Coffee - US - September 2010

About this report

The incidence and frequency of coffee use in the U.S. has remained very steady in recent years, which has contributed to relatively stable, moderate market growth. Indeed, while sales in many categories declined between 2008 and 2010—as millions of Americans sought ways save money in the face of recessionary pressures—the coffee category performed relatively well. This suggests that CPG firms seeking growth may want to consider developing new coffee products or optimizing efforts to promote existing brands in order to capitalize on opportunities.

The report provides research and insight that is useful to product developers and marketers operating in the retail coffee market. More specifically, the report addresses the following questions:

• How have retail sales of coffee fluctuated in recent years and how are they likely to change between 2010 and 2015?
  
• What categories are performing well and which are posting sales declines?
  
• How have sales in the supermarket channel fluctuated in recent years, compared with changes observed in other channels?
  
• How are economic, demographic and wellness trends impacting the coffee at retail market?
  
• What are the most popular types of coffee in the U.S.?
  
• What brands are performing well and which are posting declines?
  
• How are companies using new media, as well as television to promote their products?
  
• What segments of the population over-index on use and which under-index?
  
• What types of coffee products are companies launching and which seem well-positioned to grow in the current market?

Table of contents

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
Market poised for moderate growth
Energy drinks pose primary competitive threat
Retail channels
Population growth, health and the economy help boost sales
Folgers and Maxwell House roasted varieties driving category growth
Instant coffee holding steady
Via success signals demand for premium
Spanish language packaging could help further growth of value brands
Ready to drink (RTD) segment sales stagnant
Coffee additive/flavorings, substitutes and concentrates sales continue decline
Unflavored most popular; eco-friendly and fair trade becoming more common
Incidence and frequency of use remains stable
Most prefer national brands over regional and premium varieties
Consistent with sales, Folgers and Maxwell House most popular brands
Most use a drip-style coffee maker
Most young adults (and teens) prefer sweetened options
Hispanics are a high-value segment
Market Size and Forecast
Key points
Brew at home continues even as commodity prices percolate
Figure 2: Total U.S. retail sales and forecast of coffee, at current prices, 2005-15
Figure 3: Total U.S. retail sales and forecast of coffee, at inflation-adjusted prices, 2005-15
Walmart sales
Market Drivers
Key points
High demand 55+ segment growing quickly
Figure 4: Population, by age, 2005-15
Rapid growth of Hispanic segment could help drive growth
Figure 5: Population, by race and Hispanic origin, 2005-15
Most Americans watching their diet
Figure 6: Incidence of presently watching/controlling diet, May 2004-June 2009
Figure 7: Reasons for watching/controlling diet, 2006 and 2009
Health-related concerns could have greater impact on demand in the future
Figure 8: Attitudes towards coffee, by age, June 2010
High unemployment may undermine demand
Figure 9: U.S. unemployment rate, January 2007-July 2010
Low consumer confidence may undermine willingness to purchase premium products
Figure 10: Consumer Sentiment, January 2007-July 2010
Competitive Context
Key points
Energy drinks primary competitive threat among teens and young adults
Tea competes directly with coffee as wellness trend grows
Enjoyment drives demand; coffeehouses could undermine retail sales growth
Figure 11: Attitudes towards coffee consumption and preparation, by age, June 2010
Segment Performance
Roasted sub-category continues to drive overall category growth
Figure 12: FDMx sales of coffee, by segment, 2009 and 2010
Segment Performance—Roasted Coffee
Key points
Roasted coffee drives growth as many brew at home to save money
Figure 13: Total U.S. retail sales and forecast of roasted coffee, at current prices, 2005-15
Segment Performance—Instant Coffee
Key points
Demand for instant rises as Hispanic population grows and new products are introduced
Figure 14: Total U.S. retail sales and forecast of instant coffee, at current prices, 2005-15
Segment Performance—Ready-to-Drink (RTD) Coffee
Key point
Frappuccino sales help stem segment losses
Figure 15: Total U.S. retail sales and forecast of ready-to-drink coffee, at current prices, 2005-15
Retail Channels—Overview
Supermarkets continue to maintain nearly half of share
Figure 16: U.S. retail sales of coffee, by channel, 2008 and 2010
Retail Channels—Supermarkets
Key point
Supermarkets continue to perform well as eating and entertaining at home trend holds steady
Figure 17: U.S. sales of coffee at supermarkets, at current prices, 2005-10
Retail Channels—Other Channels
Key point
Other channels benefit from strong demand for mass merchandisers
Figure 18: U.S. sales of coffee in other retail channels, at current prices, 2005-10
Natural Channel/SPINS
Key points
Sales of coffee in the natural channel
Figure 19: Natural supermarket sales of coffee, at current prices, 2008-10
Figure 20: Natural supermarket sales of coffee, at inflation-adjusted prices, 2008-10
Implications
Natural channel sales by segment
Figure 21: Natural supermarket sales of coffee, by segment, 52 weeks ending June 2008 and June 2010
Leading brands in segments of note
Organic and fair trade trends
Figure 22: Natural supermarket sales of coffee, by organic, June 2008 and June 2010
Figure 23: Natural supermarket sales of packaged coffee, by fair trade, June 2008 and June 2010
Leading Companies
Key points
J.M. Smucker Co. maintains dominance as Starbucks gains share
Figure 24: Select manufacturer FDMx sales of coffee, 2009-10
Brand Share—Roasted Coffee
Key points
Dominant players all capitalizing on strong growth for roasted options
Figure 25: Leading FDMx brand sales and market share of roasted coffee, 2009-10
Brand Share—Instant Coffee
Key points
Folgers and Nescafé remain dominant; Via makes inroads
Figure 26: Leading FDMx brand sales and market share of instant coffee, 2009-10
Via helps to drive growth during Starbucks’ turnaround
Figure 27: Leading FDMx brand sales and market share of Starbucks’ Via instant coffee, 2009-10
Brand Share—Ready to Drink (RTD)
Key points
Bolthouse Farms and Starbucks post growth in challenging segment
Manufacturer and brand sales of ready to drink coffee
Figure 28: Leading FDMx brand sales and market share of ready to drink coffee, 2009-10
Brand Share—Coffee Additive/Flavoring, Substitutes and Concentrates
Key points
Overall FDMx sales of additives decline but some smaller brands post gains
Figure 29: Leading FDMx brand sales and market share of coffee additive/flavoring, substitutes and concentrates, 2009-10
Innovation and Innovators
Key points
Launches of flavored coffee on the decline
Figure 30: Top 10 flavors in new coffee introductions, 2004-10
Figure 31: Top 10 flavors in new coffee introductions, as a percent of total coffee launches, 2004-10
Ethical and organic launches on the rise
Figure 32: Top 10 claims associated with new coffee introductions, 2004-10
Private label introductions on the decline
Figure 33: Proportion of new product launches that are private label, 2004-10
New products with environmentally friendly packaging
Many use fair trade seal to increase brand appeal
Some able to effectively differentiate with seasonal products
Brands and Marketing Strategies
Overview of the brand landscape
Starbucks
Figure 34: Brand analysis of Starbucks’ Via, 2010
Starbucks’ Via television ads
Figure 35: Starbucks’ Via ad #1, 2010
Figure 36: Starbucks’ Via ad #2, 2010
Figure 37: Starbucks’ Via launch ad—taste the difference, 2009
Starbucks online social media
Facebook
Twitter
Dunkin’ Donuts
Figure 38: Brand analysis of Dunkin’ Donuts, 2010
Dunkin’ Donuts television ads
Figure 39: Dunkin’ Donuts ad—woman in bathrobe, 2009
Figure 40: Dunkin’ Donuts ad—copy machine, 2009
Dunkin’ Donuts social media
Facebook
Twitter
Social media campaigns from other coffee brands
Nescafé
Seattle’s Best Coffee
Illy
Incidence and Frequency of Use
Key points
Incidence of use has remained stable for the last several years
Figure 41: Trended household use of coffee and espresso products, by type, 2004-09
Most users drink coffee on a daily basis
Figure 42: Frequency of coffee consumption, by age, June 2010
Household coffee preferences in ground/whole bean coffee
Figure 43: Trended household use of caffeinated and decaffeinated coffee, 2004-09
Figure 44: Trended household use of ground and whole bean coffee, 2004-09
Household use of roasted coffee—caffeinated use skews higher than decaf
Figure 45: Trended daily household use of ground regular coffee, 2004-09
Figure 46: Trended daily household use of ground decaffeinated coffee, 2004-09
Most households that use instant coffee consume caffeinated varieties
Figure 47: Trended household use of regular or decaffeinated instant coffee 2004-09
Figure 48: Trended daily household use of instant coffee, 2004-09
Coffee mixes hold less promise
Figure 49: Trended household use of regular and sugar-free flavored coffee mixes, 2004-09
Figure 50: Trended daily household use of instant flavored coffee mixes, 2004-09
Preferred Type of Coffee
Key points
Over-55s more likely to see difference between brands
Figure 51: Coffee drinking habits, by age, June 2010`
National brands remain dominant
Figure 52: Coffee purchases for home use, by age, June 2010
National brands much less popular with affluents
Figure 53: Coffee purchases for home use, by household income, June 2010
Brand Preferences
Key points
Folgers and Maxwell House maintain dominance as Starbucks and private label gain penetration
Figure 54: Use of ground or whole bean roasted coffee, by brand, 2004-09
Dominant instant brands lose some ground in 2009
Figure 55: Use of instant coffee, by brand, 2004-09
Trended use of RTD coffee brands
Figure 56: Trended use of coffee drinks, by brand, 2006-09
Starbucks increasingly dominant in the espresso category
Figure 57: Trended use of espresso/cappuccino products, by brand, 2004-09
Method of Preparation
Key points
Many young adults prefer Euro-style preparation
Figure 58: Coffee preparation methods at home, by age, June 2010
Coffee-related Attitudes
Key points
About four in 10 young adults prefer sweetened drinks
Figure 59: Attitudes towards coffee, by age, June 2010
Race and Hispanic Origin
Key points
Hispanics represent key growth opportunity
Figure 60: Household coffee usage, by race and Hispanic origin, February 2009-March 2010
Spanish-speaking Hispanics key subsegment, especially for instant
Figure 61: Category usage among Hispanics, by language spoken in the home, February 2009-March 2010
Taste preferences differ among consumers
Figure 62: Attitudes towards coffee, by race/Hispanic origin, June 2010
Appendix: Other Useful Consumer Tables
Age
Figure 84: Average number of cups of coffee consumed per day, by age, June 2010
Figure 85: Attitudes towards coffee, by household income, June 2010
Income
Figure 86: Frequency of coffee consumption, by household income, June 2010
Figure 87: Coffee preparation methods at home, by household income, June 2010
Figure 88: Attitudes towards coffee, by household income, June 2010
Figure 89: Coffee drinking habits, by household income, June 2010
Race and Hispanic origin
Figure 90: Average number of cups of coffee consumed per day, by race/Hispanic origin, June 2010
Figure 91: Attitudes towards coffee, by race/Hispanic origin, June 2010
Figure 92: Frequency of coffee consumption, by race/Hispanic origin, June 2010
Figure 93: Coffee drinking habits, by race/Hispanic origin, June 2010
Figure 94: Attitudes towards coffee, by race/Hispanic origin, June 2010
Figure 95: Coffee purchases for home use, by race/Hispanic origin, June 2010
Figure 96: Coffee preparation methods at home, by race/Hispanic origin, June 2010
Appendix: Trade Associations

Tweet

Related research categories

By sector: Coffee (in Hot drinks)

By market: United States (in North America)