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Coffee and Tea - Canada - June 2016

Coffee and tea are integral to how Canadians eat and drink. Coffee has been an area of growth in Canada, spurred on by its emergence as a strategic focus based on its ability to support traffic growth at foodservice and the rise of convenient and customizable single-serve format at retail. Tea holds strong associations with health and wellness and is a staple across many countries, including those that represent significant sources of immigration to Canada. Coffee’s sales growth has outpaced tea’s significantly, scoring more points with the consumer around innovation. For tea, however, growth opportunities exist in leveraging its strong associations with health with messaging around innovation and revitalization.

  • Tea owns health, but not innovation
  • Young consumers claim they are less likely to drink brewed coffee
  • Single-serve coffee meets with challenges

Coffee

  • Freshly brewed, drip or French press coffee
  • Specialty/espresso-based coffees (eg, cappuccino, etc)
  • Chilled ready-to-drink coffee (eg Starbucks’ Frappuccino, Iced Coffee)
  • Instant coffee
Instant coffee

Tea

  • Black tea (eg standard, Earl Grey, orange pekoe)
  • Green Tea
  • Fruit/Herbal/Botanical Tea

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Table of contents

  1. Overview

    • What you need to know
      • Definition
        • Consumer information:
        • Executive Summary

          • The issues
            • Tea owns health, but not innovation
              • Figure 1: Total market volume consumption per capita – Coffee and tea, 2008-15
            • Young consumers claim they are less likely to drink brewed coffee
              • Figure 2: Percent of consumers who agree “I am concerned about the negative health effects of caffeine”, by age, March 2016
            • Single-serve coffee meets with challenges
              • The opportunities
                • Cold brew heats up coffee innovation
                  • Figure 3: Percent of consumers who show an interest in ready-to-drink cold-brew coffee, by age, March 2016
                • Revitalization is ‘up for grabs’
                  • Figure 4: Percent of consumers who associate “revitalization” with green tea, by age, March 2016
                • Immigration from Asia can help spur tea growth
                  • Figure 5: Tea and coffee usage among Chinese Canadians and the overall population, March 2016
                • What it means
                • The Market – What You Need to Know

                  • Coffee volume sales growth outpacing tea
                    • Immigration represents an opportunity for tea
                      • Age impacts coffee preferences
                      • Market Size and Forecast

                        • Coffee shows dynamic growth
                          • Figure 6: Canadian coffee volume and fan chart forecast of total market, 2011-21
                          • Figure 7: Canadian coffee sales and fan chart forecast of retail market, at current prices, 2011-21
                          • Figure 8: Retail Canadian coffee sales and forecast of market, at current prices, 2011-21
                        • Tea’s growth modest compared to coffee
                          • Figure 9: Canadian tea volume and fan chart forecast of total market, 2011-21
                          • Figure 10: Canadian tea sales and fan chart forecast of retail market, at current prices, 2011-21
                          • Figure 11: Retail Canadian sales and forecast of market, at current prices, 2011-21
                        • Canadians moving to non-retail venues in sourcing tea
                          • Figure 12: Coffee’s share of volume between retail and other venues, 2011-15
                          • Figure 13: Tea’s share of volume between retail and other venues, 2011-15
                      • Market Factors

                        • Immigration fuelling Canada’s population growth
                          • Figure 14: Foreign-born share of population by G7 countries and Australia
                        • Focus on health and weight management to continue
                          • Figure 15: Body mass index, self-reported rate of being overweight or obese among Canadian adults, by gender, 2010-14
                        • Canada’s aging population likely to influence coffee and tea consumption habits
                          • Figure 16: Population over 65 in Canada, historical and projected (% of total), 1971-2061
                      • Key Players – What You Need to Know

                        • Category innovation driving coffee growth
                          • Opportunities for tea to be reinvigorated at retail
                            • Nitro cold brew to give iced coffee a boost
                            • What’s Working?

                              • Coffee’s growth reflective of category innovation
                              • What’s Struggling?

                                • Keurig’s single-serve challenged with 2.0 launch
                                  • Tea market stagnant compared to coffee
                                  • What’s Next?

                                    • Coffee looks to spur on continued growth with added benefits
                                      • Figure 17: Starbucks Doubleshot Coffee and Protein Beverage (US), June 2015
                                      • Figure 18: Super Rebbl Herbs Maca Cold-Brew Coffee and Coconut Milk (US), June 2015
                                      • Figure 19: Maxwell House Blend Iced Coffee Concentrate (US), March 2015
                                    • Nitro coffee at the forefront of the “third wave”
                                      • ‘Non-traditional’ varieties to garner a greater share of tea usage
                                        • Figure 20: Share of tea launches in Canada, by flavour, 2011-15
                                        • Figure 21: DAVIDsTEA Peanut Butter Cup Fruit Infusion Tea (Canada), December 2015
                                        • Figure 22: Tea Squared Nourish The Soul Tea, Be Fit Tea and Sleepyhead tea (Canada), November 2015
                                        • Figure 23: Laura Secord Organic Teas (Canada), December 2015
                                        • Figure 24: Beauty House Urn-Fermented Kombucha (China), May 2016
                                      • Tea ventures into pods
                                      • The Consumer – What You Need to Know

                                        • Coffee surpasses tea in perceived consumption
                                          • Tea preferences are changing
                                            • Specialty coffee owns perceptions around innovation
                                            • Coffee and Tea Usage

                                              • Canadians are more likely to drink coffee than tea
                                                • Figure 25: Coffee and tea usage, March 2016
                                              • Tea preferences vary by age
                                                • Figure 26: Black and green tea usage, by age, March 2016
                                                • Figure 27: Top claims on tea – share of total launches in North America, 2015
                                              • Brewed coffee’s popularity increases with age
                                                • Figure 28: Coffee usage, by age, March 2016
                                            • Consumption Drivers

                                              • Consumers hold different associations with coffee and tea
                                                • Figure 29: Associations with coffee and tea, by type – Correspondence map, March 2016
                                              • Specialty and chilled coffee own innovation
                                                • Figure 30: Specialty-based and chilled ready-to-drink coffees’ association with being ‘innovative’, by age, March 2016
                                                • Figure 31: Chilled ready-to-drink coffees’ association with being ‘as a snack on its own’, by age, March 2016
                                              • Brewed coffee consumption supported by habit
                                                  • Figure 32: Love Grace Mocha Dairy Free Cold-Brewed Coffee Blend, US, October 2015
                                                • Tea and health are synonymous
                                                  • Figure 33: Share of consumers who agree coffee is healthier to drink than coffee and vice versa, by age, March 2016
                                              • Opportunities for Innovation

                                                • Consumers place more emphasis on ingredients for tea over coffee
                                                  • Figure 34: Interest in ingredient-based innovation, coffee vs tea, March 2016
                                                • Significant share of consumers interested in new coffee and tea flavours
                                                  • Figure 35: Agreement with trying different flavours of coffee/tea, by age, March 2016
                                                  • Figure 36: Agreement with concern over caffeine and impact of strength, by age, March 2016
                                                • Provenance continues to be an opportunity for coffee and tea
                                                  • Figure 37: Interest in international flavoured coffee and tea, by age, March 2016
                                                • Tea and coffee as stress reducers and energy enhancers
                                                  • Figure 38: Coffee and tea associations, by age, March 2016
                                                • Single-serve growth is encountering challenges
                                                  • Figure 39: Share of consumers who agree single coffee/tea pods should be compostable or biodegradable, by age, March 2016
                                                • Over half of Canadians are interested in concentrate
                                                  • Figure 40: Share of consumers interested in coffee/tea concentrate, by age, March 2016
                                                  • Figure 41: Maxwell House Blend Iced Coffee Concentrate, US, March 2015
                                              • Opportunities for Innovation by Gender

                                                • Women are more interested in tea with health benefits
                                                  • Figure 42: Interest in health benefits in coffee and tea, by gender, March 2016
                                                • Cold brew demand varies by gender
                                                  • Figure 43: Interest in RTD cold brew and grounds/leaves tailored to cold brewing, by gender, March 2016
                                              • Consumer Groups

                                                • Women are more likely to respond to tea innovation
                                                  • Figure 44: Coffee and tea usage, by gender, March 2016
                                                  • Figure 45: Tea interest, by gender, March 2016
                                                • Chinese Canadians more likely to drink tea and specialty coffee
                                                  • Figure 46: Coffee and tea usage, Chinese Canadians vs overall population, March 2016
                                                • Similarities outweigh differences between Canada and the US
                                                  • Figure 47: Retail market volume consumption per capita (population) – Coffee, Canada vs US, 2008-15
                                                  • Figure 48: Retail market volume consumption per capita (population) – Tea, Canada vs US, 2008-15
                                                  • Figure 49: Coffee shop spend as a proportion of GDP, Canada vs US, 2007 and 2015
                                                  • Figure 50: Coffee (and tea) pods/caps, single-serve usage, Canada vs US, by age, March 2016
                                              • Foodservice

                                                • Quality, value and convenience are the top visit drivers for coffee shops
                                                  • Figure 51: Factors behind foodservice visits, March 2016
                                                • Visit drivers vary across age groups
                                                  • Figure 52: Loyalty programs as a driver to visit coffee shops, by income, March 2016
                                                • How consumers perceive select foodservice operators – in their words
                                                  • Starbucks
                                                    • Tim Hortons
                                                      • McDonald’s
                                                        • Second Cup
                                                        • Appendix – Data Sources and Abbreviations

                                                          • Data sources
                                                            • Sales data
                                                              • Fan chart forecast
                                                                • Consumer survey data
                                                                  • Consumer qualitative research
                                                                    • Abbreviations and terms
                                                                      • Abbreviations
                                                                      • Appendix – Market

                                                                          • Figure 53: Canadian coffee volume and fan chart forecast of retail market, 2011-21
                                                                          • Figure 54: Canadian coffee volume and fan chart forecast of other market, 2011-21
                                                                          • Figure 55: Canadian tea volume and fan chart forecast of retail market, 2011-21
                                                                          • Figure 56: Canadian tea volume and fan chart forecast of other market, 2011-21

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                                                                      Coffee and Tea - Canada - June 2016

                                                                      US $3,995.00 (Excl.Tax)