By 2020, sales of packaged and ready-to-drink coffee are estimated to hit $18bn, according to Packaged Facts data published in its report Coffee and Ready-to-Drink Coffee: U.S. Retail market, 9th Edition.
Packaged Facts attributes the growth to a ‘culture of innovation,' adding: “The coffee category was built by iconic packaged goods brands that engineered the processes to create affordable coffee for the mass market. As the mass brands proliferated, a counter-trend developed. A second wave of roasters emerged, influenced by the artisanal quality of European coffee and the coffeehouse experience.”
The finding is in line with data from Euromonitor published last month, which found that premiumization is leading the way in the global coffee market. Subcategories such as cold brew are creating a buzz among consumers and attracting investors injecting cash into brands in these categories, such as High Brew.
The trend has also inspired entrepreneurs to push to new frontiers. This year saw the launch of probiotic cold brew line JÙS by Julie, as well as cultured coffee brand Afineur.
“The coffeehouse revolution created a new generation of consumers who appreciate premium and specialty coffee,” said David Sprinkle, research director, Packaged Facts. “Retailers see the generational shift in the coffee category playing out on supermarket shelves.”
Growth for refrigerated RTD, declines for ground and instant
Data in the report was collected using IRI data for mass-market channels, as well as both primary and secondary research, including consultations with coffee market sources, on-site examination of retail venues, Internet canvassing, and analysis of company reports and investor conference calls.
According to the data, the industry’s growth is largely driven by three segments: Single cup coffee, such as K-cups (up 8.3%), cappuccino/iced coffee (up 16.5%), and refrigerated ready-to-drink coffee (up 16%). Meanwhile, packaged 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,” the report said. In terms of dollar sales, ground coffee leads with $4bn, while single cup coffee trailed closely with $3.8bn.
Which channels are thriving?
Four retail channels comprise 87% of packaged coffee sales, led by grocery, accounting for 44% of dollar sales, followed by mass merchandisers, club, and convenience store sales.