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Coffee - US - September 2010

The incidence and frequency of coffee use in the U.S. has remained very steady in recent years, which has contributed to relatively stable, moderate market growth. Indeed, while sales in many categories declined between 2008 and 2010—as millions of Americans sought ways save money in the face of recessionary pressures—the coffee category performed relatively well. This suggests that CPG firms seeking growth may want to consider developing new coffee products or optimizing efforts to promote existing brands in order to capitalize on opportunities.

The report provides research and insight that is useful to product developers and marketers operating in the retail coffee market. More specifically, the report addresses the following questions:

  • How have retail sales of coffee fluctuated in recent years and how are they likely to change between 2010 and 2015?
  • What categories are performing well and which are posting sales declines?
  • How have sales in the supermarket channel fluctuated in recent years, compared with changes observed in other channels?
  • How are economic, demographic and wellness trends impacting the coffee at retail market?
  • What are the most popular types of coffee in the U.S.?
  • What brands are performing well and which are posting declines?
  • How are companies using new media, as well as television to promote their products?
  • What segments of the population over-index on use and which under-index?
  • What types of coffee products are companies launching and which seem well-positioned to grow in the current market?

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Table of contents

  1. Scope and Themes

    • What you need to know
      • Definition
        • Data sources
          • Sales data
            • Consumer survey data
              • Advertising creative
                • Abbreviations and terms
                  • Abbreviations
                    • Terms
                    • Executive Summary

                        • Market poised for moderate growth
                          • Energy drinks pose primary competitive threat
                            • Retail channels
                              • Population growth, health and the economy help boost sales
                                • Folgers and Maxwell House roasted varieties driving category growth
                                  • Instant coffee holding steady
                                    • Via success signals demand for premium
                                      • Spanish language packaging could help further growth of value brands
                                        • Ready to drink (RTD) segment sales stagnant
                                          • Coffee additive/flavorings, substitutes and concentrates sales continue decline
                                            • Unflavored most popular; eco-friendly and fair trade becoming more common
                                              • Incidence and frequency of use remains stable
                                                • Most prefer national brands over regional and premium varieties
                                                  • Consistent with sales, Folgers and Maxwell House most popular brands
                                                    • Most use a drip-style coffee maker
                                                      • Most young adults (and teens) prefer sweetened options
                                                        • Hispanics are a high-value segment
                                                        • Insights and Opportunities

                                                          • Consider taking ethical responsibility to the next level
                                                            • Consider highlighting concentration benefits
                                                              • Figure 1: Benefits of coffee, by household income, June 2010
                                                          • Inspire Insights

                                                              • Trend: Extend My Brand
                                                              • Market Size and Forecast

                                                                • Key points
                                                                  • Brew at home continues even as commodity prices percolate
                                                                      • Figure 2: Total U.S. retail sales and forecast of coffee, at current prices, 2005-15
                                                                      • Figure 3: Total U.S. retail sales and forecast of coffee, at inflation-adjusted prices, 2005-15
                                                                    • Walmart sales
                                                                    • Market Drivers

                                                                      • Key points
                                                                        • High demand 55+ segment growing quickly
                                                                          • Figure 4: Population, by age, 2005-15
                                                                        • Rapid growth of Hispanic segment could help drive growth
                                                                          • Figure 5: Population, by race and Hispanic origin, 2005-15
                                                                        • Most Americans watching their diet
                                                                          • Figure 6: Incidence of presently watching/controlling diet, May 2004-June 2009
                                                                          • Figure 7: Reasons for watching/controlling diet, 2006 and 2009
                                                                        • Health-related concerns could have greater impact on demand in the future
                                                                          • Figure 8: Attitudes towards coffee, by age, June 2010
                                                                        • High unemployment may undermine demand
                                                                          • Figure 9: U.S. unemployment rate, January 2007-July 2010
                                                                        • Low consumer confidence may undermine willingness to purchase premium products
                                                                          • Figure 10: Consumer Sentiment, January 2007-July 2010
                                                                      • Competitive Context

                                                                        • Key points
                                                                          • Energy drinks primary competitive threat among teens and young adults
                                                                            • Tea competes directly with coffee as wellness trend grows
                                                                              • Enjoyment drives demand; coffeehouses could undermine retail sales growth
                                                                                  • Figure 11: Attitudes towards coffee consumption and preparation, by age, June 2010
                                                                              • Segment Performance

                                                                                • Roasted sub-category continues to drive overall category growth
                                                                                  • Figure 12: FDMx sales of coffee, by segment, 2009 and 2010
                                                                              • Segment Performance—Roasted Coffee

                                                                                • Key points
                                                                                  • Roasted coffee drives growth as many brew at home to save money
                                                                                    • Figure 13: Total U.S. retail sales and forecast of roasted coffee, at current prices, 2005-15
                                                                                • Segment Performance—Instant Coffee

                                                                                  • Key points
                                                                                    • Demand for instant rises as Hispanic population grows and new products are introduced
                                                                                      • Figure 14: Total U.S. retail sales and forecast of instant coffee, at current prices, 2005-15
                                                                                  • Segment Performance—Ready-to-Drink (RTD) Coffee

                                                                                    • Key point
                                                                                      • Frappuccino sales help stem segment losses
                                                                                        • Figure 15: Total U.S. retail sales and forecast of ready-to-drink coffee, at current prices, 2005-15
                                                                                    • Retail Channels—Overview

                                                                                      • Supermarkets continue to maintain nearly half of share
                                                                                        • Figure 16: U.S. retail sales of coffee, by channel, 2008 and 2010
                                                                                    • Retail Channels—Supermarkets

                                                                                      • Key point
                                                                                        • Supermarkets continue to perform well as eating and entertaining at home trend holds steady
                                                                                          • Figure 17: U.S. sales of coffee at supermarkets, at current prices, 2005-10
                                                                                      • Retail Channels—Other Channels

                                                                                        • Key point
                                                                                          • Other channels benefit from strong demand for mass merchandisers
                                                                                            • Figure 18: U.S. sales of coffee in other retail channels, at current prices, 2005-10
                                                                                        • Natural Channel/SPINS

                                                                                            • Key points
                                                                                              • Sales of coffee in the natural channel
                                                                                                • Figure 19: Natural supermarket sales of coffee, at current prices, 2008-10
                                                                                                • Figure 20: Natural supermarket sales of coffee, at inflation-adjusted prices, 2008-10
                                                                                              • Implications
                                                                                                • Natural channel sales by segment
                                                                                                  • Figure 21: Natural supermarket sales of coffee, by segment, 52 weeks ending June 2008 and June 2010
                                                                                                • Leading brands in segments of note
                                                                                                  • Organic and fair trade trends
                                                                                                    • Figure 22: Natural supermarket sales of coffee, by organic, June 2008 and June 2010
                                                                                                    • Figure 23: Natural supermarket sales of packaged coffee, by fair trade, June 2008 and June 2010
                                                                                                • Leading Companies

                                                                                                  • Key points
                                                                                                    • J.M. Smucker Co. maintains dominance as Starbucks gains share
                                                                                                      • Figure 24: Select manufacturer FDMx sales of coffee, 2009-10
                                                                                                  • Brand Share—Roasted Coffee

                                                                                                    • Key points
                                                                                                      • Dominant players all capitalizing on strong growth for roasted options
                                                                                                          • Figure 25: Leading FDMx brand sales and market share of roasted coffee, 2009-10
                                                                                                      • Brand Share—Instant Coffee

                                                                                                        • Key points
                                                                                                          • Folgers and Nescafé remain dominant; Via makes inroads
                                                                                                            • Figure 26: Leading FDMx brand sales and market share of instant coffee, 2009-10
                                                                                                          • Via helps to drive growth during Starbucks’ turnaround
                                                                                                            • Figure 27: Leading FDMx brand sales and market share of Starbucks’ Via instant coffee, 2009-10
                                                                                                        • Brand Share—Ready to Drink (RTD)

                                                                                                          • Key points
                                                                                                            • Bolthouse Farms and Starbucks post growth in challenging segment
                                                                                                              • Manufacturer and brand sales of ready to drink coffee
                                                                                                                • Figure 28: Leading FDMx brand sales and market share of ready to drink coffee, 2009-10
                                                                                                            • Brand Share—Coffee Additive/Flavoring, Substitutes and Concentrates

                                                                                                              • Key points
                                                                                                                • Overall FDMx sales of additives decline but some smaller brands post gains
                                                                                                                  • Figure 29: Leading FDMx brand sales and market share of coffee additive/flavoring, substitutes and concentrates, 2009-10
                                                                                                              • Innovation and Innovators

                                                                                                                • Key points
                                                                                                                  • Launches of flavored coffee on the decline
                                                                                                                    • Figure 30: Top 10 flavors in new coffee introductions, 2004-10
                                                                                                                    • Figure 31: Top 10 flavors in new coffee introductions, as a percent of total coffee launches, 2004-10
                                                                                                                  • Ethical and organic launches on the rise
                                                                                                                    • Figure 32: Top 10 claims associated with new coffee introductions, 2004-10
                                                                                                                  • Private label introductions on the decline
                                                                                                                    • Figure 33: Proportion of new product launches that are private label, 2004-10
                                                                                                                  • New products with environmentally friendly packaging
                                                                                                                    • Many use fair trade seal to increase brand appeal
                                                                                                                      • Some able to effectively differentiate with seasonal products
                                                                                                                      • Brands and Marketing Strategies

                                                                                                                        • Overview of the brand landscape
                                                                                                                          • Starbucks
                                                                                                                            • Figure 34: Brand analysis of Starbucks’ Via, 2010
                                                                                                                          • Starbucks’ Via television ads
                                                                                                                            • Figure 35: Starbucks’ Via ad #1, 2010
                                                                                                                            • Figure 36: Starbucks’ Via ad #2, 2010
                                                                                                                            • Figure 37: Starbucks’ Via launch ad—taste the difference, 2009
                                                                                                                          • Starbucks online social media
                                                                                                                            • Facebook
                                                                                                                              • Twitter
                                                                                                                                • Dunkin’ Donuts
                                                                                                                                  • Figure 38: Brand analysis of Dunkin’ Donuts, 2010
                                                                                                                                • Dunkin’ Donuts television ads
                                                                                                                                  • Figure 39: Dunkin’ Donuts ad—woman in bathrobe, 2009
                                                                                                                                  • Figure 40: Dunkin’ Donuts ad—copy machine, 2009
                                                                                                                                • Dunkin’ Donuts social media
                                                                                                                                  • Facebook
                                                                                                                                    • Twitter
                                                                                                                                      • Social media campaigns from other coffee brands
                                                                                                                                        • Nescafé
                                                                                                                                          • Seattle’s Best Coffee
                                                                                                                                            • Illy
                                                                                                                                            • Incidence and Frequency of Use

                                                                                                                                              • Key points
                                                                                                                                                • Incidence of use has remained stable for the last several years
                                                                                                                                                  • Figure 41: Trended household use of coffee and espresso products, by type, 2004-09
                                                                                                                                                • Most users drink coffee on a daily basis
                                                                                                                                                  • Figure 42: Frequency of coffee consumption, by age, June 2010
                                                                                                                                                • Household coffee preferences in ground/whole bean coffee
                                                                                                                                                  • Figure 43: Trended household use of caffeinated and decaffeinated coffee, 2004-09
                                                                                                                                                  • Figure 44: Trended household use of ground and whole bean coffee, 2004-09
                                                                                                                                                • Household use of roasted coffee—caffeinated use skews higher than decaf
                                                                                                                                                  • Figure 45: Trended daily household use of ground regular coffee, 2004-09
                                                                                                                                                  • Figure 46: Trended daily household use of ground decaffeinated coffee, 2004-09
                                                                                                                                                • Most households that use instant coffee consume caffeinated varieties
                                                                                                                                                  • Figure 47: Trended household use of regular or decaffeinated instant coffee 2004-09
                                                                                                                                                  • Figure 48: Trended daily household use of instant coffee, 2004-09
                                                                                                                                                • Coffee mixes hold less promise
                                                                                                                                                  • Figure 49: Trended household use of regular and sugar-free flavored coffee mixes, 2004-09
                                                                                                                                                  • Figure 50: Trended daily household use of instant flavored coffee mixes, 2004-09
                                                                                                                                              • Preferred Type of Coffee

                                                                                                                                                • Key points
                                                                                                                                                  • Over-55s more likely to see difference between brands
                                                                                                                                                    • Figure 51: Coffee drinking habits, by age, June 2010`
                                                                                                                                                  • National brands remain dominant
                                                                                                                                                    • Figure 52: Coffee purchases for home use, by age, June 2010
                                                                                                                                                  • National brands much less popular with affluents
                                                                                                                                                    • Figure 53: Coffee purchases for home use, by household income, June 2010
                                                                                                                                                • Brand Preferences

                                                                                                                                                  • Key points
                                                                                                                                                    • Folgers and Maxwell House maintain dominance as Starbucks and private label gain penetration
                                                                                                                                                      • Figure 54: Use of ground or whole bean roasted coffee, by brand, 2004-09
                                                                                                                                                    • Dominant instant brands lose some ground in 2009
                                                                                                                                                      • Figure 55: Use of instant coffee, by brand, 2004-09
                                                                                                                                                    • Trended use of RTD coffee brands
                                                                                                                                                      • Figure 56: Trended use of coffee drinks, by brand, 2006-09
                                                                                                                                                    • Starbucks increasingly dominant in the espresso category
                                                                                                                                                      • Figure 57: Trended use of espresso/cappuccino products, by brand, 2004-09
                                                                                                                                                  • Method of Preparation

                                                                                                                                                    • Key points
                                                                                                                                                      • Many young adults prefer Euro-style preparation
                                                                                                                                                        • Figure 58: Coffee preparation methods at home, by age, June 2010
                                                                                                                                                    • Coffee-related Attitudes

                                                                                                                                                      • Key points
                                                                                                                                                        • About four in 10 young adults prefer sweetened drinks
                                                                                                                                                          • Figure 59: Attitudes towards coffee, by age, June 2010
                                                                                                                                                      • Race and Hispanic Origin

                                                                                                                                                        • Key points
                                                                                                                                                          • Hispanics represent key growth opportunity
                                                                                                                                                            • Figure 60: Household coffee usage, by race and Hispanic origin, February 2009-March 2010
                                                                                                                                                          • Spanish-speaking Hispanics key subsegment, especially for instant
                                                                                                                                                            • Figure 61: Category usage among Hispanics, by language spoken in the home, February 2009-March 2010
                                                                                                                                                          • Taste preferences differ among consumers
                                                                                                                                                            • Figure 62: Attitudes towards coffee, by race/Hispanic origin, June 2010
                                                                                                                                                        • Cluster Analysis

                                                                                                                                                            • Cup o’ Joes (38%)
                                                                                                                                                              • Characteristics
                                                                                                                                                                • Opportunity
                                                                                                                                                                  • Gourmands (25%)
                                                                                                                                                                    • Characteristics
                                                                                                                                                                      • Opportunity
                                                                                                                                                                        • Adders (38%)
                                                                                                                                                                          • Characteristics
                                                                                                                                                                            • Opportunity
                                                                                                                                                                              • Cluster characteristics
                                                                                                                                                                                • Figure 63: Coffee clusters, July 2010
                                                                                                                                                                                • Figure 64: Frequency of coffee consumption, by coffee clusters, July 2010
                                                                                                                                                                                • Figure 65: Coffee consumption and brand preferences, by coffee clusters, July 2010
                                                                                                                                                                                • Figure 66: Brands of coffee purchased, by coffee clusters, July 2010
                                                                                                                                                                                • Figure 67: Attitudes towards coffee, by coffee clusters, July 2010
                                                                                                                                                                              • Cluster demographics
                                                                                                                                                                                • Figure 68: Coffee clusters, by gender, July 2010
                                                                                                                                                                                • Figure 69: Coffee clusters, by age, July 2010
                                                                                                                                                                                • Figure 70: Coffee clusters, by household income, July 2010
                                                                                                                                                                                • Figure 71: Coffee clusters, by race/Hispanic origin, July 2010
                                                                                                                                                                              • Cluster methodology
                                                                                                                                                                              • Custom Consumer Groups

                                                                                                                                                                                • About one in three teens drink coffee; incidence of use grows with age
                                                                                                                                                                                    • Figure 72: Coffee consumption among teens, by age, July 2010
                                                                                                                                                                                  • Boys less likely than girls to drink coffee
                                                                                                                                                                                      • Figure 73: Coffee consumption among teens, by gender, July 2010
                                                                                                                                                                                    • Most teen drinkers use only occasionally
                                                                                                                                                                                        • Figure 74: Frequency of coffee consumption among teens, July 2010
                                                                                                                                                                                        • Figure 75: Average coffee consumption among teens, July 2010
                                                                                                                                                                                      • Most prepare at home but many users also consume at coffee shops
                                                                                                                                                                                        • Figure 76: Coffee procurement among teens, July 2010
                                                                                                                                                                                      • Teen users prefer sweetened drinks and enjoy drinking coffee
                                                                                                                                                                                          • Figure 77: Attitudes towards coffee among teens, July 2010
                                                                                                                                                                                      • IRI/Builders—Key Household Purchase Measures

                                                                                                                                                                                          • Overview of coffee
                                                                                                                                                                                            • Ground coffee
                                                                                                                                                                                              • Consumer insights on key purchase measures
                                                                                                                                                                                                • Brand map
                                                                                                                                                                                                  • Figure 78: Brand map, selected brands of ground coffee, buying rate, by household penetration, 2009
                                                                                                                                                                                                • Brand leader characteristics
                                                                                                                                                                                                  • Key purchase measures
                                                                                                                                                                                                    • Figure 79: Key purchase measures for the top brands of ground coffee, by household penetration, 2009
                                                                                                                                                                                                  • Instant coffee
                                                                                                                                                                                                    • Consumer insights on key purchase measures
                                                                                                                                                                                                      • Brand map
                                                                                                                                                                                                        • Figure 80: Brand map, selected brands of instant coffee, buying rate, by household penetration, 2009
                                                                                                                                                                                                      • Brand leader characteristics
                                                                                                                                                                                                        • Key purchase measures
                                                                                                                                                                                                          • Figure 81: Key purchase measures for the top brands of instant coffee, by household penetration, 2009
                                                                                                                                                                                                        • Ground decaffeinated coffee
                                                                                                                                                                                                          • Consumer insights on key purchase measures
                                                                                                                                                                                                            • Brand map
                                                                                                                                                                                                              • Figure 82: Brand map, selected brands of ground decaffeinated coffee, buying rate, by household penetration, 2009
                                                                                                                                                                                                            • Brand leader characteristics
                                                                                                                                                                                                              • Key purchase measures
                                                                                                                                                                                                                • Figure 83: Key purchase measures for the top brands of ground decaffeinated coffee, by household penetration, 2009
                                                                                                                                                                                                            • Appendix: Other Useful Consumer Tables

                                                                                                                                                                                                              • Age
                                                                                                                                                                                                                • Figure 84: Average number of cups of coffee consumed per day, by age, June 2010
                                                                                                                                                                                                                • Figure 85: Attitudes towards coffee, by household income, June 2010
                                                                                                                                                                                                              • Income
                                                                                                                                                                                                                • Figure 86: Frequency of coffee consumption, by household income, June 2010
                                                                                                                                                                                                                • Figure 87: Coffee preparation methods at home, by household income, June 2010
                                                                                                                                                                                                                • Figure 88: Attitudes towards coffee, by household income, June 2010
                                                                                                                                                                                                                • Figure 89: Coffee drinking habits, by household income, June 2010
                                                                                                                                                                                                              • Race and Hispanic origin
                                                                                                                                                                                                                • Figure 90: Average number of cups of coffee consumed per day, by race/Hispanic origin, June 2010
                                                                                                                                                                                                                • Figure 91: Attitudes towards coffee, by race/Hispanic origin, June 2010
                                                                                                                                                                                                                • Figure 92: Frequency of coffee consumption, by race/Hispanic origin, June 2010
                                                                                                                                                                                                                • Figure 93: Coffee drinking habits, by race/Hispanic origin, June 2010
                                                                                                                                                                                                                • Figure 94: Attitudes towards coffee, by race/Hispanic origin, June 2010
                                                                                                                                                                                                                • Figure 95: Coffee purchases for home use, by race/Hispanic origin, June 2010
                                                                                                                                                                                                                • Figure 96: Coffee preparation methods at home, by race/Hispanic origin, June 2010
                                                                                                                                                                                                            • Appendix: IRI/Builders Panel Data Definitions

                                                                                                                                                                                                                • IRI Consumer Network Metrics
                                                                                                                                                                                                                • Appendix: Trade Associations

                                                                                                                                                                                                                  Companies Covered

                                                                                                                                                                                                                  • Borders Group
                                                                                                                                                                                                                  • Caribou Coffee Company Inc.
                                                                                                                                                                                                                  • Coca-Cola Company (The) (USA)
                                                                                                                                                                                                                  • Coffee Bean International Inc.
                                                                                                                                                                                                                  • Coffee Kids
                                                                                                                                                                                                                  • Dunkin' Brands
                                                                                                                                                                                                                  • Economist Group Limited (The)
                                                                                                                                                                                                                  • Eight O'Clock Coffee Company, The
                                                                                                                                                                                                                  • Facebook, Inc.
                                                                                                                                                                                                                  • Family Dollar Stores, Inc
                                                                                                                                                                                                                  • Green Mountain Coffee Roasters, Inc.
                                                                                                                                                                                                                  • Harris Teeter, Inc
                                                                                                                                                                                                                  • illycaffè S.p.A
                                                                                                                                                                                                                  • International Coffee Organization (ICO)
                                                                                                                                                                                                                  • Kraft Foods Inc. (U.S.A.)
                                                                                                                                                                                                                  • Luigi Lavazza SpA
                                                                                                                                                                                                                  • McDonald's U.S.A.
                                                                                                                                                                                                                  • McNeil Consumer Nutritionals UK Ltd
                                                                                                                                                                                                                  • National Coffee Association
                                                                                                                                                                                                                  • Nestlé USA
                                                                                                                                                                                                                  • Peet's Coffee & Tea, Inc.
                                                                                                                                                                                                                  • Rainforest Alliance
                                                                                                                                                                                                                  • Reuters Group PLC
                                                                                                                                                                                                                  • Seattle Coffee Company
                                                                                                                                                                                                                  • Specialty Coffee Association of America
                                                                                                                                                                                                                  • Starbucks Corporation
                                                                                                                                                                                                                  • The Grocery Trader
                                                                                                                                                                                                                  • The J. M. Smucker Company
                                                                                                                                                                                                                  • The Kroger Co.
                                                                                                                                                                                                                  • The New York Times Company
                                                                                                                                                                                                                  • Twitter, Inc.
                                                                                                                                                                                                                  • U.S. Bureau of Labor Statistics
                                                                                                                                                                                                                  • U.S. Bureau of the Census
                                                                                                                                                                                                                  • U.S. Department of Agriculture
                                                                                                                                                                                                                  • United Nations
                                                                                                                                                                                                                  • University of Michigan, The
                                                                                                                                                                                                                  • Walmart Stores (USA)
                                                                                                                                                                                                                  • Whole Foods Market Inc
                                                                                                                                                                                                                  • Wm. Bolthouse Farms Inc.
                                                                                                                                                                                                                  • Wolfgang Puck Worldwide Inc.
                                                                                                                                                                                                                  • YouTube, Inc.

                                                                                                                                                                                                                  Coffee - US - September 2010

                                                                                                                                                                                                                  £3,174.67 (Excl.Tax)