Coffee in the US

PROSPECTS

Growth in fresh ground coffee pods is slowest in recent history

For the past several years the growth of fresh ground coffee pods has been enough to compensate for declining retail sales in other coffee formats. However, pod growth rates are now a fraction of what they were in the recent past as the category has matured.

New push for functionality

Many new studies have appeared in recent years indicating that regular coffee consumption has a number of positive health effects, including reduced risk of diabetes, liver cirrhosis and even depression. The industry has been quick to seize upon this at a time when health and wellness concerns are increasingly shaping consumer buying behaviour.

Coffee goes into the cold

While traditional coffee formats are in decline, cold coffee/RTD coffee, tracked under soft drinks, is gaining ground. Cold brew continues to gain a greater share of foodservice, RTD and even at-home occasions, with newer formats such as nitro also becoming more prominent.

COMPETITIVE LANDSCAPE

Nestlé becomes the leading player in retail coffee

Because the American aversion to instant coffee has limited Nescafé’s importance and the Keurig system has blocked Nespresso from becoming the leading pod coffee format, Nestlé has in the past played a much less significant role in coffee in the US than in almost any other major global coffee market. This changed in 2018 with a multi-billion dollar deal with Starbucks that saw Nestlé gain the rights to use the coffee chain’s well-known brand name to sell retail coffee products.

Keurig looks beyond pods by joining with Dr Pepper

While Nestlé expanded its presence in US coffee by joining together with Starbucks, its major global rival JAB Holdings engineered a deal that merged Keurig Green Mountain Inc with the Dr Pepper Snapple Group, forming Keurig Dr Pepper Inc. Keurig’s leadership has signalled that the company will target new coffee occasions, likely as a response to its stagnant sales of fresh ground coffee pods.

Mainstream brand Folgers launches a premium spin-off

Folgers remains one of the most important brands in US coffee, although it has struggled to stay relevant to younger coffee drinkers and sales have been in constant decline. The JM Smucker Co sought to reverse that in 2018 by debuting a new, premium line of Folgers coffees known as 1850, designed to win back the younger consumers who have been abandoning the flagship brand for higher-end products.

Files are delivered directly into your account within a few minutes of purchase.