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Strategy Briefing

The Global Coffee Pods Market in 2017: The End of an Era?

May 2017

US$1,325

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About This Report

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If you purchase a report that is updated in the next 60 days, we will send you the new edition and data extract FREE!

Fresh ground coffee pods remain not only the fastest growing category of coffee, but of hot drinks in general. However, market maturity, high prices, intellectual property battles and sustainability concerns have started to cause this category to lose its lustre. Growth will still continue in pods’ core markets, but at a more subdued rate than in the recent past, as the gatekeepers to the major pod systems try to fend off a wave of new entrants to the category.

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Overview

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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.

The next few years will see a considerable slowdown in the growth rate of pods globally

The pods category grew at an average annual rate of 18% in real value terms over 2011-2016. This astounding growth rate was unsustainable, and slowed to single digits in 2016, which is predicted to continue for the foreseeable future. Even so, pods remain the best performing category not only in coffee, but in hot drinks in general.

The woes of Keurig in North America are the major reason for this slowdown

Consumers in Canada and the US fell in love with the Keurig system and its compatible K-cups during the early years of the review period, but a botched follow-up machine led to both the company and the category in general falling out of favour with consumers. Market maturity also played a major role in slowing North American growth. Because of this, Western Europe will resume being the central region for global growth, as was the case prior to 2010.

The high price of pod coffee remains a significant problem for the category

Coffee made from pods is comparatively much more expensive than alternative options. While this has made for healthy profit margins for companies, it has restricted the category’s appeal and made it vulnerable to disruption from newer, value-oriented products, especially private labels.

Prices are falling as a result of more brands entering the category

Patent expirations affecting the Nespresso and Keurig systems have opened the category up to a large number of new, value-oriented competitors. This has made the category more affordable, but has posed a challenge to the category’s model of getting the machines into the hands of consumers and profiting from high mark-up pods.

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Introduction

Scope

Key findings

Category Overview

The years of double-digit pod growth are over

Pods remain very much a developed world phenomenon

The developed world will remain the core of the category

Pods still playing a minor role in global consumption

The US is the new global centre of pod sales

The geographical picture should stay largely consistent

Income growth is not a driver of pod sales, unlike for coffee overall

Conclusions: Growth trends in pod coffee

Convenience is the driving factor behind pod machines growth

Pod machine sales are losing their edge over standard machines

Is there a hard ceiling on pod machine sales?

Most countries have not yet hit the peak

Conclusion: There are four types of markets for pod machines

Pods and Income

Pods are the most expensive type of coffee in all regions

Pods are not an affordable option in most developing markets

Wealth is important to pod consumption, but it is not everything

USD30,000 seems to be the key threshold

Brazil is the exception that proves the rule

Pods as inferior goods: The case of Spain

Conclusions: Pods and Income

Brand strategy

JAB Holdings makes a run at Nestl é for global pod dominance

Brand Strategy

Few areas escape the dominance of Nestlé or JAB

Nescafé Dolce Gusto: Nestlé aims for the lower end of the price tier

L’Or Espresso and JDE’s Nespresso dilemma

Caffisimo and the importance of branding in pods

Grupo Nutresa: Can developing world companies beat Nestl é ?

Private label brands are growing across the world

Conclusions: Competitive landscape

Slowdown in North America

Slowing growth in North America is shaking the category globally

Unmet potential still exists in North America

Keurig has not been able to follow up on its breakthrough machine

Can anyone challenge Keurig’s dominance?

Commodification

Prices have been falling since 2012

Patent expiration freed the Keurig and Nespresso systems

Commodification in action: The US

Commodification in action, part 2: Café Royal in Western Europe

Future Outlook

How can the consumer base of pods be expanded?

The sustainability challenge

Making pods more sustainable: Four main options

Premiumisation: Embracing the third wave

Super-premiumisation: Going for the very high end

What new functionalities are possible for machines?

Trends to look for in pods

Why buy this report?

Want to find out more about this report?

Request more information

Megatrends

Strategy Briefing

The Global Coffee Pods Market in 2017: The End of an Era?

New Report Guarantee

About This Report

New Report Guarantee

Overview

Why buy this report?

The next few years will see a considerable slowdown in the growth rate of pods globally

The woes of Keurig in North America are the major reason for this slowdown

The high price of pod coffee remains a significant problem for the category

Prices are falling as a result of more brands entering the category

Want to find out more about this report?

Table of Contents

Introduction

Scope

Key findings

Category Overview

The years of double-digit pod growth are over

Pods remain very much a developed world phenomenon

The developed world will remain the core of the category

Pods still playing a minor role in global consumption

The US is the new global centre of pod sales

The geographical picture should stay largely consistent

Income growth is not a driver of pod sales, unlike for coffee overall

Conclusions: Growth trends in pod coffee

Convenience is the driving factor behind pod machines growth

Pod machine sales are losing their edge over standard machines

Is there a hard ceiling on pod machine sales?

Most countries have not yet hit the peak

Conclusion: There are four types of markets for pod machines

Pods and Income

Pods are the most expensive type of coffee in all regions

Pods are not an affordable option in most developing markets

Wealth is important to pod consumption, but it is not everything

USD30,000 seems to be the key threshold

Brazil is the exception that proves the rule

Pods as inferior goods: The case of Spain

Conclusions: Pods and Income

Brand strategy

JAB Holdings makes a run at Nestl é for global pod dominance

Brand Strategy

Few areas escape the dominance of Nestlé or JAB

Nescafé Dolce Gusto: Nestlé aims for the lower end of the price tier

L’Or Espresso and JDE’s Nespresso dilemma

Caffisimo and the importance of branding in pods

Grupo Nutresa: Can developing world companies beat Nestl é ?

Private label brands are growing across the world

Conclusions: Competitive landscape

Slowdown in North America

Slowing growth in North America is shaking the category globally

Unmet potential still exists in North America

Keurig has not been able to follow up on its breakthrough machine

Can anyone challenge Keurig’s dominance?

Commodification

Prices have been falling since 2012

Patent expiration freed the Keurig and Nespresso systems

Commodification in action: The US

Commodification in action, part 2: Café Royal in Western Europe

Future Outlook

How can the consumer base of pods be expanded?

The sustainability challenge

Making pods more sustainable: Four main options

Premiumisation: Embracing the third wave

Super-premiumisation: Going for the very high end

What new functionalities are possible for machines?

Trends to look for in pods

Why buy this report?

Want to find out more about this report?

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