The cost of living crisis benefited the UK coffee market at the expense of foodservice venues, and boosted usage of instant coffee. A significant threat to the coffee market comes from widespread and growing efforts to reduce caffeine intake among UK consumers.
UK Coffee Market – Current Landscape
The cost of living crisis and rapid inflation have benefited the retail coffee market, also driving trading down in this category, both within and between segments. Although the squeeze is easing, this behaviour has continued into 2024. The feelgood factor linked to savvy choices will ensure value remains key even as consumer confidence improves, and will continue to favour retail over coffee shops.
Widespread and growing efforts to reduce caffeine intake present a significant threat to the coffee market. While these should be a boon for decaffeinated coffee, this segment is so far failing to capitalise on this trend, and coffee drinking occasions are being lost. Concerns over the decaffeination process – heightened by the spotlight on UPFs – need to be addressed in marketing. Decaf should also be a bigger focus for NPD, given the appetite for more choice in this segment.
Supermarkets are doing this much-loved category a disservice by not better leaning into many consumers’ connoisseur spirit for coffee in-store. Through, for example, POS features that help coffee lovers enhance their knowledge of coffee, or in-store coffee grinders, supermarkets can create an engaging environment that also encourages trading up.
UK Coffee Market Report – What’s Inside?
Topics Analysed in the Report
- The impact of the cost of living crisis on value and volume sales of coffee and RTD coffee
- Trends in launch activity in coffee and RTD coffee, and opportunities for further innovation
- Coffee drinking behaviours
- Interest in coffee product concepts, including added health benefits and regenerative farming
- Behaviours relating to coffee, including making savvy choices and concerns around UPFs
- Attitudes towards coffee, including those relating to the retail experience in supermarkets’ coffee aisles and cold coffees made at home.
Report Scope
For the purposes of this report, Mintel has used the following definitions:
This report covers coffee consumption in the retail market only. Therefore, it excludes coffee shops or other outlets where coffee is purchased and drunk outside the home. Sales through vending machines and self-serve coffee outlets are also excluded.
The following broad segments make up the coffee retail market:
- Instant coffee – through various processes, coffee is dehydrated into the form of powder or granules for sale and prepared by adding these to hot water.
- Roast and ground – when coffee is sold in the form of coffee beans or when the coffee beans are sold ready-ground.
- Coffee pods feature pre-packaged ground beans sold in their own filter to make the coffee-making process easier. Included in this category are products for open and closed coffee systems, such as those that take a cartridge or pod.
Separate to the above, the report also includes discussion of and data for RTD coffee drinks in retail.
The market definition includes decaffeinated coffee.
Meet the Expert Behind the Analysis
This report was written by Emma Clifford, Mintel’s Associate Director – Food and Drink. Emma joined the Food and Drink team in June 2012 and is responsible for researching and writing food reports. Before joining Mintel, Emma worked as a marketing information analyst at Marketforce and gained retail experience from her time working as a fashion distributor at Debenhams head office.
Focus on decaf coffee and enliven supermarkets’ coffee aisles to offset volume losses to foodservice. Functionality and regenerative farming also offer potential.
Emma Clifford
Associate Director – Food and Drink
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Executive Summary
- Opportunities for the coffee market
- Unlock the huge potential in decaf coffee…
- …though NPD and addressing concerns over decaffeination
- Enhance the coffee retail experience
- Opportunities around regenerative farming
- Market dynamics and outlook
- Market size & forecast of the coffee market
- Market predictions for coffee
- Value growth of coffee will be driven by rising prices and trading up
- Ground coffee sees the strongest value growth in 2024
- Graph 1: retail value sales of coffee, by segment, 2022-24
- Own-label and coffee shop brands are winners in instant coffee
- Graph 2: leading brands’ value sales in the retail instant coffee market, 2021/22-2023/24
- Lavazza closes the gap on Taylors in the ground/beans segment
- Graph 3: leading brands’ value sales in the retail ground coffee (excl pods) and coffee beans market, 2021/22-2023/24
- Nespresso continues to dominate coffee pods; mixed performances from other brands
- Graph 4: leading brands’ value sales in the retail coffee pods market, 2021/22-2023/24
- Market predictions for RTD coffee
- Market size & forecast of the RTD coffee market
- Strong but slowing value growth expected for RTD coffee
- Starbucks extends its lead in RTD coffee; not all players benefit from RTD coffee’s rapid growth
- Graph 5: leading brands’ value sales in the RTD coffee market, 2021/22-2023/24
- Coffee inflation slows significantly in 2023; global shortages set to drive up global coffee prices
- Graph 6: CPI annual rate, coffee and all food and non-alcoholic drinks, 2019-24
- What consumers want and why
- Usage of instant coffee and RTD coffee rises in 2024
- Graph 7: types of coffee used at home 2020-24
- Decaf coffee usage remains stable despite more people cutting back on caffeine
- Graph 8: usage of standard and decaffeinated coffee, 2021-24
- Regenerative farming offers a route to differentiation in the crowded sustainability space
- Functionality is underexplored in coffee
- Opportunities around coffee with added health benefits and regenerative farming
- Graph 9: interest in trying coffee product concepts, 2024
- Savvy choices are driven by necessity and the feelgood factor; UPF concerns affect coffee choices
- Graph 10: behaviours relating to coffee, 2024
- Over a third see the coffee aisle as uninspiring
- A need to enhance the retail experience; take the inconvenience out of cold brew coffee
- Graph 11: attitudes towards coffee, 2024
- Innovation and marketing
- Claims relating to sustainable sourcing rise; indulgent flavours are a key NPD trend
- Graph 12: share of coffee launches featuring sustainable claims, 2020-24
- RTD iced coffee attracts new entrants, sees a surge in high-protein launches
- Coffee adspend saw a 44% annual rise in 2023, driven by Nestlé
- Graph 13: total above-the-line, online display and direct mail advertising on coffee products, by leading advertisers, 2021-24
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Market Dynamics
- Market size
- Volumes return to growth in 2024, value growth slows
- Graph 14: retail value sales of coffee, 2019-23
- Market forecast
- Robust value growth expected for category
- Value growth driven by inflation, premiumisation and trading up
- The on-trade regaining momentum will hit underlying growth
- Strong but slowing value growth expected for RTD coffee…
- …volumes showing the same pattern
- Rising prices and ongoing volume growth to drive a strong value performance
- Market segmentation
- Ground coffee sees the strongest value growth in 2024
- Graph 15: retail value sales of coffee, by segment, 2022-24
- RTD coffee growth slows, but remains strong
- Graph 16: retail value and volume sales of RTD coffee, 2019-24
- Market share
- Nescafé is steady at the top, but mixed performances from sub-brands
- Graph 17: leading brands’ value sales in the retail instant coffee market, 2021/22-2023/24
- Own-label and coffee shop brands are winners in instant coffee
- Lavazza closes the gap on Taylors in the ground/beans segment
- Graph 18: leading brands’ value sales in the retail ground coffee (excl pods) and coffee beans market, 2021/22-2023/24
- Mounting competition from smaller brands in ground coffee/coffee beans
- Nespresso continues to dominate coffee pods
- Graph 19: leading brands’ value sales in the retail coffee pods market, 2021/22-2023/24
- Mixed performances from other brands in pods
- Starbucks extends its lead in RTD coffee
- Graph 20: leading brands’ value sales in the RTD coffee market, 2021/22-2023/24
- Not all players benefit from the boom in RTD coffee
- Macro-economic factors
- The squeeze on real incomes is easing
- Graph 21: CPI inflation rate and total pay growth rate, 2021-24
- Current financial wellbeing remains subdued
- Graph 22: the financial wellbeing index, 2016-24
- Consumer spending remains cautious
- Coffee inflation slows significantly in 2023
- Graph 23: CPI annual rate, coffee and all food and non-alcoholic drinks, 2019-24
- Further rises in global coffee prices will put companies under pressure to pass these onto consumers
- Social, environmental and legal factors
- Sustainability-related factors trumped by brand familiarity and quality credentials in coffee
- Graph 24: most important factors when choosing one at home coffee product (eg ground beans, pods, instant, etc) to buy over another, 2024
- Interest in sustainability to gain ground as income pressures ease
- Coffee supplies under threat from climate change
- Bean-free coffee heralded as a way to futureproof the industry
- Greater vigilance over caffeine intake
- Graph 25: Google searches for caffeine, 2019-24
- Coffee shops slammed for excessive sugar content of food and drink
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What Consumers Want and Why
- Usage of coffee
- Coffee usage at home has climbed over 2020-24
- Usage of instant coffee and RTD coffee rises in 2024
- Graph 26: types of coffee used at home, 2020-24
- 25-34s are most engaged with the category
- Graph 27: types of coffee drunk, by age, 2024
- Daily coffee consumption is commonplace
- Graph 28: frequency of drinking coffee, by type, 2024
- Usage of standard coffee slips
- Graph 29: usage of standard and decaffeinated coffee, 2021-2024
- Decaf coffee usage remains stable despite growing efforts to reduce caffeine intake
- Heightened concerns around the decaffeination process
- Put details about decaffeination on front-of-pack
- Offer reassurance on decaffeination
- Make decaf a bigger focus for NPD
- Interest in coffee product concepts
- Notable interest in coffee with added health benefits
- Graph 30: interest in trying coffee product concepts, 2024
- Functionality is underexplored in coffee
- It’s time for mainstream brands to explore the “shroom boom”
- The rising profile of Dirtea is part of the growing buzz around mushroom drinks
- Collagen coffee arrives on the scene
- Opportunities around regenerative farming
- Graph 31: perceived environmental impact of different stages of a coffee product’s lifecycle, 2024
- Drive awareness of the scale of the environmental impact of coffee farming
- Prove to consumers that sustainable choices can make a meaningful impact
- Products with strong sustainability messages showing shoppers make a difference
- Behaviours relating to coffee
- Price rises have made many rethink their coffee choices in the last 12 months…
- Graph 32: behaviours relating to coffee, 2024
- …but savvy choices are also driven by the feelgood factor
- Lean into the feelgood factor in marketing campaigns
- Drive feelgood factor with messages linking money-saving to sustainability
- Concerns over UPFs are affecting the coffee market
- A need to address concerns over UPFs in instant coffee; Nescafé sets the bar by inviting fans behind the scenes
- Attitudes towards coffee
- Over a third find the coffee aisle uninspiring
- Graph 33: attitudes towards coffee, 2024
- A need to enhance the retail experience
- Sharing knowledge will resonate with aspiring coffee connoisseurs
- Look to other categories for inspiration on engaging displays
- Bring theatre (and aroma) to the coffee aisle with in-store grinders
- Look to retailers already offering in-store coffee grinders for inspiration
- Take the inconvenience out of cold brew coffee
- Retail cold brew coffee products outside RTD
- Interest in cold brew coffee machines can be mined
- Look to textures in cold brew RTDs, taking inspiration from US NPD
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Innovation And Marketing Trends
- Launch activity and innovation
- A rise in private label NPD in 2024
- Graph 34: share of coffee launches, branded versus private label, 2020-24
- On-trend private label coffee launches
- Nescafé unveils modernised new look
- More retail activity from roasteries
- The NPD trend for indulgent flavours gains momentum
- Leading coffee brands boost their indulgent offerings
- Kenco and Nescafé lead the way in indulgent instant coffee launches
- Treat-oriented flavour NPD is also rife within private label instant coffee launches
- A rise in caffeine-free launches
- Graph 35: share of coffee launches which are caffeine-free, 2020-24
- NPD brings more variation in caffeine levels
- TrueStart’s low- and high- caffeine instant coffees
- A jump in claims relating to sustainable sourcing in 2024
- Graph 36: share of coffee launches featuring sustainable claims, 2020-24
- Increasingly hard for brands to stand out on sustainability
- High-profile NPD in paper refill packs
- Companies support coffee pod recycling
- Illy claims a world first with regenerative agriculture labeled coffee
- RTD iced coffee attracts new entrants
- New brands on the RTD coffee scene in 2024
- A surge in high-protein RTD coffee launches in 2024
- Advertising and marketing activity
- Coffee adspend saw a 44% annual rise in 2023
- Graph 37: total above-the-line, online display and direct mail advertising on coffee products, 2021-24
- Graph 38: quarterly above-the-line, online display and direct mail advertising on coffee products, 2021-24
- A sharp increase in spend from Nestlé in 2023
- Graph 39: total above-the-line, online display and direct mail advertising on coffee products, by leading advertisers, 2021-24
- Nescafé focuses on moments of me-time
- Taylors of Harrogate celebrates its heritage and family values
- Brands continue to nurture an aspirational image through partnerships
- Nespresso teams up with David Beckham
- Nespresso launches new ethical collaboration
- Sustainability is a key theme in advertising
- Kenco promotes its new paper refill bags
- Adspend on RTD coffee drops from its 2022 spike
- Graph 40: total above-the-line, online display and direct mail advertising on RTD coffee products, 2021-24
- Starbucks highlights links to productivity
- Emmi launches campaign celebrating everyday victories
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Appendix
- Market share
- Leading brands’ value sales in the retail instant coffee market
- Leading brands’ volume sales in the retail instant coffee market
- Leading manufacturers’ sales in the retail instant coffee market
- Leading brands’ value sales in the retail ground/beans coffee market
- Leading brands’ volume sales in the retail ground/beans coffee market
- Leading manufacturers’ value sales in the retail ground/beans coffee market
- Leading manufacturers’ volume sales in the retail ground/beans coffee market
- Leading brands’ value sales in the retail coffee pods market
- Leading manufacturers’ value sales in the retail coffee pods market
- Leading brands’ value sales in the retail RTD coffee market
- Leading brands’ volume sales in the retail RTD coffee market
- Leading manufacturers’ sales in the retail RTD coffee market
- Launch activity and innovation
- Share of coffee launches by company
- Advertising and marketing activity
- ATL, online display and direct mail advertising expenditure on coffee
- ATL, online display and direct mail advertising expenditure on RTD coffee
- Market segmentation
- Retail value sales of coffee, by type
- Market forecast data and methodology
- Market forecast for coffee
- Market forecast and prediction intervals for coffee (value)
- Market forecast for RTD coffee
- Market forecast and prediction intervals for RTD coffee (value)
- Market forecast and prediction intervals for RTD coffee (volume)
- Forecast methodology
- Report scope and definitions
- Market definition
- Abbreviations and terms
- Consumer research methodology
- Nielsen Ad Intel coverage
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