Tea and Coffee - Canada - September 2014
“Appealing to older coffee drinkers, for example via pods/capsules which use intense roasts, could help to tap into this flavour interest in a more targeted manner.”
– Andrew Zmijak , Consumer Behaviour Research Analyst
This report looks at the following issues:
- Increasing popularity of coffee pods could bring down prices
- Appealing to older palates with hot beverages
- Specialized teas can increase consumption in and out of the home
Hot beverages are highly popular drinks in Canada, with 95% drinking at least one type of tea, coffee or hot chocolate. That 57% drink five or more types of these beverages reflects the high level of engagement which continues to broaden as innovation brings new products to the market.
Volume retail sales of tea and coffee have grown steadily over the past five years, reaching an estimated 105 million kg in 2014. Volumes are expected to continue rising by approximately 5% annually over the next five years. Driven by the rising price of tea and coffee, and premium variants such as coffee pods, value sales rose significantly over the 2010-12 period before falling back to a still robust 6-7% growth annually over 2013 and 2014. Growth in sales is anticipated to be steady at around 6-7% in the coming years. Coffee is significantly the larger market, accounting for almost 85% of total retail sales.
Coffee is also the most innovative of the markets, with notable growth coming from single-serve coffee machines which are tapping into consumer demand for premium products while at home. This report analyses consumer trends in the tea, coffee and hot chocolate category and explores areas of the market where further growth may still be possible.
This report covers tea and coffee consumption for both the in-home and out of home market, including sales through coffee shops/cafés etc. However, please note that market size figures include the in-home market only. Out of home trends are covered throughout the Consumer sections but are not included in the market size and segmentation data. Hot chocolate is also covered in the Consumer sections for context but excluded from the market size data.
Values throughout this report are at constant 2014 prices and devised using Mintel’s deflator which has been tailored to the Canadian market.
There are three broad segments of coffee in the take-home market:
- Instant coffee – This is where, through various processes, the coffee is dehydrated into the form of powder or granules for sale, and prepared by adding these to hot water.
- Roast and ground – This is 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 capsule or pod.
- Ready-to-drink coffee – This is chilled ready-to-drink (RTD) coffee drinks such as Starbucks Frappuccino.
The tea market is segmented as follows:
- Standard/Regular – This includes ordinary tea bags which contain black tea, blends, red and instant teas.
- Decaffeinated tea is used to refer to black tea that has been through a process to remove most of the caffeine content.
- Speciality tea is used to refer to tea which, although similar in appearance to standard tea and also often drunk with milk, is usually sourced from specific high-quality tea plantations and has a distinctive taste. Examples include Earl or Lady Grey, Chai and Darjeeling, Ceylon, Assam and Kenyan blends.
- Fruit and herbal teas are typically infusions which contain pieces of fruit, herbs (eg peppermint), spices or flowers (eg chamomile). Tending not to contain black or green tea, they are generally caffeine-free.
- Green tea is a tea which gives a light green colour when brewed and is generally drunk without milk. In contrast to black tea which is oxidised, green tea is un-oxidised and has a more bitter flavour.
- Instant tea comes in powder or granule form and contains soluble tea solids, sometimes with the addition of sweetener, milk powder and/or flavourings.
Hot chocolate drinks are defined as follows:
- Hot chocolate powder that requires the addition of either milk or water. It also includes products that are ready prepared and need to be heated in the microwave, as well as stir-in spoons (that are stirred into hot milk).
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