The COVID-19 pandemic resulted in more coffee being consumed at home, supporting the retail growth of coffee. Consumers developed new consumption and shopping habits in 2020, and many bought equipment to make their own coffee, such as coffee machines.
The growing consumer desire to recreate a barista experience at home has represented a good growth opportunity for foodservice coffee chain brands grappling with disruption to traditional footfall, especially amongst office workers and commuters. Indeed, the pandemic has, unsurprisingly, accelerated foodservice players’ investment in retailing, as retail has become an increasingly important channel for packaged coffee.
The sharp reduction in consumption occasions in foodservice channels has completely changed the operating landscape for hot drinks. Channel shifts, accelerated by the COVID-19 pandemic, have required significant and strategic business changes to adapt to new consumer demands.
Temporary outlet closures and takeaway-only schemes cut foodservice sales of coffee significantly in the UK in 2020. Despite rebound in 2021, the channel is only expected to recover to the pre-pandemic level of volume sales in 2023, although there remains uncertainty over the outlook.
Remote working is likely to be here to stay, and the industry is aggressively seeking to mix its offerings to reach the new class of white-collar workers who primarily work remotely. This will lead to a major focus on at-home consumption even from high-street brands, resulting in new product developments and enhancing direct-to-consumer sales models, such as speciality coffee subscriptions.
Meanwhile, multiple factors are driving up input costs, due to several issues from the supply side and increasing uncertainty. Indeed, given a surge in the prices of green coffee, harvest issues due to droughts, as well as rising costs and labour shortages, coffee prices are rising, and this is set to continue.
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This is the aggregation of fresh coffee and instant coffee. Please note that foodservice sales of coffee are volumes sold to the on-trade (foodservice) sector and not those sold to the consumer.See All of Our Definitions
This report originates from Passport, our Coffee research and analysis database.
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