Consumers embracing coffee innovation

by Keith Nunes
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Coffee segment growth - iced coffee, single-serve coffee, ready-to-drink packaged coffee
Growth in the industry may be attributed to three segments — cappuccino/iced coffee, refrigerated ready-to-drink coffee and single-cup coffee.

ROCKVILLE, MD. — Beverage manufacturers are working hard to bring the coffeehouse vibe home and consumers are responding. The market research firm Packaged Facts estimates the market for packaged and ready-to-drink coffee sold at retail was $13.5 billion in 2015. By 2020, sales are expected to be nearing $18 billion.

“The coffeehouse revolution created a new generation of consumers who appreciate premium and specialty coffee,” said David Sprinkle, research director for Packaged Facts. “Retailers see the generational shift in the coffee category playing out on supermarket shelves.”

Growth in the industry may be attributed to three segments — single-cup coffee, cappuccino/iced coffee and refrigerated ready-to-drink coffee, according to Packaged Facts’ “Coffee and ready-to-drink coffee: U.S. retail market, 9th edition” report. At the same time, traditional coffee products such as ground coffee and instant coffee have seen declines. Ground coffee is still the largest contributing segment to the category, although single-cup has been quickly closing the gap.

Canned coffee - Folgers, Cafe Bustelo
A large consumer segment views canned coffee as outdated and unpalatable.

Yet the retail revolution is not without its complications. Many older and more traditional consumers are still purchasing ground coffee in cans. Another large consumer segment came of age being exposed to specialty coffee, and that group views canned coffee as outdated and unpalatable. The retailer’s consumer base is now highly polarized.

Some retailers have tried to shift their assortment to address the new coffee consumer by reducing their assortment of canned coffee, and found that they had alienated an important shopper segment. Retailers are adapting to the changing market landscape by aiming for a “total coffee” section that is relevant to multiple generations of coffee users, according to Packaged Facts. Retail specialists note that supermarkets should recognize that the overall coffee category is on a solid growth trend, with some segments of excellent growth. Retailers may consider reducing other slow-growing categories to give the coffee section adequate space to showcase all its strong segments and trends.

Dunkin' Donuts iced coffee
Dunkin’ Donuts branded ready-to-drink coffee beverages will be available in early 2017.

Recent ready-to-drink coffee innovation has been coming in cold brew applications. Cold-brew coffee, also known as cold press, is coffee brewed without heat. Cold brewing requires steeping beans in ambient- to cold-temperature water for a long period of time. Competitors in the market include such companies as Mojo Cold Brewed Coffee Inc., Wenham, Mass.; the Shamrock Foods Co., Phoenix; Starbucks Coffee Co., Seattle; and Dunkin’ Brands Group, Inc., Canton, Mass.

This past September, Dunkin’ Brands and the Coca-Cola Co., Atlanta, announced a partnership that will feature a line of Dunkin’ Donuts branded ready-to-drink coffee beverages in early 2017.

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READER COMMENTS (1)

By James Hawkes 12/29/2016 3:26:53 PM
Informative - time to see coffee reaching out to the new generations.