer survey data
Advertising creative
Abbreviations and terms
Abbreviations
Terms
EXECUTIVE SUMMARY
Sales increase driven by commodity prices and innovation
Roasted remains the leading category
Instant and RTD also driving gains at some firms
2010 new products introductions up sharply from 2009
Usage unchanged except in instant category
Established mid-market brands remain dominant
Single-cup usage driven by convenience and freshness
Most noticed price increases yet purchase behavior remains fairly steady
INSIGHTS AND OPPORTUNITIES
There’s still lots of room for growth through innovation
Starbucks Natural Fusions
Single-cup segment will continue to drive growth
INSPIRE TRENDS
Inspire Trend: “Mood to Order”
Inspire Trend: “The Real Thing”
MARKET SIZE AND FORECAST
Key points
Coffee sales spike in 2011 as gourmet options proliferate and raw bean prices surge
Figure 1: Total U.S. retail sales and forecast of coffee, at current prices, 2006-16
Figure 2: Total U.S. sales and forecast of coffee, at inflation-adjusted prices, 2006-16
Fan chart forecast
Figure 3: Fan chart forecast of total U.S. retail sales of coffee, at current prices, 2006-16
Walmart sales
MARKET DRIVERS
Key points
Growth of mature segment will drive long-term sales growth
Figure 4: Population, by age, 2006-16
Weak economy could undermine growth
Figure 5: Unemployment and underemployment rates, January 2007-July 2010
Figure 6: Unemployment status (seasonally adjusted) among civilian noninstitutional population, by age, gender, and race/Hispanic origin, July 2010-July 2011
Figure 7: Consumer sentiment index, by quarter, 2001-10
Challenging economy motivates some to drink more coffee at home
Figure 8: Attitudes and behavior toward coffee, by age, June 2011
However, some report drinking less coffee as a result of price increases
Most adults watching diet
Figure 9: Trends in watching diet among adults aged 18+, 2005-10
Figure 10: Trends in watching diet among adults aged 18+, 2005-10
Increase in commodity prices driving sales gains
Figure 11: Percent change in CPI* in food and energy sectors, Dec. 2010–May 2011
COMPETITIVE CONTEXT
Key points
Energy drinks and shots pose competition for coffee, especially for the RTD segment
Competition with coffeehouses
Tea and RTD tea offer growing competition
SEGMENT PERFORMANCE
Figure 12: Sales of Coffee in the U.S. by category, at current prices, by segment, 2006-16
Figure 13: Total U.S. sales of coffee, by segment, 2010 and 2011
Figure 14: FDMx sales of coffee, by segment, 2010 and 2011
SEGMENT PERFORMANCE—ROASTED COFFEE
Key points
2011 sales spike as a function of commodity prices and innovation
Figure 15: Trends in FDMx roasted coffee dollar and volume sales and price, 2006-16
Single-cup options also driving growth
Figure 16: Total U.S. sales of roasted coffee, 2006-16
SEGMENT PERFORMANCE—INSTANT COFFEE
Key points
Instant coffee gains driven in part by increase in usage
Figure 17: FDMx sales and forecast of instant coffee, 2006-16
SEGMENT PERFORMANCE—READY-TO-DRINK COFFEE
Key points
Retail sales and forecast of RTD Coffee
Figure 18: Retail sales and forecast of RTD coffee, 2006-16
RETAIL CHANNELS—OVERVIEW
Sales growth can be seen across channels
Figure 19: U.S. retail sales of coffee, by channel, 2006-11
RETAIL CHANNELS—SUPERMARKETS
Key points
Increase in supermarket sales proportionate to overall category growth
Figure 20: U.S. sales of coffee at supermarkets, 2006-11
RETAIL CHANNELS—OTHER FDMX CHANNELS
Key points
Other FDMx channels likely to be important partners in the future
Figure 21: Other FDMx channel sales of coffee, 2006-11
RETAIL CHANNELS—NON-FDMX CHANNELS
Key points
C-stores and sales growing at slower pace
Figure 22: Total U.S. retail sales of coffee through non-FDMx channels, 2006-11
RETAIL CHANNELS—NATURAL SUPERMARKETS
Key points
Insights
Sales of spreads and dips in the natural channel
Figure 23: Natural supermarket sales of coffee, at current prices, 2008-10*
Figure 24: Natural supermarket sales of coffee, at inflation-adjusted prices, 2008-10*
Natural channel sales by segment
Figure 25: Natural supermarket sales of coffee, by segment, 2008 and 2010*
Brands of note
Natural channel sales by organic content
Figure 26: Natural supermarket sales of coffee, by organic content, 2008 and 2010*
COMPANIES AND BRANDS
Key points
J.M. Smucker Co.
Kraft Foods
Starbucks Coffee Company
Green Mountain Coffee Roasters
North American Coffee Partnership
Nestlé
Figure 27: Select manufacturer FDMx sales of coffee, 2009-10
BRAND SHARE—ROASTED COFFEE
Key points
J.M. Smucker Co. wins with gourmet and Dunkin’ partnership
Dunkin’ co-branded SKUs driving growth for J.M. Smucker Co.
Green Mountain capitalizes on strong demand for K-Cups
Figure 28: Leading FDMx brand sales and market share of roasted coffee, 2010-11
BRAND SHARE—INSTANT COFFEE
Key points
Nestlé USA continues to drive growth with bilingual instant
Starbucks make inroads with Via and instant iced coffee
Kraft finds some growth with sweet quasi-gourmet formulations
Figure 29: Leading FDMx brand sales and market share of instant coffee, 2010-11
BRAND SHARE—READY-TO-DRINK (RTD) COFFEE
Key points
WM Bolthouse Farms decline; private labels gain
Starbucks Doubleshot Energy+Coffee could drive significant gains
Figure 30: Starbucks Doubleshot Energy+Coffee
Figure 31: Leading FDMx brand sales and market share of RTD coffee, 2010-11
BRAND SHARE—COFFEE ADDITIVE/FLAVORING, SUBSTITUTES AND CONCENTRATES
Key points
R. Torre & Co. Inc. realizes some gains but category sales remain weak
Figure 32: Leading FDMx brand sales and market share of coffee additive/flavoring, substitutes and concentrates, 2010-11
INNOVATIONS AND INNOVATORS
Key points
Ground coffee concepts represent majority of new products introductions
Figure 33: Incidence of new products introductions in the U.S., 2006-11
Most new products are branded
Figure 34: Incidence of new product introductions in the U.S., branded vs. private label, 2006-11
Most new products are unflavored
Figure 35: Top 10 flavors in new coffee products in the U.S., 2006-11
Kosher most common claim
Figure 36: Top 10 claims in new coffee products in the U.S., 2006-11
Premium 100% arabica bean claims common
Fruity, floral, and nutty notes could drive sales in some cases
Country-of-origin and fair trade certified claims adorn a variety of gourmet SKUs
Limited-edition and seasonal could drive growth around the holidays
Functional and healthy coffee products have the potential to drive growth
Private labels becoming more sophisticated
Single-cup SKUs becoming more common, and differentiated
MARKETING STRATEGIES
Dunkin’ Donuts
Figure 37: Brand analysis of Dunkin’ Donuts
Television advertising
Figure 38: Dunkin’ Donuts coffee, 2010
Website
Figure 39: Quantcast estimates for Dunkin’Donuts.com, September 2011
Facebook
Twitter
YouTube
Starbucks
Figure 40: Brand analysis of Starbucks Via
Television advertising
Figure 41: Starbucks Via Ready Brew ad, 2011
Website
Figure 42: Quantcast estimates for Starbucks.com, September 2011
Facebook
Twitter
YouTube
Folgers
Figure 43: Brand analysis of Folgers
Television advertising
Figure 44: Folgers Classic Roast ad, 2011
Figure 45: Folgers Special Roast ad, 2010
Website
Figure 46: Quantcast estimates for Folgers.com, September 2011
Facebook
Maxwell House
Television advertising
Figure 47: Maxwell House ad, 2011
Figure 48: Maxwell House International Café ad, 2010
Website
Facebook
THE CONSUMER—USAGE, TYPE, BRANDS, AND FREQUENCY
Key points
Increase in instant usage key driver of sales gains
Figure 49: Incidence of household coffee consumption, by type, May 2005-March 2011
25- to 34-year-olds less likely to use decaffeinated coffee
Figure 50: Household consumption of ground and whole bean coffee by type, by age, February 2010-March 2011
Whole bean coffee popular with higher-income households
Figure 51: Household consumption of ground and whole bean coffee by kind, by household income, February 2010-March 2011
Whole bean especially popular in the West
Figure 52: Household consumption of ground and whole bean coffee by kind, by region, February 2010-March 2011
Folgers popular across age groups, Starbucks more popular with younger drinkers
Figure 53: Household consumption of whole or ground bean coffee by top brand, by age, February 2010-March 2011
Folgers very popular among lower-income households
Figure 54: Household consumption of whole or ground bean coffee by top brand, by household income, February 2010-March 2011
Starbucks most popular in the West
Figure 55: Household consumption of whole or ground bean coffee by top brand, by region, February 2010-March 2011
Consumption of ground/whole bean coffee highest since 2006
Figure 56: Trends in household frequency of drinking ground/whole bean coffee on an average day, May 2005-June 2010
Households with 18- to 24-year-olds drink most ground/whole bean coffee
Figure 57: household frequency of drinking ground/whole bean coffee on an average day, by age, February 2010-March 2011
Younger instant coffee drinkers less likely to use decaf
Figure 58: Household consumption of instant by type, by age, February 2010-March 2011
Younger instant coffee drinkers more likely to use flavored varieties
Figure 59: Household consumption of instant coffee by flavor, by age, February 2010-March 2011
Younger adult households more likely to use Folgers, Maxwell House
Figure 60: Household consumption of instant coffee by top brand, by age, February 2010-March 2011
Nescafé Clasico very popular in the West
Figure 61: Household consumption of instant coffee by top brand, by region, February 2010-March 2011
Frequency of instant coffee use up from 2007-08
Figure 62: Trends in household frequency of drinking instant coffee on an average day, January 2006-March 2011
Households of 18- to 24-year-olds drinking more instant coffee
Figure 63: household frequency of drinking instant coffee on an average day, by age, February 2010-March 2011
RTD coffee consumption continues downturn
Figure 64: Personal incidence of drinking RTD coffee, by age, February 2010-March 2011
Slightly more 18- to 24-year-olds drink RTD coffee
Figure 65: Personal incidence of drinking RTD coffee, by age, February 2010-March 2011
Starbucks Frappuccino most popular among 18- to 24-year-olds
Figure 66: Personal incidence of drinking RTD coffee by brand, by age, February 2010-March 2011
Coffee most popular with older and higher-income adults
Figure 67: Personal incidence of drinking coffee, by gender, age, race/Hispanic origin, and region, June 2011
Among coffee drinkers older and less well-off drink most
Figure 68: Personal average volume consumption of coffee, by gender, age, race/Hispanic origin, and region, June 2011
SINGLE-CUP COFFEE
Key points
Convenience is a major attraction for single-cup coffee users
Figure 69: Reasons for drinking single-cup coffee, by gender, June 2011
Convenience important to 18- to 44-year-olds, 45+ like being able to brew single cups without making a full pot
Figure 70: Reasons for drinking single-cup coffee, by age, June 2011
Those earning $75K+ more interested in convenience of single-cup
Figure 71: Reasons for drinking single-cup coffee, by household income, June 2011
Many who do not use pod-style machines already own a regular coffee maker
Figure 72: Reasons for not drinking single-cup coffee, by gender, June 2011
Young adults less likely to cite major reasons for not using pod-style
Figure 73: Reasons for not drinking single-cup coffee, by age, June 2011
BRAND CHOICE AND INFLUENCE OF RISING PRICES ON BUYING HABITS
Key points
Older adults more likely to use retail brands while younger use coffeehouse
Figure 74: Incidence of buying coffee by type of brand, by age, June 2011
Those from $75K+ households more interested in coffeehouse brands
Figure 75: Incidence of buying coffee by type of brand, by household income, June 2011
Young adults less likely to be aware of price increases
Figure 76: Consumer observation of rising prices of favorite coffee brand, by age, June 2011
Those from households earning $75K+ less aware of price increases
Figure 77: Consumer observation of rising prices of favorite coffee brand, by household income, June 2011
Young adults who noticed price increase more likely to change behavior
Figure 78: Change in purchase behavior in buying favorite brand due to rising prices, by age, June 2011
$100K+ households least likely to change behavior due to rising prices
Figure 79: Change in purchase behavior in buying favorite brand due to rising prices, by age, June 2011
COFFEE-RELATED ATTITUDES AND BEHAVIOR
Key points
Many drinking more coffee at home and less away from home than last year
Figure 80: Attitudes and behavior toward coffee, by age, June 2011
Young more likely to use coffee for energy and concentration
Figure 81: Attitudes toward caffeine in coffee and reasons to drink coffee, by age, June 2011
Older more likely to see big difference in quality between coffee brands
Figure 82: Attitudes toward brand quality, coffeehouse brands, and other attributes, by age, June 2011
$100K+ coffee drinkers more likely to prefer coffeehouse brands
Figure 83: Attitudes toward brand quality, coffeehouse brands, and other attributes, by age, June 2011
RACE AND HISPANIC ORIGIN
Key points
Whites and Asians more likely to use caffeinated coffee
Figure 84: Household consumption of ground and whole bean coffee by type, by race/Hispanic origin, February 2010-March 2011
Whites and Asians most likely to use whole bean coffee
Figure 85: Household consumption of ground and whole bean coffee by kind, by race/Hispanic origin, February 2010-March 2011
Starbucks most popular with Asians
Figure 86: Household consumption of whole or ground bean coffee by top brand, by race/Hispanic origin, February 2010-March 2011
Whites consume ground/whole bean coffee with greatest frequency
Figure 87: household frequency of drinking ground/whole bean coffee on an average day, by race/Hispanic origin, February 2010-March 2011
Hispanics most likely to use decaffeinated instant coffee
Figure 88: Household consumption of instant by type, by race/Hispanic origin, February 2010-March 2011
Whites most likely to use unflavored instant coffee
Figure 89: Household consumption of instant coffee by flavor, by age, February 2010-March 2011
Nescafé Clasico most popular among Hispanics
Figure 90: Household consumption of instant coffee by top brand, by race/Hispanic origin, February 2010-March 2011
Black and Hispanic households heaviest users of instant
Figure 91: household frequency of drinking instant coffee on an average day, by race/Hispanic origin, February 2010-March 2011
Asians most likely to drink RTD coffee
Figure 92: Personal incidence of drinking RTD coffee, by race/Hispanic origin, February 2010-March 2011
Starbucks Frappuccino most popular with Asians
Figure 93: Personal incidence of drinking RTD coffee by brand, by age, February 2010-March 2011
Blacks most likely to use national retail brands
Figure 94: Choice of brand when buying coffee, by race/Hispanic origin, June 2011
Hispanics less sensitive to recent coffee price increases
Figure 95: Consumer observation of rising prices of favorite coffee brand, by race/Hispanic origin, June 2011
Blacks and Hispanics more likely to buy favorite brand less often due to rising prices
Figure 96: Change in purchase behavior in buying favorite brand due to rising prices, by race/Hispanic origin, June 2011
Coffeehouse/specialty brands more popular among bean and single-cup coffee users
Figure 97: Incidence of buying different tier of brands by the ways coffee is consumed, June 2011
Whole bean coffee users more likely to perceive quality differences between brands
Figure 98: Coffee attribute preference by the way coffee drinkers use coffee, June 2011
CLUSTER ANALYSIS
Instant Minimalists
Demographics
Characteristics
Opportunity
Gourmet Relaxers
Demographics
Characteristics
Opportunity
Decaffeinated Home-grinders
Demographics
Characteristics
Opportunity
Cluster characteristic tables
Figure 99: Coffee clusters, June 2011
Figure 100: Incidence of drinking coffee at home, by ways of drinking by coffee clusters, June 2011
Figure 101: Attitudes and behavior of toward coffee, by coffee clusters, June 2011
Figure 102: Personal average volume consumption of coffee (by number of cups), by coffee clusters, June 2011
Figure 103: Incidence of buying coffee by type of brand, by coffee clusters, June 2011
Figure 104: Consumer observation of rising prices of favorite coffee brand, by coffee clusters, June 2011
Figure 105: Attitudes toward caffeine in coffee and reasons to drink coffee, by coffee clusters, June 2011
Figure 106: Attitudes toward brand quality, coffeehouse brands, and other attributes, by coffee clusters, June 2011
Cluster demographic tables
Figure 107: Coffee clusters, by gender, June 2011
Figure 108: Coffee clusters, by age, June 2011
Figure 109: Coffee clusters, by household income, June 2011
Figure 110: Coffee clusters, by race, June 2011
Figure 111: Coffee clusters, by Hispanic origin, June 2011
Cluster methodology
IRI/BUILDERS—KEY HOUSEHOLD PURCHASE MEASURES
Overview of coffee
Ground coffee—consumer insights on key purchase measures
Brand map
Figure 112: Brand map, selected brands of ground coffee buying rate, by household penetration, 2010*
Brand leader characteristics
Key purchase measures
Figure 113: Key purchase measures for the top brands of ground coffee, by household penetration, 2010*
Ground decaffeinated coffee—consumer insights on key purchase measures
Brand map
Figure 114: Brand map, selected brands of ground decaffeinated coffee buying rate, by household penetration, 2010*
Brand leader characteristics
Key purchase measures
Figure 115: Key purchase measures for the top brands of ground decaffeinated coffee, by household penetration, 2010*
Instant coffee—consumer insights on key purchase measures
Brand map
Figure 116: Brand map, selected brands of instant coffee buying rate, by household penetration, 2010*
Brand leader characteristics
Key purchase measures
Figure 117: Key purchase measures for the top brands of instant coffee, by household penetration, 2010*
APPENDIX—IRI/BUILDERS PANEL DATA DEFINITIONS
APPENDIX—TRADE ASSOCIATIONS