It doesn’t only have a space in our hands, it’s one of the fastest growing CPG industry sectors
57% of US adults drink coffee daily, and it is consumed across all incomes, ages, genders, and states. Since 2013, the number of US adults consuming coffee rose approximately 1.2% each year. With an increase of available options, everyone can drink something enjoyable! Consumers are gravitating towards higher quality (and higher margin) options such as single-origin options or Arabica beans. Though the US is not the largest consumer of coffee (that title goes to Europe), it’s a high potential market.
Multiple factors contribute to the coffee industry’s rising popularity: changing consumer preferences, health factors, and convenience.
Drinking coffee with avocado toast
Almost 44% of coffee demand in the United States comes from millennials. For millennials, coffee does not only satisfy tiredness. Coffee represents social relationships, including a relationship with their favorite coffee shop or brand. A peaceful neighborhood spot or a friendly barista reinforces the importance of these relationships. Brands can use market research to understand how they can capitalize on these relationships.
Millennials crave new taste experiences and expect flavor variety. Coffee establishments are rising to the challenge with constant CPG product innovation. Nitro coffee, cold brew, and Frappuccino’s were unheard of until a few years ago. Now, variations of them are found in almost every retailer. As a result, specialty coffee (defined as both whole beans and beverages) consumption rose in 2017, and specialty coffee represented 37% of the US coffee market. As good tasting coffee is seen as a necessary luxury among millennials, brands should differentiate themselves by emphasizing their philanthropic efforts to buy sustainable coffee or capitalize on their local roots as shown in this mobile ethnography case study.
From carcinogen list to reducing cancer risks
The cultural opinion around coffee has certainly changed. Drinking three to four cups of day has been linked to a longer lifespan, along with providing reduced risks for cardiovascular disease, liver cancer, and many others.
Besides these proven health benefits, consumers also turn to coffee for a caffeinated fix instead of soft drinks. Not only does coffee usually contain more caffeine per ounce, but it also usually contains fewer calories and sugar. Brands, such as Sunniva and Nestle, are taking on the health challenge by creating flavors with reduced sugars. With reduced sugar and health benefits, its no wonder people are choosing it over other beverage options!
“Humanity runs on coffee.” – Unknown
Coffee can be found everywhere from coffee houses to restaurants to convenience stores to grocery stores to offices to homes! From my desk, I can either walk to our Keurig, wander to the gas station, or head about a block to a cafe. Coffee is as convenient to drink now as soft drinks or water.
Along with being easily consumable, it’s gained a reputation for a quick energy boost. These factors, coupled with the increasing number of food outlets, retail stores, and cafes, helped grow the coffee industry.
The canned and ready-to-drink (RTD) coffee market is quickly growing as well, with $3.6 billion worth of products sold in 2017. Coffee retailers are jumping into the market as bottled coffees produce higher profit margins than other beverages. Retailers and consumers can experiment with new flavor combinations and products within this space. Another advantage for this market is that canned and RTD beverages can be placed in spaces where coffee traditionally could not be served, such as vending machines.
Traditional coffee producers are quickly encountering competitors as the coffee industry continues to grow. Millennials will continue to grow in importance as their spending power rises. CPG retailers should ensure they are producing coffee products geared toward their tastes and marketing the correct messages. Because, after all, all you need is coffee.
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