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Coffee - UK - August 2015

“Instant coffee, which still accounts almost three quarters of all value sales of UK coffee, has seen a sales fall as it loses drinkers. Meanwhile the pods segment continues to go from strength to strength.”
– Douglas Faughnan, Senior Food and Drink Analyst

This report discusses the following key topics:

  • Instant coffee set for a long, slow decline
  • Pod sales break through £100 million for the first time in 2014
  • Instant coffee with artisan credentials sparks wide interest

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Table of contents

  1. Overview

    • What you need to know
      • Covered in this report
      • Executive Summary

          • The market
            • Coffee market propped up by growth of pods
              • Figure 1: UK retail value sales of coffee, 2010-20
            • Instant coffee’s woes continue
              • Figure 2: UK retail sales of coffee, by coffee type, 2012-14
            • Companies, brands and innovation
              • Nescafé leads in instant coffee
                • Figure 3: Leading brands’ shares in the UK retail instant coffee market, by value, 2014/15*
              • Taylors retains the lead in ground coffee
                • Above-the-line advertising grew by a further 6.4% in 2014
                  • Figure 4: Recorded above-the-line, online display and direct mail total advertising expenditure on coffee. 2012-15*
                • Next wave of coffee shop-to-retail product: cold brew and nitro
                  • Pods continue to gain share of NPD
                    • Figure 5: New product launches in the UK coffee market, by format, 2011-14
                  • The consumer
                    • Figure 6: Frequency of drinking coffee at home, by type, June 2015
                  • Leading instant brands have failed to embrace the craft movement
                    • More than a quarter express an interest in delivery coffee
                      • Figure 7: Interest in types of coffee products and services, June 2015
                    • Cafetière is the most widely owned coffee system, but many owners don’t use them
                      • One in five own a coffee pod machine
                        • Figure 8: Types of coffee system owned, June 2015
                      • Interest in origin is significant, even in instant coffee
                        • Coffee is ideally placed to capitalise on health concerns around CSDs
                          • Replicating the coffee shop experience is at the centre of successful NPD
                            • Figure 9: Attitudes towards coffee, June 2015
                          • What we think
                          • Issues and Insights

                            • Instant coffee set for a long, slow decline
                              • The facts
                                • The implications
                                  • Pod sales break through £100 million for the first time in 2014
                                    • The facts
                                      • The implications
                                        • Instant coffee with artisan credentials sparks wide interest
                                          • The facts
                                            • The implications
                                            • The Market – What You Need to Know

                                              • Coffee market estimated at £1.1bn in 2015
                                                • Instant coffee value sales set to decline by 9.1% by 2020
                                                  • Ground coffee sales expected to remain broadly similar
                                                    • Pod sales forecast to reach £373 million by 2020
                                                      • Ageing population is slowing the decline of instant coffee
                                                        • Coffee prices enduring a sustained period of volatility
                                                        • Market Size and Forecast

                                                          • Coffee market propped up by growth of pods
                                                            • Figure 10: UK retail value and volume sales of coffee, 2010-20
                                                            • Figure 11: UK retail value sales of coffee, 2010-20
                                                          • Instant coffee’s woes continue
                                                              • Figure 12: UK retail value and volume sales of instant coffee, 2010-20
                                                              • Figure 13: UK retail value and volume sales of instant coffee, 2010-20
                                                            • Volume sales of ground coffee/coffee beans remain flat
                                                              • Figure 14: UK retail value and volume sales of ground coffee/coffee beans, 2010-20
                                                              • Figure 15: UK retail value and volume sales of ground coffee/coffee beans, 2010-20
                                                            • Pods smash the £100 million mark for the first time
                                                              • Figure 16: UK retail value and volume sales of coffee pods, 2010-20
                                                              • Figure 17: UK retail value and volume sales of coffee pods, 2010-20
                                                          • Market Drivers

                                                            • Ageing population will slow instant coffee’s decline in the short term
                                                              • Figure 18: Trends in the age structure of the UK population, 2010-15 and 2015-20
                                                            • EFSA takes positive stance on caffeine
                                                              • Coffee prices enduring a period of volatility
                                                              • Key Players – What You Need to Know

                                                                • Mondelēz and DE Merger makes JDE a serious challenger in instant coffee
                                                                  • Own-label continues to lose out
                                                                    • Nescafé Azera’s strong performance balances decline of Nescafé’s core brands
                                                                      • Taylors retains the lead in ground coffee
                                                                        • Coffee adspend rises for the fourth consecutive year
                                                                          • Pods accounted for 18% of new coffee product launches in 2014
                                                                            • Cold brew and nitro coffee set to move form high-street to retail
                                                                            • Market Share

                                                                              • Mondelēz and DE Merger makes JDE a serious challenger in instant coffee
                                                                                • Own-label continues to lose out
                                                                                  • Figure 19: Leading manufacturers’ sales and shares in the UK retail instant coffee market, by value, 2013/14 and 2014/15
                                                                                  • Figure 20: Leading manufacturers’ sales and shares in the UK retail instant coffee market, by volume, 2013/14 and 2014/15
                                                                                • Microground helping to slow the value decline
                                                                                  • Figure 21: Leading brands’ sales and shares in the UK retail instant coffee market, by value, 2013/14 and 2014/15
                                                                                  • Figure 22: Leading brands’ sales and shares in the UK retail instant coffee market, by volume, 2013/14 and 2014/15
                                                                                • Lavazza continues to benefit from its partnership with Wimbledon
                                                                                    • Figure 23: Leading brands’ sales and shares in the UK retail ground coffee market, by value, 2013/14 and 2014/15
                                                                                • Brand Communication and Promotion

                                                                                  • Coffee adspend rises for the fourth consecutive year
                                                                                    • Figure 24: Recorded above-the-line, online display and direct mail total advertising expenditure on coffee, by advertiser, 2012-15*
                                                                                  • Nescafé Azera encourages consumers to “be their own Barista”
                                                                                    • Kenco’s Coffee vs Gangs should hit the right note with ethically minded consumers
                                                                                      • Figure 25: Recorded above-the-line, online display and direct mail total advertising expenditure on coffee, by highest spend, 2012-15*
                                                                                  • Launch Activity and Innovation

                                                                                    • Pods continue to account for an increasing share of innovation
                                                                                      • Figure 26: New product launches in the UK coffee market, by format, 2011-14
                                                                                    • Coffee shop trends continue to influence the retail offering
                                                                                      • Next wave of coffee shop to retail: cold brew and nitro
                                                                                        • Nitro offers a next step for cold brew
                                                                                          • The next step for ethical coffee
                                                                                            • Figure 27: Share of new coffee/tea/chocolate launches in the UK carrying an ethical/environmental claim, 2012-14
                                                                                        • The Consumer – What You Need to Know

                                                                                          • Usage of instant coffee drops
                                                                                            • Key to short-term volume growth in ground coffee is boosting frequency
                                                                                              • Younger consumers have extensive repertoires, while older consumers are more refined
                                                                                                • Leading instant brands have failed to embrace the craft movement
                                                                                                  • More than a quarter express an interest in delivery coffee
                                                                                                    • Ethical claims become more targeted
                                                                                                      • Cafetière is the most widely owned, but isn’t being fully utilised
                                                                                                        • One in five own a coffee pod machine
                                                                                                          • Interest in origin is significant, even in instant coffee
                                                                                                            • Coffee is ideally place to capitalise on health concerns around CSDs
                                                                                                              • Replicating the coffee shop experience is at the centre of successful NPD
                                                                                                              • Usage of Coffee

                                                                                                                • Usage of instant coffee drops
                                                                                                                  • Key to short-term volume growth in ground coffee is boosting frequency
                                                                                                                    • Figure 28: Types of coffee drunk at home, April 2014 and June 2015
                                                                                                                    • Figure 29: Frequency of drinking coffee at home, by type, June 2015
                                                                                                                  • Younger consumers have extensive repertoires
                                                                                                                    • Figure 30: Repertoire of coffee usage, June 2015
                                                                                                                • Interest in Coffee Products and Services

                                                                                                                  • Leading instant brands have failed to embrace the craft movement
                                                                                                                      • Figure 31: Interest in types of coffee products and services
                                                                                                                    • More than a quarter express an interest in delivery coffee
                                                                                                                      • Readymade coffee
                                                                                                                        • Fresh coffee subscriptions
                                                                                                                          • Subscription businesses will need a brick and mortar presence for scale
                                                                                                                            • Ethical claims become more targeted
                                                                                                                            • Types of Coffee System Owned

                                                                                                                              • Cafetière is the most widely owned, but isn’t being fully utilised
                                                                                                                                • Figure 32: Types of coffee system owned, June 2015
                                                                                                                              • One in five own a coffee pod machine
                                                                                                                                • Cost and lack of usage are the key reasons for not buying a coffee system
                                                                                                                                  • Figure 33: Reasons for not owning a coffee system, June 2015
                                                                                                                              • Attitudes towards Coffee

                                                                                                                                • Interest in origin is significant
                                                                                                                                  • Figure 34: Attitudes towards coffee, June 2015
                                                                                                                                • Coffee is ideally placed to capitalise on health concerns around CSDs
                                                                                                                                  • Replicating the coffee shop experience is at the centre of successful NPD
                                                                                                                                  • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                                                      • Abbreviations
                                                                                                                                        • Fan chart forecast
                                                                                                                                        • Appendix – Market Size and Forecast

                                                                                                                                            • Figure 35: UK retail volume sales of coffee, 2010-20
                                                                                                                                            • Figure 36: UK retail volume sales of instant coffee, 2010-20
                                                                                                                                            • Figure 37: UK retail volume sales of ground coffee/coffee beans, 2010-20
                                                                                                                                            • Figure 38: UK retail volume sales of coffee pods, 2010-20
                                                                                                                                          • Best- and worst-case forecasts
                                                                                                                                            • Figure 39: UK retail coffee market, value sales, best- and worst-case forecast, 2015-20
                                                                                                                                            • Figure 40: UK retail coffee market, volume sales, best- and worst-case forecast, 2015-20
                                                                                                                                            • Figure 41: UK retail instant coffee market, value sales, best- and worst-case forecast, 2015-20
                                                                                                                                            • Figure 42: UK retail instant coffee market, volume sales, best- and worst-case forecast, 2015-20
                                                                                                                                            • Figure 43: UK retail ground coffee market, value sales, best- and worst-case forecast, 2015-20
                                                                                                                                            • Figure 44: UK retail ground coffee market, volume sales, best- and worst-case forecast, 2015-20
                                                                                                                                            • Figure 45: UK retail pod coffee market, value sales, best- and worst-case forecast, 2015-20
                                                                                                                                            • Figure 46: UK retail pod coffee market, volume sales, best- and worst-case forecast, 2015-20

                                                                                                                                        Companies Covered

                                                                                                                                        To learn more about the companies covered in this report please contact us.

                                                                                                                                        Coffee - UK - August 2015

                                                                                                                                        US $2,648.76 (Excl.Tax)