Coffee - UK - August 2017


#1312620

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Mintel

$ 2584

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While the market continues to enjoy value growth, recent stagnation in household penetration of coffee pod machines is curbing the volume performance. Exploring subscription models could tackle the barrier that the upfront cost of the machines poses. Meanwhile, variety packs featuring coffee with different roast styles and origins could help brands tap Brits desire for coffee adventures.
Table of contents

OVERVIEW
What you need to know
Products covered in this Report
Excluded
EXECUTIVE SUMMARY
The market
Topline growth masks mixed segment performances
Inflation to support value growth
Figure 1: Forecast of UK retail value sales of coffee*, 2012-22
Instant coffee remains under pressure
Figure 2: UK retail value sales of coffee, by segment, 2012 and 2017
Growth of ground and beans continues
Pods value growth slows on stalling volumes
Ageing population should underpin coffee sales
Commodity prices on the rise, incomes set to be squeezed
Companies and brands
Instant coffee market remains under Nestls stronghold
Figure 3: Leading manufacturers value shares in the UK retail instant coffee market, 2016/17*
Leading ground/beans brand Taylors loses share as sales fall
Figure 4: Leading manufacturers value shares in the UK retail ground coffee/coffee beans market (excluding coffee pods), 2016/17*
Private label grows its share of NPD
Operators explore premium coffee
Adspend falls in 2016
The consumer
Instant coffee is the most commonly drunk type
Figure 5: Types of coffee drunk, June 2017
Coffee pod machine ownership remains stable
Figure 6: Ownership of coffee pod machines, June 2017
Large supermarkets the most common purchase location
Figure 7: Purchase channels for coffee, by type of coffee, June 2017
Strong interest in variety packs of coffee
Subscriptions with a free machine could foster pod growth
Figure 8: Interest in coffee product concepts, June 2017
Majority of coffee drinkers are adventurous
A sizeable 24% consider themselves a coffee connoisseur
Most coffee drinkers pay attention to flavour descriptions
Origin details denote quality
Figure 9: Behaviours relating to coffee, June 2017
What we think
ISSUES AND INSIGHTS
Scope for instant coffee to capitalise on users' adventurousness
The facts
The implications
Subscription models could overcome price barrier to pod machine purchase
The facts
The implications
Scope to reposition decaffeinated coffee as an evening drink
The facts
The implications
THE MARKET WHAT YOU NEED TO KNOW
Topline growth masks mixed segment performances
Inflation to support value growth
Instant coffee remains under pressure
Growth of ground and beans continues
Pods value growth slows on stalling volumes
Ageing population should underpin coffee sales
Commodity prices on the rise, incomes set to be squeezed
MARKET SIZE AND FORECAST
Topline growth masks mixed segment performances
Figure 10: UK retail value and volume sales of coffee*, 2012-22
Inflation to support value growth
Figure 11: Forecast of UK retail value sales of coffee*, 2012-22
Figure 12: Forecast of UK retail volume sales of coffee*, 2012-22
Forecast methodology
MARKET SEGMENTATION
Instant coffee remains under pressure
Figure 13: UK retail value and volume sales of instant coffee, 2012-22
Figure 14: Forecast of UK retail value sales of instant coffee, 2012-22
Growth of ground and beans continues
Figure 15: UK retail value and volume sales of ground coffee/coffee beans, 2012-22
Figure 16: Forecast of UK retail value sales of ground coffee/coffee beans, 2012-22
Pods value growth slows on stalling volumes
Figure 17: UK retail value and volume sales of coffee pods, 2012-22
Figure 18: Forecast of UK retail value sales of coffee pods, 2012-22
MARKET DRIVERS
Ageing population should underpin coffee sales
Figure 19: Trends in the age structure of the UK population, 2012-17 and 2017-22
Coffee shops offer competition and inspiration
Growth in hot beverage appliances slows
Weakened Pound points to rising retail prices
Household incomes set to be squeezed
COMPANIES AND BRANDS WHAT YOU NEED TO KNOW
Instant coffee market remains under Nestls stronghold
Leading ground/beans brand Taylors loses share as sales fall
Private label grows its share of NPD
Operators explore premium coffee
Adspend falls in 2016
MARKET SHARE
Nestl retains stronghold on instant coffee market
Figure 20: Leading manufacturers sales and shares in the UK retail instant coffee market, by value and volume, 2015/16 and 2016/17
Micro-ground buoys sales for Nescaf and Kenco
Figure 21: Leading brands value sales and shares in the UK retail instant coffee market, 2015/16 and 2016/17
Figure 22: Leading brands volume sales and shares in the UK retail instant coffee market, 2015/16 and 2016/17
Own-label posts growth across the board
Leading ground/beans brand Taylors loses share as sales fall
Figure 23: Leading brands sales and shares in the UK retail ground coffee/coffee beans market (excluding coffee pods), by value and volume, 2015/16 and 2016/17
LAUNCH ACTIVITY AND INNOVATION
New products grew in 2016
Figure 24: Share of new product launches in the UK coffee market, by format, 2013-17
Nestl retains its position as top in NPD
Figure 25: Share of new product launches in the UK coffee market, by company (sorted by 2016), 2013-17
JDE introduces luxury brand LOR to the UK market
Taylors unveils single-origin range
Caff Nero makes first foray into retail
Compostable pod launches look to tackle waste
Ethical claims grow
Figure 26: Share of new product launches in the UK coffee market, by top 10 claims, 2013-17
ADVERTISING AND MARKETING ACTIVITY
Adspend falls in 2016
Figure 27: Above-the-line, online display and direct mail advertising expenditure on coffee, 2013-17
Nestl ups adspend
Nescaf targets Millennials in 2016 ad campaign
and on social media
Figure 28: Above-the-line, online display and direct mail advertising expenditure on coffee, by top 4 advertisers, 2013-17
Nespresso spend doubles in 2016
Lavazza supports Prontissimo!
JDE goes for gold with LOR campaign
Kenco continues Coffee vs Gang campaign
Nielsen Ad Intel coverage
THE CONSUMER WHAT YOU NEED TO KNOW
Instant coffee is the most commonly drunk type
Coffee pod machine ownership remains stable
Large supermarkets the most common purchase location
Strong interest in variety packs of coffee
Subscriptions with a free machine could foster pod growth
Majority of coffee drinkers are adventurous
A sizeable 24% consider themselves a coffee connoisseur
Most coffee drinkers pay attention to flavour descriptions
Origin details denote quality
COFFEE DRINKING AT HOME
Instant coffee is the most commonly drunk type
Figure 29: Types of coffee drunk, June 2017
Over-55s most likely to drink coffee; 25-34s have the widest repertoire
Coffee mixes and chilled RTD coffee peak among 16-24s
Figure 30: Frequency of drinking coffee, by type, June 2017
Decaf drunk by just 17% of coffee drinkers
Figure 31: Drinking of standard and decaffeinated coffee, June 2017
OWNERSHIP OF COFFEE POD MACHINES
Coffee pod machine ownership remains stable
A quarter of Brits interested in buying a coffee pod machine
Figure 32: Ownership of coffee pod machines, June 2017
Tassimo takes the pod machine crown
Figure 33: Type of coffee pod machine owned, June 2017
Pod machine owners remain frequent instant coffee drinkers
COFFEE PURCHASE CHANNELS
Large supermarkets the most common purchase location
Figure 34: Purchase channels for coffee, by type of coffee, June 2017
Nespresso owners most likely to use alternative purchase channels
Figure 35: Purchase channels for coffee pods in the last month, by type of coffee pod machine owned, June 2017
INTEREST IN COFFEE CONCEPTS
Variety packs echo interest in coffee experimentation
Strong interest in variety packs of coffee
Assortment packs are little explored in ground and instant coffee
Pack size poses a challenge for assortments
Figure 36: Interest in coffee product concepts, June 2017
Single-serve instant coffee sachets garner interest
Subscriptions with a free machine could foster pod growth
Evening coffee appeals to under-45s
A quarter of under-45s are interested in evening coffee
Scope to reposition decaf as an evening drink
BEHAVIOURS RELATING TO COFFEE
Majority of coffee drinkers are adventurous
Young coffee drinkers are the most adventurous
Frequent NPD needed to cater to love of newness
while a sizeable 24% consider themselves a coffee connoisseur
Figure 37: Behaviours relating to coffee, June 2017
Flavour descriptions and origin details important
Most coffee drinkers pay attention to flavour descriptions
Origin details denote quality
Recyclable coffee pods appeal
Cold-brew and nitro-brew coffee garners interest among the young
APPENDIX DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Abbreviations
Consumer research methodology
APPENDIX MARKET SIZE AND FORECAST
Forecast methodology
Figure 38: Total UK retail value sales of coffee*, best- and worst-case forecast, 2017-22
Figure 39: Total UK retail volume sales of coffee, best- and worst-case forecast*, 2017-22
APPENDIX MARKET SEGMENTATION
Instant coffee segment
Figure 40: Forecast of UK retail volume sales of instant coffee, 2012-22
Figure 41: Total UK retail value sales of instant coffee, best- and worst-case forecast, 2017-22
Figure 42: Total UK retail volume sales of instant coffee, best- and worst-case forecast, 2017-22
Ground coffee/coffee beans segment
Figure 43: Forecast of UK retail volume sales of ground coffee/coffee beans, 2012-22
Figure 44: Total UK retail value sales of ground coffee/coffee beans, best- and worst-case forecast, 2017-22
Figure 45: Total UK retail volume sales of ground coffee/coffee beans, best- and worst-case forecast, 2017-22
Coffee pods
Figure 46: Forecast of UK retail volume sales of coffee pods, 2012-22
Figure 47: Total UK retail value sales of coffee pods, best- and worst-case forecast, 2017-22
Figure 48: Total UK retail volume sales of coffee pods, best- and worst-case forecast, 2017-22
APPENDIX MARKET SHARE
Figure 49: Leading manufacturers sales and shares in the UK ground coffee/coffee beans market (excluding coffee pods), by value and volume, 2015/16 and 2016/17
APPENDIX LAUNCH ACTIVITY AND INNOVATION
Figure 50: Share of new product launches in the UK coffee market, by launch type, 2013-17
Figure 51: Share of new product launches in the UK coffee market, by branded and private label, 2013-17