Coffee - US - September 2016

OVERVIEW
What you need to know
Definition
Figure 1: Coffee definitions and hierarchy
EXECUTIVE SUMMARY 
The issues
Roasted coffees see stagnant growth
Figure 2: Sales of market, by segment, current year
RTD coffees challenged by low consumption frequency
Figure 3: Coffee consumption – RTD coffees, June 2016
Competition with foodservice for specialty coffees
Figure 4: Coffee tracker – Coffee consumption at home and away from home, by coffee type, July 2016
The opportunities
Third Wave movement opens opportunity for innovation through premiumization
Figure 5: Attitudes and behaviors of interest regarding Third Wave coffees, June 2016
70% want functions with their coffee
Figure 6: Desired coffee functionality, June 2016
Opportunity to cater to new drinking occasions, like mood
Figure 7: Drinking occasions – Consumption need, by generation, June 2016
What it means
THE MARKET – WHAT YOU NEED TO KNOW
Coffee sales forecast to grow 6.3% from 2015-16 estimate
Roasted coffee leads category sales, single-cup close behind
Cream and creamer see sales growth, popular additions in coffee
At home coffee consumption rate higher than at foodservice
Coffee prices unpredictable, reliant on the state of key importers
MARKET SIZE AND FORECAST
Coffee sales forecast to grow 6.3% from 2015-16 estimate
Figure 8: Total US sales and fan chart forecast of coffee, at current prices, 2011-21
Figure 9: Total US retail sales and forecast of coffee, at current prices, 2011-21
Figure 10: Total US retail sales and forecast of coffee, at inflation-adjusted prices, 2011-21
MARKET BREAKDOWN
Roasted coffee leads category sales, single-cup close behind
Roasted coffee
Single cup
RTD coffee
Instant coffee
Figure 11: Total US retail sales and forecast of coffee, by segment, at current prices, 2011-21
Healthy future growth expected for single-cup, RTD coffee segments
Figure 12: Sales of market, by segment, 2012-21
“Other” retail channels, supermarkets dominate coffee sales
Figure 13: Sales of market, by segment, current year
Natural channels coffee sales grow 26.2% from 2015-16
Figure 14: Natural supermarket sales of coffee, at current prices, rolling 52 weeks April 2014-16
Whole beans dominate coffee sales at natural channels
Figure 15: Natural supermarket sales of coffee, by type, at current prices, rolling 52 weeks ending April 2016
MARKET PERSPECTIVE – CREAM/CREAMER
Cream and creamer see sales growth, popular additions in coffee
Figure 16: Total US sales and fan chart forecast of cream and creamers, at current prices, 2011-21
Figure 17: Total US retail sales and forecast of cream and creamers, at current prices, 2011-21
Figure 18: Total US retail sales and forecast of cream and creamers, at inflation-adjusted prices, 2011-21
MARKET PERSPECTIVE – FOODSERVICE
At home coffee consumption rate higher than at foodservice
Figure 19: Coffee tracker – Coffee consumption at home and away from home, Trended December 2014 to July 2016
Figure 20: Coffee tracker – Coffee consumption at home and away from home, by coffee type, July 2016
Coffee house chain most popular foodservice location
Figure 21: Coffee/tea segment visitation, October 2015
MARKET PERSPECTIVE – MINTEL DEFINES COFFEE’S “WAVES”
The history of coffee, defined by waves
The First Wave
The Second Wave
The Third Wave
Third Wave Evolution – What’s next
MARKET FACTORS 
Coffee prices unpredictable, reliant on the state of key importers
Figure 22: US imports of coffee, trended 2010-14, November 2015
US coffee consumption on the rise
Figure 23: US domestic consumption of coffee, trended 2011-16, June 2016
iGeneration, Millennial populations have positive growth
Figure 24: Population by generation, percentage change, 2011-21
Declining household income challenges some coffee segments
Figure 25: Median household income, in inflation-adjusted dollars, 2004-14
Overlap between Millennials, acculturated Hispanics, and parents
Millennials as parents
Figure 26: Households with own children, by age of householder, 2013
Hispanics as parents
Figure 27: Households with own children, by Hispanic origin of householder, 2013
Hispanics as Millennials
Figure 28: Generations, by Hispanic origin, 2016
KEY PLAYERS – WHAT YOU NEED TO KNOW 
Leading companies see MULO sales growth
Coffee house and foodservice brands experience gains across segments
National brands face challenges across segments
Coffee innovation picks up pace
LEADING COMPANIES AND BRANDS OF COFFEE
Leading companies see MULO sales growth
Manufacturer sales of coffee
Figure 29: MULO sales of coffee, by leading companies, rolling 52 weeks 2015 and 2016
WHAT’S WORKING?
Roasted coffee house brands see sales gains at MULO channels
Specialty roasters
Foodservice/national coffee house brands
Foodservice, national brands drive single-cup sales growth
RTD coffees
WHAT’S STRUGGLING?
National brands face challenges across segments
Figure 30: MULO sales of roasted coffee, by leading companies and brands, rolling 52 weeks 2015 and 2016
Keurig brand sales decline at MULO channels
Figure 31: MULO sales of single cup coffee, by leading companies and brands, rolling 52 weeks 2015 and 2016
Instant coffee continues to falter in wake of single-cup success
WHAT’S NEXT?
RTD coffees feature unique nutrition, functional qualities
Specific regions are spotlighted
Unique roasting and aging methods create new flavor experience
Nitro, carbonated coffees launch at retail
Single-cup packaging
THE CONSUMER – WHAT YOU NEED TO KNOW
Segmentation breakdown
Figure 32: Coffee definitions and hierarchy
Core consumers drink multiple types of coffee
Roasted coffee leading coffee format, consumed at highest frequency
Sugar, flavored creamer leading coffee additions
Coffee pot brewer preferred preparation method
Classic cold coffee drinks most preferred RTD option, frequency still low
Cold brew continues to see impressive sale gains
The history of coffee, defined by waves
Quality, price, premium flavor defining characteristics of Third Wave
Roast type, flavor most influential to consumers’ coffee choice
70% of consumers want functionality
Brewed, RTD coffees preferred at different occasions
CROSS CONSUMPTION OF COFFEE SEGMENTS
Core consumers drink multiple types of coffee
Figure 33: Repertoire analysis – Coffee consumption, June 2016
ROASTED AND SINGLE-CUP COFFEE CONSUMPTION
Roasted coffee leading coffee format, consumed at highest frequency
Figure 34: Coffee consumption – Brewed and single-cup coffee, June 2016
Older Millennials heaviest brewed coffee drinkers
Figure 35: Coffee consumption (heavy and moderate) – Brewed and single-cup coffee, by generation, June 2016
Coffee consumption influenced by household income level
Figure 36: Coffee consumption (heavy and moderate) – Brewed and single-cup coffee, by household income, June 2016
Figure 37: Coffee consumption (heavy) – Brewed and single-cup coffee, by age and household income, June 2016
Acculturated Hispanics heavy, frequent brewed coffee drinkers
Figure 38: Coffee consumption (heavy and moderate) – Brewed and single-cup coffee, by race and Hispanic origin, June 2016
BREWED COFFEE ADDITIONS 
Sugar, flavored creamer leading coffee additions
Figure 39: Coffee additions, June 2016
Consumers add multiple ingredients into their coffee
Figure 40: Coffee additions – Dairy and non-dairy additions, June 2016
Figure 41: Coffee additions – Sugar, sweeteners, and flavorings, June 2016
Older consumers most likely to drink coffee black
Figure 42: Coffee additions – Drink it plain/black, June 2016
Men drive usage for a variety of coffee additions
Figure 43: Coffee additions, by gender, June 2016
Millennials drive usage of coffee additions
Figure 44: Coffee additions, by generation, June 2016
Hispanics, Blacks, Whites stand out for preferences
Figure 45: Coffee additions, by race and Hispanic origin, June 2016
COFFEE BREWER USAGE
Coffee pot brewer preferred preparation method
Figure 46: Attitudes and behaviors – Coffee brewer usage, June 2016
Millennials use a variety of brewers, iGen stands out with single-cup
Figure 47: Attitudes and behaviors – Coffee brewer usage, by generation, June 2016
Income influences coffee brewer preferences
Figure 48: Attitudes and behaviors – Coffee brewer usage, by household income, June 2016
READY-TO-DRINK COFFEE CONSUMPTION
Classic cold coffee drinks most preferred RTD option, frequency still low
Figure 49: Coffee consumption – RTD coffees, June 2016
Millennials, iGeneration core consumer groups
Figure 50: Coffee consumption (heavy and moderate) – RTD coffees, by generation, June 2016
Income level influences rate, frequency of RTD coffee consumption
Figure 51: Coffee consumption (heavy and moderate) – RTD coffees, by household income, June 2016
Figure 52: Coffee consumption (heavy and moderate) – RTD coffees, by age and household income, June 2016
Hispanics dominate RTD coffee consumption, Blacks least interested
Figure 53: Coffee consumption (heavy and moderate) – RTD coffees, by race and Hispanic origin, June 2016
COLD BREW
Cold brew consumption remains steady from 2015-16
Figure 54: Cold brew coffee consumption, trended June 2015 to June 2016
Impressive sale gains indicate increased awareness, trial
Figure 55: Total US retail sales of refrigerated cold-brew/concentrate coffee, at current prices, 2011-21
Interest in cold brew preparation at home
Figure 56: Attitudes and behaviors, by generation, June 2016
Classic RTD cold coffees preferred over cold brew retail varieties
THIRD WAVE COFFEE – CONSUMER DEFINED
Quality, price, premium flavor defining characteristics of Third Wave
Figure 57: Defining third wave coffee, June 2016
“I don’t know what this is”
Figure 58: Defining third wave coffee – I don’t know what this is, June 2016
Millennials, iGen drive definition of Third Wave coffee
Figure 59: Coffee additions, June 2016
Potential for premiumized coffee growth
Figure 60: Attitudes and behaviors, by generation, June 2016
IMPORTANT COFFEE ATTRIBUTES
Roast type, flavor most influential to consumers’ coffee choice
Power of niche attributes
Brand influences consumer coffee preferences
Figure 61: Important coffee attributes, June 2016
FUNCTIONALITY
70% of consumers want functionality
Leveraging inherent nutrition and functions
The mood of coffee
Figure 62: Desired coffee functionality, June 2016
Functionality a way to reach iGeneration consumers
Figure 63: Desired coffee functionality, June 2016
Millennials, Gen Xers interested in added health benefits
Figure 64: Desired coffee functionality – Health focus, by generation, June 2016
DRINKING OCCASIONS
Brewed, RTD coffees preferred at different occasions
Morning habitual time to drink brewed coffee
With/without a meal
Weather influences drink choice
Figure 65: Drinking occasions, June 2016
Coffee consumption for energy, relaxation, thirst
Figure 66: Drinking occasions – Consumption need, by generation, June 2016
APPENDIX – DATA SOURCES AND ABBREVIATIONS
Data sources
Sales data
Fan chart forecast
Consumer survey data
Abbreviations and terms
Abbreviations
Terms
APPENDIX – MARKET 
Figure 67: Total US retail sales and forecast of roasted coffee, at current prices, 2011-21
Figure 68: Total US retail sales and forecast of roasted coffee, at inflation-adjusted prices, 2011-21
Figure 69: Total US retail sales and forecast of single-cup coffee, at current prices, 2011-21
Figure 70: Total US retail sales and forecast of single-cup coffee, at inflation-adjusted prices, 2011-21
Figure 71: Total US retail sales and forecast of instant coffee, at current prices, 2011-21
Figure 72: Total US retail sales and forecast of instant coffee, at inflation-adjusted prices, 2011-21
Figure 73: Total US retail sales and forecast of ready-to-drink coffee, at current prices, 2011-21
Figure 74: Total US retail sales and forecast of ready-to-drink coffee, at inflation-adjusted prices, 2011-21
Figure 75: Total US retail sales and forecast of cream, at current prices, 2011-21
Figure 76: Total US retail sales and forecast of cream, at inflation-adjusted prices, 2011-21
Figure 77: Total US retail sales and forecast of creamer, at current prices, 2011-21
Figure 78: Total US retail sales and forecast of creamer, at inflation-adjusted prices, 2011-21
Figure 79: US supermarket sales of coffee, at current prices, 2011-16
Figure 80: US drugstore sales of coffee, at current prices, 2011-16
Figure 81: US sales of coffee through other retail channels, at current prices, 2011-16
Figure 82: US supermarket sales of cream and creamer, at current prices, 2011-16
Figure 83: US sales of cream and creamer through other retail channels, at current prices, 2011-16
APPENDIX – KEY PLAYERS 
Figure 84: MULO sales of roasted coffee, by leading companies and brands, rolling 52 weeks 2015 and 2016
Figure 85: MULO sales of single cup coffee, by leading companies and brands, rolling 52 weeks 2015 and 2016
Figure 86: MULO sales of instant coffee, by leading companies and brands, rolling 52 weeks 2015 and 2016
Figure 87: MULO sales of ready to drink coffee, by leading companies and brands, rolling 52 weeks 2015 and 2016