Table of Contents
Executive Summary
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- The market
- Coffee market propped up by growth of pods
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- Figure 1: UK retail value sales of coffee, 2010-20
- Instant coffee’s woes continue
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- Figure 2: UK retail sales of coffee, by coffee type, 2012-14
- Companies, brands and innovation
- Nescafé leads in instant coffee
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- Figure 3: Leading brands’ shares in the UK retail instant coffee market, by value, 2014/15*
- Taylors retains the lead in ground coffee
- Above-the-line advertising grew by a further 6.4% in 2014
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- Figure 4: Recorded above-the-line, online display and direct mail total advertising expenditure on coffee. 2012-15*
- Next wave of coffee shop-to-retail product: cold brew and nitro
- Pods continue to gain share of NPD
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- Figure 5: New product launches in the UK coffee market, by format, 2011-14
- The consumer
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- Figure 6: Frequency of drinking coffee at home, by type, June 2015
- Leading instant brands have failed to embrace the craft movement
- More than a quarter express an interest in delivery coffee
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- Figure 7: Interest in types of coffee products and services, June 2015
- Cafetière is the most widely owned coffee system, but many owners don’t use them
- One in five own a coffee pod machine
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- Figure 8: Types of coffee system owned, June 2015
- Interest in origin is significant, even in instant coffee
- Coffee is ideally placed to capitalise on health concerns around CSDs
- Replicating the coffee shop experience is at the centre of successful NPD
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- Figure 9: Attitudes towards coffee, June 2015
- What we think
Issues and Insights
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- Instant coffee set for a long, slow decline
- The facts
- The implications
- Pod sales break through £100 million for the first time in 2014
- The facts
- The implications
- Instant coffee with artisan credentials sparks wide interest
- The facts
- The implications
The Market – What You Need to Know
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- Coffee market estimated at £1.1bn in 2015
- Instant coffee value sales set to decline by 9.1% by 2020
- Ground coffee sales expected to remain broadly similar
- Pod sales forecast to reach £373 million by 2020
- Ageing population is slowing the decline of instant coffee
- Coffee prices enduring a sustained period of volatility
Market Size and Forecast
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- Coffee market propped up by growth of pods
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- Figure 10: UK retail value and volume sales of coffee, 2010-20
- Figure 11: UK retail value sales of coffee, 2010-20
- Instant coffee’s woes continue
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- Figure 12: UK retail value and volume sales of instant coffee, 2010-20
- Figure 13: UK retail value and volume sales of instant coffee, 2010-20
- Volume sales of ground coffee/coffee beans remain flat
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- Figure 14: UK retail value and volume sales of ground coffee/coffee beans, 2010-20
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- Figure 15: UK retail value and volume sales of ground coffee/coffee beans, 2010-20
- Pods smash the £100 million mark for the first time
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- Figure 16: UK retail value and volume sales of coffee pods, 2010-20
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- Figure 17: UK retail value and volume sales of coffee pods, 2010-20
Market Drivers
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- Ageing population will slow instant coffee’s decline in the short term
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- Figure 18: Trends in the age structure of the UK population, 2010-15 and 2015-20
- EFSA takes positive stance on caffeine
- Coffee prices enduring a period of volatility
Key Players – What You Need to Know
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- Mondelēz and DE Merger makes JDE a serious challenger in instant coffee
- Own-label continues to lose out
- Nescafé Azera’s strong performance balances decline of Nescafé’s core brands
- Taylors retains the lead in ground coffee
- Coffee adspend rises for the fourth consecutive year
- Pods accounted for 18% of new coffee product launches in 2014
- Cold brew and nitro coffee set to move form high-street to retail
Market Share
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- Mondelēz and DE Merger makes JDE a serious challenger in instant coffee
- Own-label continues to lose out
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- Figure 19: Leading manufacturers’ sales and shares in the UK retail instant coffee market, by value, 2013/14 and 2014/15
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- Figure 20: Leading manufacturers’ sales and shares in the UK retail instant coffee market, by volume, 2013/14 and 2014/15
- Microground helping to slow the value decline
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- Figure 21: Leading brands’ sales and shares in the UK retail instant coffee market, by value, 2013/14 and 2014/15
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- Figure 22: Leading brands’ sales and shares in the UK retail instant coffee market, by volume, 2013/14 and 2014/15
- Lavazza continues to benefit from its partnership with Wimbledon
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- Figure 23: Leading brands’ sales and shares in the UK retail ground coffee market, by value, 2013/14 and 2014/15
Brand Communication and Promotion
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- Coffee adspend rises for the fourth consecutive year
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- Figure 24: Recorded above-the-line, online display and direct mail total advertising expenditure on coffee, by advertiser, 2012-15*
- Nescafé Azera encourages consumers to “be their own Barista”
- Kenco’s Coffee vs Gangs should hit the right note with ethically minded consumers
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- Figure 25: Recorded above-the-line, online display and direct mail total advertising expenditure on coffee, by highest spend, 2012-15*
Launch Activity and Innovation
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- Pods continue to account for an increasing share of innovation
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- Figure 26: New product launches in the UK coffee market, by format, 2011-14
- Coffee shop trends continue to influence the retail offering
- Next wave of coffee shop to retail: cold brew and nitro
- Nitro offers a next step for cold brew
- The next step for ethical coffee
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- Figure 27: Share of new coffee/tea/chocolate launches in the UK carrying an ethical/environmental claim, 2012-14
The Consumer – What You Need to Know
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- Usage of instant coffee drops
- Key to short-term volume growth in ground coffee is boosting frequency
- Younger consumers have extensive repertoires, while older consumers are more refined
- Leading instant brands have failed to embrace the craft movement
- More than a quarter express an interest in delivery coffee
- Ethical claims become more targeted
- Cafetière is the most widely owned, but isn’t being fully utilised
- One in five own a coffee pod machine
- Interest in origin is significant, even in instant coffee
- Coffee is ideally place to capitalise on health concerns around CSDs
- Replicating the coffee shop experience is at the centre of successful NPD
Usage of Coffee
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- Usage of instant coffee drops
- Key to short-term volume growth in ground coffee is boosting frequency
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- Figure 28: Types of coffee drunk at home, April 2014 and June 2015
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- Figure 29: Frequency of drinking coffee at home, by type, June 2015
- Younger consumers have extensive repertoires
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- Figure 30: Repertoire of coffee usage, June 2015
Interest in Coffee Products and Services
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- Leading instant brands have failed to embrace the craft movement
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- Figure 31: Interest in types of coffee products and services
- More than a quarter express an interest in delivery coffee
- Readymade coffee
- Fresh coffee subscriptions
- Subscription businesses will need a brick and mortar presence for scale
- Ethical claims become more targeted
Types of Coffee System Owned
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- Cafetière is the most widely owned, but isn’t being fully utilised
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- Figure 32: Types of coffee system owned, June 2015
- One in five own a coffee pod machine
- Cost and lack of usage are the key reasons for not buying a coffee system
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- Figure 33: Reasons for not owning a coffee system, June 2015
Attitudes towards Coffee
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- Interest in origin is significant
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- Figure 34: Attitudes towards coffee, June 2015
- Coffee is ideally placed to capitalise on health concerns around CSDs
- Replicating the coffee shop experience is at the centre of successful NPD
Appendix – Data Sources, Abbreviations and Supporting Information
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- Abbreviations
- Fan chart forecast
Appendix – Market Size and Forecast
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- Figure 35: UK retail volume sales of coffee, 2010-20
- Figure 36: UK retail volume sales of instant coffee, 2010-20
- Figure 37: UK retail volume sales of ground coffee/coffee beans, 2010-20
- Figure 38: UK retail volume sales of coffee pods, 2010-20
- Best- and worst-case forecasts
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- Figure 39: UK retail coffee market, value sales, best- and worst-case forecast, 2015-20
- Figure 40: UK retail coffee market, volume sales, best- and worst-case forecast, 2015-20
- Figure 41: UK retail instant coffee market, value sales, best- and worst-case forecast, 2015-20
- Figure 42: UK retail instant coffee market, volume sales, best- and worst-case forecast, 2015-20
- Figure 43: UK retail ground coffee market, value sales, best- and worst-case forecast, 2015-20
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- Figure 44: UK retail ground coffee market, volume sales, best- and worst-case forecast, 2015-20
- Figure 45: UK retail pod coffee market, value sales, best- and worst-case forecast, 2015-20
- Figure 46: UK retail pod coffee market, volume sales, best- and worst-case forecast, 2015-20
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