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Coffee - UK - August 2017

“While the market continues to enjoy value growth, recent stagnation in household penetration of coffee pod machines is curbing the volume performance. Exploring subscription models could tackle the barrier that the upfront cost of the machines poses. Meanwhile, variety packs featuring coffee with different roast styles and origins could help brands tap Brits’ desire for coffee adventures.”

- Anita Winther, Research Analyst

This report will look at the following areas:

  • Scope for instant coffee to capitalise on users' adventurousness
  • Subscription models could overcome price barrier to pod machine purchase
  • Scope to reposition decaffeinated coffee as an evening drink

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Table of contents

  1. Overview

    • What you need to know
      • Products covered in this Report
        • Excluded
        • Executive Summary

            • The market
              • Topline growth masks mixed segment performances
                • Inflation to support value growth
                  • Figure 1: Forecast of UK retail value sales of coffee*, 2012-22
                • Instant coffee remains under pressure
                  • Figure 2: UK retail value sales of coffee, by segment, 2012 and 2017
                • Growth of ground and beans continues
                  • Pods’ value growth slows on stalling volumes
                    • Ageing population should underpin coffee sales
                      • Commodity prices on the rise, incomes set to be squeezed
                        • Companies and brands
                          • Instant coffee market remains under Nestlé’s stronghold
                            • Figure 3: Leading manufacturers’ value shares in the UK retail instant coffee market, 2016/17*
                          • Leading ground/beans brand Taylors loses share as sales fall
                            • Figure 4: Leading manufacturers’ value shares in the UK retail ground coffee/coffee beans market (excluding coffee pods), 2016/17*
                          • Private label grows its share of NPD
                            • Operators explore premium coffee
                              • Adspend falls in 2016
                                • The consumer
                                  • Instant coffee is the most commonly drunk type
                                    • Figure 5: Types of coffee drunk, June 2017
                                  • Coffee pod machine ownership remains stable
                                    • Figure 6: Ownership of coffee pod machines, June 2017
                                  • Large supermarkets the most common purchase location
                                    • Figure 7: Purchase channels for coffee, by type of coffee, June 2017
                                  • Strong interest in variety packs of coffee
                                    • Subscriptions with a free machine could foster pod growth
                                      • Figure 8: Interest in coffee product concepts, June 2017
                                    • Majority of coffee drinkers are adventurous
                                      • A sizeable 24% consider themselves a coffee connoisseur
                                        • Most coffee drinkers pay attention to flavour descriptions
                                          • Origin details denote quality
                                            • Figure 9: Behaviours relating to coffee, June 2017
                                          • What we think
                                          • Issues and Insights

                                            • Scope for instant coffee to capitalise on users' adventurousness
                                              • The facts
                                                • The implications
                                                  • Subscription models could overcome price barrier to pod machine purchase
                                                    • The facts
                                                      • The implications
                                                        • Scope to reposition decaffeinated coffee as an evening drink
                                                          • The facts
                                                            • The implications
                                                            • The Market – What You Need to Know

                                                              • Topline growth masks mixed segment performances
                                                                • Inflation to support value growth
                                                                  • Instant coffee remains under pressure
                                                                    • Growth of ground and beans continues
                                                                      • Pods’ value growth slows on stalling volumes
                                                                        • Ageing population should underpin coffee sales
                                                                          • Commodity prices on the rise, incomes set to be squeezed
                                                                          • Market Size and Forecast

                                                                            • Topline growth masks mixed segment performances
                                                                              • Figure 10: UK retail value and volume sales of coffee*, 2012-22
                                                                            • Inflation to support value growth
                                                                              • Figure 11: Forecast of UK retail value sales of coffee*, 2012-22
                                                                              • Figure 12: Forecast of UK retail volume sales of coffee*, 2012-22
                                                                            • Forecast methodology
                                                                            • Market Segmentation

                                                                              • Instant coffee remains under pressure
                                                                                • Figure 13: UK retail value and volume sales of instant coffee, 2012-22
                                                                                • Figure 14: Forecast of UK retail value sales of instant coffee, 2012-22
                                                                              • Growth of ground and beans continues
                                                                                • Figure 15: UK retail value and volume sales of ground coffee/coffee beans, 2012-22
                                                                                • Figure 16: Forecast of UK retail value sales of ground coffee/coffee beans, 2012-22
                                                                              • Pods’ value growth slows on stalling volumes
                                                                                • Figure 17: UK retail value and volume sales of coffee pods, 2012-22
                                                                                • Figure 18: Forecast of UK retail value sales of coffee pods, 2012-22
                                                                            • Market Drivers

                                                                              • Ageing population should underpin coffee sales
                                                                                • Figure 19: Trends in the age structure of the UK population, 2012-17 and 2017-22
                                                                              • Coffee shops offer competition and inspiration
                                                                                • Growth in hot beverage appliances slows
                                                                                  • Weakened Pound points to rising retail prices
                                                                                    • Household incomes set to be squeezed
                                                                                    • Companies and Brands – What You Need to Know

                                                                                      • Instant coffee market remains under Nestlé’s stronghold
                                                                                        • Leading ground/beans brand Taylors loses share as sales fall
                                                                                          • Private label grows its share of NPD
                                                                                            • Operators explore premium coffee
                                                                                              • Adspend falls in 2016
                                                                                              • Market Share

                                                                                                • Nestlé retains stronghold on instant coffee market
                                                                                                  • Figure 20: Leading manufacturers’ sales and shares in the UK retail instant coffee market, by value and volume, 2015/16 and 2016/17
                                                                                                • Micro-ground buoys sales for Nescafé and Kenco
                                                                                                  • Figure 21: Leading brands’ value sales and shares in the UK retail instant coffee market, 2015/16 and 2016/17
                                                                                                  • Figure 22: Leading brands’ volume sales and shares in the UK retail instant coffee market, 2015/16 and 2016/17
                                                                                                • Own-label posts growth across the board
                                                                                                  • Leading ground/beans brand Taylors loses share as sales fall
                                                                                                    • Figure 23: Leading brands’ sales and shares in the UK retail ground coffee/coffee beans market (excluding coffee pods), by value and volume, 2015/16 and 2016/17
                                                                                                • Launch Activity and Innovation

                                                                                                  • New products grew in 2016
                                                                                                    • Figure 24: Share of new product launches in the UK coffee market, by format, 2013-17
                                                                                                  • Nestlé retains its position as top in NPD
                                                                                                    • Figure 25: Share of new product launches in the UK coffee market, by company (sorted by 2016), 2013-17
                                                                                                  • JDE introduces luxury brand L’OR to the UK market
                                                                                                    • Taylors unveils single-origin range
                                                                                                      • Caffè Nero makes first foray into retail
                                                                                                        • Compostable pod launches look to tackle waste
                                                                                                          • Ethical claims grow
                                                                                                            • Figure 26: Share of new product launches in the UK coffee market, by top 10 claims, 2013-17
                                                                                                        • Advertising and Marketing Activity

                                                                                                          • Adspend falls in 2016
                                                                                                            • Figure 27: Above-the-line, online display and direct mail advertising expenditure on coffee, 2013-17
                                                                                                          • Nestlé ups adspend
                                                                                                            • Nescafé targets Millennials in 2016 ad campaign…
                                                                                                              • …and on social media
                                                                                                                • Figure 28: Above-the-line, online display and direct mail advertising expenditure on coffee, by top 4 advertisers, 2013-17
                                                                                                              • Nespresso spend doubles in 2016
                                                                                                                • Lavazza supports Prontissimo!
                                                                                                                  • JDE goes for gold with L’OR campaign
                                                                                                                    • Kenco continues Coffee vs Gang campaign
                                                                                                                      • Nielsen Ad Intel coverage
                                                                                                                      • The Consumer – What You Need to Know

                                                                                                                        • Instant coffee is the most commonly drunk type
                                                                                                                          • Coffee pod machine ownership remains stable
                                                                                                                            • Large supermarkets the most common purchase location
                                                                                                                              • Strong interest in variety packs of coffee
                                                                                                                                • Subscriptions with a free machine could foster pod growth
                                                                                                                                  • Majority of coffee drinkers are adventurous
                                                                                                                                    • A sizeable 24% consider themselves a coffee connoisseur
                                                                                                                                      • Most coffee drinkers pay attention to flavour descriptions
                                                                                                                                        • Origin details denote quality
                                                                                                                                        • Coffee Drinking at Home

                                                                                                                                          • Instant coffee is the most commonly drunk type
                                                                                                                                            • Figure 29: Types of coffee drunk, June 2017
                                                                                                                                          • Over-55s most likely to drink coffee; 25-34s have the widest repertoire
                                                                                                                                            • Coffee mixes and chilled RTD coffee peak among 16-24s
                                                                                                                                              • Figure 30: Frequency of drinking coffee, by type, June 2017
                                                                                                                                            • Decaf drunk by just 17% of coffee drinkers
                                                                                                                                              • Figure 31: Drinking of standard and decaffeinated coffee, June 2017
                                                                                                                                          • Ownership of Coffee Pod Machines

                                                                                                                                            • Coffee pod machine ownership remains stable
                                                                                                                                              • A quarter of Brits interested in buying a coffee pod machine
                                                                                                                                                • Figure 32: Ownership of coffee pod machines, June 2017
                                                                                                                                              • Tassimo takes the pod machine crown
                                                                                                                                                • Figure 33: Type of coffee pod machine owned, June 2017
                                                                                                                                              • Pod machine owners remain frequent instant coffee drinkers
                                                                                                                                              • Coffee Purchase Channels

                                                                                                                                                • Large supermarkets the most common purchase location
                                                                                                                                                  • Figure 34: Purchase channels for coffee, by type of coffee, June 2017
                                                                                                                                                • Nespresso owners most likely to use alternative purchase channels
                                                                                                                                                  • Figure 35: Purchase channels for coffee pods in the last month, by type of coffee pod machine owned, June 2017
                                                                                                                                              • Interest in Coffee Concepts

                                                                                                                                                • Variety packs echo interest in coffee experimentation
                                                                                                                                                  • Strong interest in variety packs of coffee
                                                                                                                                                    • Assortment packs are little explored in ground and instant coffee
                                                                                                                                                      • Pack size poses a challenge for assortments
                                                                                                                                                        • Figure 36: Interest in coffee product concepts, June 2017
                                                                                                                                                      • Single-serve instant coffee sachets garner interest
                                                                                                                                                        • Subscriptions with a free machine could foster pod growth
                                                                                                                                                          • Evening coffee appeals to under-45s
                                                                                                                                                            • A quarter of under-45s are interested in evening coffee
                                                                                                                                                              • Scope to reposition decaf as an evening drink
                                                                                                                                                              • Behaviours Relating to Coffee

                                                                                                                                                                • Majority of coffee drinkers are adventurous…
                                                                                                                                                                  • Young coffee drinkers are the most adventurous
                                                                                                                                                                    • Frequent NPD needed to cater to love of newness
                                                                                                                                                                      • …while a sizeable 24% consider themselves a coffee connoisseur
                                                                                                                                                                        • Figure 37: Behaviours relating to coffee, June 2017
                                                                                                                                                                      • Flavour descriptions and origin details important
                                                                                                                                                                        • Most coffee drinkers pay attention to flavour descriptions
                                                                                                                                                                          • Origin details denote quality
                                                                                                                                                                            • Recyclable coffee pods appeal
                                                                                                                                                                              • Cold-brew and nitro-brew coffee garners interest among the young
                                                                                                                                                                              • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                                                                                                  • Abbreviations
                                                                                                                                                                                    • Consumer research methodology
                                                                                                                                                                                    • Appendix – Market Size and Forecast

                                                                                                                                                                                      • Forecast methodology
                                                                                                                                                                                          • Figure 38: Total UK retail value sales of coffee*, best- and worst-case forecast, 2017-22
                                                                                                                                                                                          • Figure 39: Total UK retail volume sales of coffee, best- and worst-case forecast*, 2017-22
                                                                                                                                                                                      • Appendix – Market Segmentation

                                                                                                                                                                                        • Instant coffee segment
                                                                                                                                                                                          • Figure 40: Forecast of UK retail volume sales of instant coffee, 2012-22
                                                                                                                                                                                          • Figure 41: Total UK retail value sales of instant coffee, best- and worst-case forecast, 2017-22
                                                                                                                                                                                          • Figure 42: Total UK retail volume sales of instant coffee, best- and worst-case forecast, 2017-22
                                                                                                                                                                                        • Ground coffee/coffee beans segment
                                                                                                                                                                                          • Figure 43: Forecast of UK retail volume sales of ground coffee/coffee beans, 2012-22
                                                                                                                                                                                          • Figure 44: Total UK retail value sales of ground coffee/coffee beans, best- and worst-case forecast, 2017-22
                                                                                                                                                                                          • Figure 45: Total UK retail volume sales of ground coffee/coffee beans, best- and worst-case forecast, 2017-22
                                                                                                                                                                                        • Coffee pods
                                                                                                                                                                                          • Figure 46: Forecast of UK retail volume sales of coffee pods, 2012-22
                                                                                                                                                                                          • Figure 47: Total UK retail value sales of coffee pods, best- and worst-case forecast, 2017-22
                                                                                                                                                                                          • Figure 48: Total UK retail volume sales of coffee pods, best- and worst-case forecast, 2017-22
                                                                                                                                                                                      • Appendix – Market Share

                                                                                                                                                                                          • Figure 49: Leading manufacturers’ sales and shares in the UK ground coffee/coffee beans market (excluding coffee pods), by value and volume, 2015/16 and 2016/17
                                                                                                                                                                                      • Appendix – Launch Activity and Innovation

                                                                                                                                                                                          • Figure 50: Share of new product launches in the UK coffee market, by launch type, 2013-17
                                                                                                                                                                                          • Figure 51: Share of new product launches in the UK coffee market, by branded and private label, 2013-17

                                                                                                                                                                                      Companies Covered

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

                                                                                                                                                                                      Coffee - UK - August 2017

                                                                                                                                                                                      US $2,648.76 (Excl.Tax)