Coffee and Tea - Canada - June 2016

OVERVIEW
What you need to know
Definition
Consumer information:
EXECUTIVE SUMMARY
The issues
Tea owns health, but not innovation
Figure 1: Total market volume consumption per capita – Coffee and tea, 2008-15
Young consumers claim they are less likely to drink brewed coffee
Figure 2: Percent of consumers who agree “I am concerned about the negative health effects of caffeine”, by age, March 2016
Single-serve coffee meets with challenges
The opportunities
Cold brew heats up coffee innovation
Figure 3: Percent of consumers who show an interest in ready-to-drink cold-brew coffee, by age, March 2016
Revitalization is ‘up for grabs’
Figure 4: Percent of consumers who associate “revitalization” with green tea, by age, March 2016
Immigration from Asia can help spur tea growth
Figure 5: Tea and coffee usage among Chinese Canadians and the overall population, March 2016
What it means
THE MARKET – WHAT YOU NEED TO KNOW
Coffee volume sales growth outpacing tea
Immigration represents an opportunity for tea
Age impacts coffee preferences
MARKET SIZE AND FORECAST
Coffee shows dynamic growth
Figure 6: Canadian coffee volume and fan chart forecast of total market, 2011-21
Figure 7: Canadian coffee sales and fan chart forecast of retail market, at current prices, 2011-21
Figure 8: Retail Canadian coffee sales and forecast of market, at current prices, 2011-21
Tea’s growth modest compared to coffee
Figure 9: Canadian tea volume and fan chart forecast of total market, 2011-21
Figure 10: Canadian tea sales and fan chart forecast of retail market, at current prices, 2011-21
Figure 11: Retail Canadian sales and forecast of market, at current prices, 2011-21
Canadians moving to non-retail venues in sourcing tea
Figure 12: Coffee’s share of volume between retail and other venues, 2011-15
Figure 13: Tea’s share of volume between retail and other venues, 2011-15
MARKET FACTORS
Immigration fuelling Canada’s population growth
Figure 14: Foreign-born share of population by G7 countries and Australia
Focus on health and weight management to continue
Figure 15: Body mass index, self-reported rate of being overweight or obese among Canadian adults, by gender, 2010-14
Canada’s aging population likely to influence coffee and tea consumption habits
Figure 16: Population over 65 in Canada, historical and projected (% of total), 1971-2061
KEY PLAYERS – WHAT YOU NEED TO KNOW
Category innovation driving coffee growth
Opportunities for tea to be reinvigorated at retail
Nitro cold brew to give iced coffee a boost
WHAT’S WORKING?
Coffee’s growth reflective of category innovation
WHAT’S STRUGGLING?
Keurig’s single-serve challenged with 2.0 launch
Tea market stagnant compared to coffee
WHAT’S NEXT?
Coffee looks to spur on continued growth with added benefits
Figure 17: Starbucks Doubleshot Coffee and Protein Beverage (US), June 2015
Figure 18: Super Rebbl Herbs Maca Cold-Brew Coffee and Coconut Milk (US), June 2015
Figure 19: Maxwell House Blend Iced Coffee Concentrate (US), March 2015
Nitro coffee at the forefront of the “third wave”
‘Non-traditional’ varieties to garner a greater share of tea usage
Figure 20: Share of tea launches in Canada, by flavour, 2011-15
Figure 21: DAVIDsTEA Peanut Butter Cup Fruit Infusion Tea (Canada), December 2015
Figure 22: Tea Squared Nourish The Soul Tea, Be Fit Tea and Sleepyhead tea (Canada), November 2015
Figure 23: Laura Secord Organic Teas (Canada), December 2015
Figure 24: Beauty House Urn-Fermented Kombucha (China), May 2016
Tea ventures into pods
THE CONSUMER – WHAT YOU NEED TO KNOW
Coffee surpasses tea in perceived consumption
Tea preferences are changing
Specialty coffee owns perceptions around innovation
COFFEE AND TEA USAGE
Canadians are more likely to drink coffee than tea
Figure 25: Coffee and tea usage, March 2016
Tea preferences vary by age
Figure 26: Black and green tea usage, by age, March 2016
Figure 27: Top claims on tea – share of total launches in North America, 2015
Brewed coffee’s popularity increases with age
Figure 28: Coffee usage, by age, March 2016
CONSUMPTION DRIVERS
Consumers hold different associations with coffee and tea
Figure 29: Associations with coffee and tea, by type – Correspondence map, March 2016
Specialty and chilled coffee own innovation
Figure 30: Specialty-based and chilled ready-to-drink coffees’ association with being ‘innovative’, by age, March 2016
Figure 31: Chilled ready-to-drink coffees’ association with being ‘as a snack on its own’, by age, March 2016
Brewed coffee consumption supported by habit
Figure 32: Love Grace Mocha Dairy Free Cold-Brewed Coffee Blend, US, October 2015
Tea and health are synonymous
Figure 33: Share of consumers who agree coffee is healthier to drink than coffee and vice versa, by age, March 2016
OPPORTUNITIES FOR INNOVATION
Consumers place more emphasis on ingredients for tea over coffee
Figure 34: Interest in ingredient-based innovation, coffee vs tea, March 2016
Significant share of consumers interested in new coffee and tea flavours
Figure 35: Agreement with trying different flavours of coffee/tea, by age, March 2016
Figure 36: Agreement with concern over caffeine and impact of strength, by age, March 2016
Provenance continues to be an opportunity for coffee and tea
Figure 37: Interest in international flavoured coffee and tea, by age, March 2016
Tea and coffee as stress reducers and energy enhancers
Figure 38: Coffee and tea associations, by age, March 2016
Single-serve growth is encountering challenges
Figure 39: Share of consumers who agree single coffee/tea pods should be compostable or biodegradable, by age, March 2016
Over half of Canadians are interested in concentrate
Figure 40: Share of consumers interested in coffee/tea concentrate, by age, March 2016
Figure 41: Maxwell House Blend Iced Coffee Concentrate, US, March 2015
OPPORTUNITIES FOR INNOVATION BY GENDER
Women are more interested in tea with health benefits
Figure 42: Interest in health benefits in coffee and tea, by gender, March 2016
Cold brew demand varies by gender
Figure 43: Interest in RTD cold brew and grounds/leaves tailored to cold brewing, by gender, March 2016
CONSUMER GROUPS
Women are more likely to respond to tea innovation
Figure 44: Coffee and tea usage, by gender, March 2016
Figure 45: Tea interest, by gender, March 2016
Chinese Canadians more likely to drink tea and specialty coffee
Figure 46: Coffee and tea usage, Chinese Canadians vs overall population, March 2016
Similarities outweigh differences between Canada and the US
Figure 47: Retail market volume consumption per capita (population) – Coffee, Canada vs US, 2008-15
Figure 48: Retail market volume consumption per capita (population) – Tea, Canada vs US, 2008-15
Figure 49: Coffee shop spend as a proportion of GDP, Canada vs US, 2007 and 2015
Figure 50: Coffee (and tea) pods/caps, single-serve usage, Canada vs US, by age, March 2016
FOODSERVICE
Quality, value and convenience are the top visit drivers for coffee shops
Figure 51: Factors behind foodservice visits, March 2016
Visit drivers vary across age groups
Figure 52: Loyalty programs as a driver to visit coffee shops, by income, March 2016
How consumers perceive select foodservice operators – in their words
Starbucks
Tim Hortons
McDonald’s
Second Cup
APPENDIX – DATA SOURCES AND ABBREVIATIONS
Data sources
Sales data
Fan chart forecast
Consumer survey data
Consumer qualitative research
Abbreviations and terms
Abbreviations
APPENDIX – MARKET
Figure 53: Canadian coffee volume and fan chart forecast of retail market, 2011-21
Figure 54: Canadian coffee volume and fan chart forecast of other market, 2011-21
Figure 55: Canadian tea volume and fan chart forecast of retail market, 2011-21
Figure 56: Canadian tea volume and fan chart forecast of other market, 2011-21