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Strategy Briefing

Coffee Machines: The New Normal

52 pages, Jun 2014

US$1,325

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About This Report

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The coffee machine market is entering a new normal. Pod coffee machines in North America and Western Europe are a consolidated reality and globally, premiumisation is over. 20% of growth in pod coffee machines now comes from non-traditional coffee drinking markets. In the US, new premium entrants must face Keurig’s undisputed leadership. In Western Europe it is now time for open brewing systems to go premium, leveraging the individuality and localisation trends driving value in foodservice.

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Overview

Why buy this report?

Gain competitive intelligence about market leaders. Track key industry trends, opportunities and threats. Inform your marketing, brand, strategy and market development, sales and supply functions.

Aspirational/lifestyle consumption will drive sales of pod coffee machines

Over 20% of the growth expected over 2013-2018 will come from non-coffee-drinking markets. The popularity of specialist coffee shops is fuelling demand for a premium coffee. In this context, ease of use and consistent brewing results are driving middle class consumers to switch from instant coffee to pod coffee machines to replicate the same experience at home.

Time to focus on premium standard machines in Western Europe

Increased competition and retailers discounting in Western Europe is pushing prices down. However, here consumers still pay more than anywhere else for fresh ground coffee, preferring quality and taste over brand loyalty. Individuality and localisation – key in the development of premium specialist coffee shops – also indicates that consumers are happy to pay a premium for locally brewed coffee. This shows it could be the right time for open coffee brewing systems to go premium.

Brazil and Russia will drive sales of standard coffee machines

Over 2013-2018, the Brazilian filter coffee machine market is set to double in value to become the world's second largest market after the US. Over the same period, Russian sales of espresso coffee machines are expected to post the world’s largest real value growth.

Nearly half of the coffee machines sold are purchased in the US

Sales of Keurig’s pod coffee brewers are boosting the overall growth of the US coffee machine market. The US is forecast to account for over 40% of real value growth and 55% of volume growth globally over 2013-2018.

In the US it is not just about the coffee size, it is about the business model

Nespresso’s business model (one brand, one drink) will continue having a hard time in the US. Consumers here are loyal to few hot drink brands. They will pay a premium for a Keurig coffee machine because it brews all their favourite branded drinks at the touch of a button and at a price that is still perceived as reasonable.

What this report includes

Top-level strategic analysis of how major consumer trends will influence global markets
Consumer insight
Impact across all relevant consumer markets
Unique graphics and case studies
Key market snapshots
Accompanying presentation to synthesise main findings

Why buy this report

Identify factors driving change now and in the future
Understand motivation
Forward-looking outlook
Briefings and presentation should provoke lively discussion at senior level
Take a step back from micro trends
Get up to date estimates and comment

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Introduction

Scope

Pod and standard coffee machines: What is the difference?

Key findings

Global Overview

Setting the scene

Latin America remains world’s third largest market

The US still the most dynamic value market

Five markets alone to generate over 80% of sales growth

Open systems: Asia Pacific and Eastern Europe go premium

Eastern Europe and Latin America showing espresso potential

Espresso coffee machines: B2B drives value in Russia

Brazil drives global filter coffee machine value

But in Western Europe consumers still spend the most

Pod coffee machines: Premiumisation is over

Western Europe

Western Europe: Which coffee?

Pod coffee machines benefit from cuts on out-of-home expenditure

Coffee consumption indicates possibilities for developments

C hained specialist coffee shops vie with independent cafés

Coffee shops compete for every customer at every occasion

Western Europe favours coffee type and quality over coffee brand

Case study: The UK has emerging market potential

The UK outstrips traditional coffee drinking markets

Coffee machines sales slow down in mature coffee markets

The UK shows emerging market potential

Case study: The Southwest European markets

Coffee and pod coffee machines: Southern Europe

Consumers’ reaction to the recession varies across markets

Diverse consumer preferences and competitive scenarios

Foodservice pricing and existing traditional brewing key in Italy

In Portugal, Nespresso loses out to local players

The Case of Delta Coffee

Conclusions: Time to revive open systems in Western Europe?

The market fundamentals look right for a category turnaround

North America

North Americans prefer fresh coffee

Fresh coffee: Volume and value category breakdown

Love affair with coffee set to continue

North American consumers are loyal to just few coffee brands

… And devoted to one specialist coffee shop chain: Starbucks

The K f actor: S ame b rewing system, multiple coffee partners

Top fresh coffee companies partner with Green Mountain

It’s not just about the coffee format, it’s about the business model

Further Opportunities

Specialist coffee shops: Potential in non-coffee-drinking markets

Next coffee culture likely to develop in Asia Pacific

Aspirational coffee culture drive expenditure on pod brewers

Non-habitual coffee drinking markets drive future growth

Fresh coffee for the “experience”, instant for the convenience

Wrap-up

Why buy this report?

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Megatrends

Strategy Briefing

Coffee Machines: The New Normal

New Report Guarantee

About This Report

New Report Guarantee

Overview

Why buy this report?

Aspirational/lifestyle consumption will drive sales of pod coffee machines

Time to focus on premium standard machines in Western Europe

Brazil and Russia will drive sales of standard coffee machines

Nearly half of the coffee machines sold are purchased in the US

In the US it is not just about the coffee size, it is about the business model

What this report includes

Why buy this report

Want to find out more about this report?

Table of Contents

Introduction

Scope

Pod and standard coffee machines: What is the difference?

Key findings

Global Overview

Setting the scene

Latin America remains world’s third largest market

The US still the most dynamic value market

Five markets alone to generate over 80% of sales growth

Open systems: Asia Pacific and Eastern Europe go premium

Eastern Europe and Latin America showing espresso potential

Espresso coffee machines: B2B drives value in Russia

Brazil drives global filter coffee machine value

But in Western Europe consumers still spend the most

Pod coffee machines: Premiumisation is over

Western Europe

Western Europe: Which coffee?

Pod coffee machines benefit from cuts on out-of-home expenditure

Coffee consumption indicates possibilities for developments

C hained specialist coffee shops vie with independent cafés

Coffee shops compete for every customer at every occasion

Western Europe favours coffee type and quality over coffee brand

Case study: The UK has emerging market potential

The UK outstrips traditional coffee drinking markets

Coffee machines sales slow down in mature coffee markets

The UK shows emerging market potential

Case study: The Southwest European markets

Coffee and pod coffee machines: Southern Europe

Consumers’ reaction to the recession varies across markets

Diverse consumer preferences and competitive scenarios

Foodservice pricing and existing traditional brewing key in Italy

In Portugal, Nespresso loses out to local players

The Case of Delta Coffee

Conclusions: Time to revive open systems in Western Europe?

The market fundamentals look right for a category turnaround

North America

North Americans prefer fresh coffee

Fresh coffee: Volume and value category breakdown

Love affair with coffee set to continue

North American consumers are loyal to just few coffee brands

… And devoted to one specialist coffee shop chain: Starbucks

The K f actor: S ame b rewing system, multiple coffee partners

Top fresh coffee companies partner with Green Mountain

It’s not just about the coffee format, it’s about the business model

Further Opportunities

Specialist coffee shops: Potential in non-coffee-drinking markets

Next coffee culture likely to develop in Asia Pacific

Aspirational coffee culture drive expenditure on pod brewers

Non-habitual coffee drinking markets drive future growth

Fresh coffee for the “experience”, instant for the convenience

Wrap-up

Why buy this report?

Want to find out more about this report?

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