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UK Coffee market report

Everything you need to make the right decisions

Providing the most comprehensive and up-to-date information and analysis of the Coffee market, its consumers and the major players who make up that market.

Mintel has the answers you’re looking for

  • What are the key challenges facing the industry?
  • Who is the consumer and what do they want?
  • Where are the opportunities, where are the risks and what lies ahead?

Market

Point of sale market data

In conjunction with IRi, extensive point of sale data shows you what consumers are spending their money on

Market Size

How big is the market today and what is our 5 year forecast? Includes both best & worst case scenarios

Market Segmentation

What are the different segments within the market and how are those individual segments performing?

Consumer

Consumer behaviors

What are consumers looking for, what drives their buying habits and what are their main purchase influencers?

Demographic breakdown

From iGen & Millennials to Baby Boomers & beyond. Who is spending money and what are they spending it on?

Representative sample

We gather our data from real-world consumers, selected to accurately reflect precise global demographics

Players

Company strategy

What are the key players doing, what has been successful for them and what was their marketing spend?

Product innovation

Using data from our Global New Product Database, what products were launched and how well were they perceived?

Opportunities

What happens next, which areas are likely to experience growth and what opportunities exist within the market?

Covered in this report

This Report covers coffee consumption in the retail market only. Therefore, it does not include 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 – this is the largest sector accounting for around 70% of the market. 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 cartridge or pod. The market definition includes decaffeinated coffee.
Excluded

RTD (Ready-To-Drink) coffee drinks, such as Starbucks Frappuccino and ready-to-drink cold brew coffee, are excluded from Mintel’s market size figure for retail coffee, but are discussed in Launch Activity and Innovation, and the Consumer sections of this Report where relevant.

What you need to know

While the retail coffee market has enjoyed volume growth of 5% over 2013-17, performance across the segments has varied. Coffee pods were the main driver of growth over 2013-14; however, pod machine ownership has now plateaued, putting a dampener on volume growth.

Meanwhile, ground coffee and coffee beans have seen volume sales grow on the back of Brits’ connoisseur interest in coffee. Against this backdrop, instant coffee saw sales chipped away over 2013-17 as consumers switched to the other two segments. This trading up, combined with rising inflation, has seen value sales grow ahead of volumes.

There remains notable interest in owning coffee pod machines among current non-owners; however, unlocking this potential is proving challenging with prices of both the machines and the pods a barrier, while the current spotlight on packaging waste is also not working in their favour. Meanwhile, interest in cold brewing coffee at home could open up new usage occasions for ground coffee.

Expert analysis from a specialist in the field

Written by Anita Winther, a leading analyst in the Food & Drink sector, her extensive knowledge delivers in-depth commentary and analysis to highlight current trends and add expert context to the numbers.

Coffee drinking is ingrained among Brits, with usage on-par with the quintessentially British tea. However, a plateauing in pod machine ownership has put the brakes on coffee pods’ growth and slowed the overall volume performance. Reusable pods could polish the green credentials of pod machines and appeal to those put off by the environmental issues surrounding single-use pods. Meanwhile, notable interest in cold-brewing at home highlights this as an area warranting more attention from ground coffee brands.Anita Winther
Food & Drink Analyst

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Table of contents

  1. Overview

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

            • The market
              • Coffee pods lift volumes while inflation boosts values
                • Modest volume growth ahead, with inflation set to continue
                  • Figure 1: Forecast of UK retail value sales of coffee*, 2013-23
                • Dominant instant coffee segment bolstered by inflation
                  • Value growth slows for coffee pods
                    • Figure 2: UK retail value sales of coffee, by segment, 2016-18
                  • Uncertainty around the future of the UK economy
                    • Growth in pod machine ownership stagnates
                      • Companies and brands
                        • Nestlé returns to growth in instant coffee
                          • Figure 3: Leading brands’ share of value sales in the UK retail instant coffee market, 2017/18*
                        • Taylors maintains lead in ground coffee and coffee beans
                          • Figure 4: Leading brands’ share of value sales in the UK retail ground coffee/coffee beans market (excluding coffee pods), 2017/18*
                        • Coffee pods attracts most NPD
                          • Uptick in coffee mix launches
                            • RTD coffee is a hotbed of launch activity
                              • Above-the-line adspend falls
                                • Social aspects of coffee drinking celebrated in campaigns
                                  • L’OR and Taylors campaigns emphasise flavour and expertise
                                    • Nescafé’s lead is rooted in a strong positive image
                                      • The consumer
                                        • Four in five Brits drink coffee
                                          • Figure 5: Types of coffee drunk, June 2018
                                          • Figure 6: Drinking of standard and decaffeinated coffee, June 2018
                                        • Instant coffee remains dominant
                                          • Figure 7: Frequency of drinking coffee, by type, June 2018
                                        • Milk/cream is the most common coffee addition
                                          • Half of coffee drinkers sweeten their brew
                                            • Figure 8: Coffee additions, June 2018
                                          • The wider environmental impact of packaging warrants discussion
                                            • Home-brewing cold brew garners interest
                                              • Figure 9: Behaviours relating to coffee, June 2018
                                            • More guidance is needed on caffeine
                                              • Reusable coffee pods could help tackle environmental concerns
                                                • Figure 10: Attitudes towards coffee, June 2018
                                              • Low usage underpins weak perceptions of RTD coffee
                                                • Figure 11: Qualities associated with chilled ready-to-drink coffee, June 2018
                                              • What we think
                                              • Issues and Insights

                                                • Green credentials of packaging warrant attention also in the coffee category
                                                  • The facts
                                                    • The implications
                                                      • Cold brewing can open new usage occasions for coffee
                                                        • The facts
                                                          • The implications
                                                            • Reusable pods could polish green credentials of pod machines
                                                              • The facts
                                                                • The implications
                                                                • The Market – What You Need to Know

                                                                  • Coffee pods lift volumes while inflation boosts values
                                                                    • Modest volume growth ahead, with inflation set to continue
                                                                      • Dominant instant coffee segment bolstered by inflation
                                                                        • Value growth slows for coffee pods
                                                                          • Uncertainty around the future of the UK economy
                                                                            • Growth in pod machine ownership stagnates
                                                                            • Market Size and Forecast

                                                                              • Inflation sees values grow ahead of volumes
                                                                                • Figure 12: UK retail value and volume sales of coffee*, 2013-23
                                                                              • The future
                                                                                • Figure 13: Forecast of UK retail value sales of coffee*, 2013-23
                                                                                • Figure 14: Forecast of UK retail volume sales of coffee*, 2013-23
                                                                              • Forecast methodology
                                                                              • Market Segmentation

                                                                                • Inflation boosts value growth for instant coffee
                                                                                  • Figure 15: UK retail value and volume sales of coffee, by segment, 2016-18
                                                                                • Ground coffee and beans remain a growth area
                                                                                  • Strong but slowing value growth continues for coffee pods
                                                                                  • Market Drivers

                                                                                    • Future of the UK economy remains uncertain
                                                                                      • Income squeeze eases
                                                                                        • Figure 16: Annual percentage change in CPI and AWE (regular pay), monthly basis, January 2012-April 2018
                                                                                      • Competition from coffee shops remains strong
                                                                                        • Coffee retail sales should be supported by aging population
                                                                                          • Coffee drinking is now on par with tea
                                                                                            • Figure 17: UK household purchase volumes of tea and coffee, 2000-16/17
                                                                                          • Ownership of pod machines plateaus
                                                                                            • Figure 18: Coffee pod machine ownership, June 2018
                                                                                        • Companies and Brands – What You Need to Know

                                                                                          • Nestlé returns to growth in instant coffee
                                                                                            • Taylors maintains lead in ground coffee and coffee beans
                                                                                              • Coffee pods attracts most NPD
                                                                                                • Uptick in coffee mix launches
                                                                                                  • RTD coffee is a hotbed of launch activity
                                                                                                    • Above-the-line adspend falls
                                                                                                      • Social aspects of coffee drinking celebrated in campaigns
                                                                                                        • L’OR and Taylors campaigns emphasise flavour and expertise
                                                                                                          • Nescafé’s lead is rooted in a strong positive image
                                                                                                          • Market Share

                                                                                                            • Nestlé reverses its fortunes
                                                                                                              • Figure 19: Leading brands’ sales and shares in the UK retail instant coffee market, by value and volume, 2016/17 and 2017/18
                                                                                                            • JDE sees mixed performances from its brands
                                                                                                              • Carte Noire sales fall ahead of its licence moving over to Lavazza
                                                                                                                • Taylors maintains lead in ground coffee and coffee beans
                                                                                                                  • Figure 20: Leading brands’ sales and shares in the UK retail ground coffee/coffee beans market (excluding coffee pods), by value and volume, 2016/17 and 2017/18
                                                                                                                • Own-label continues to gain share
                                                                                                                • Launch Activity and Innovation

                                                                                                                  • Coffee pods continue to attract NPD
                                                                                                                    • Figure 21: Share of new product launches in the UK retail coffee market, by format, 2014-18
                                                                                                                  • Nestlé relaunches Nescafé Gold range
                                                                                                                    • Figure 22: Relaunched Nescafé Gold range, 2017
                                                                                                                    • Figure 23: Share of new product launches in the UK retail coffee market, by top 10 companies (sorted by 2017), 2014-18
                                                                                                                  • JDE launches luxury brand L’OR in the UK
                                                                                                                    • Kenco range is extended
                                                                                                                      • Figure 24: JDE launched in the coffee market, 2017 and 2018
                                                                                                                    • Lavazza reintroduces Carte Noire instant coffee
                                                                                                                      • CaféPod unveils bold new identity and goes beyond pods
                                                                                                                        • Organic and Fairtrade coffees launched by Rombouts
                                                                                                                          • Change Please gains listings in Sainsbury’s
                                                                                                                            • Tassimo and Nespresso ramp up the treat factor
                                                                                                                              • Figure 25: Indulgent launches in the UK coffee market, 2017
                                                                                                                            • New brands dip their toes into coffee
                                                                                                                              • RTD coffee is a hotbed of launch activity
                                                                                                                                • Nescafé unveils Azera Nitro
                                                                                                                                  • Kenco launches RTD and iced coffee mixes
                                                                                                                                    • Alpro enters RTD chilled coffee category, coffee soda launched by Sandows
                                                                                                                                    • Advertising and Marketing Activity

                                                                                                                                      • Above-the-line spend continues to decline
                                                                                                                                        • Figure 26: Total above-the-line, online display, and direct mail advertising expenditure on coffee, 2014-18
                                                                                                                                      • Nestlé cuts spend but continues support across coffee portfolio
                                                                                                                                        • Lavazza and Nescafé Gold celebrate the social aspects of coffee drinking
                                                                                                                                          • Lavazza sings an ‘Ode to Coffee’ for its ‘Born Social’ campaign
                                                                                                                                            • Nescafé Gold spotlights on the “moments that matter”
                                                                                                                                              • Figure 27: Total above-the-line, online display, and direct mail advertising expenditure on coffee, by top four advertisers, 2014-18
                                                                                                                                            • The morning remains at the centre of Nescafé Original campaigns
                                                                                                                                              • Flavour and expertise at the centre of L’OR and Taylors campaigns
                                                                                                                                                • JDE shifts spend to ‘gold standard’ L’OR
                                                                                                                                                  • Kenco plays up its expertise with the ‘Cofficionado’
                                                                                                                                                    • Patrick Stewart narrates Taylors of Harrogate’s journey into flavour
                                                                                                                                                      • Nespresso transform aromas into melodies
                                                                                                                                                        • Nespresso shifts focus onto its farmers and sustainability
                                                                                                                                                          • Lavazza invites four young people on a journey to discover sustainable coffee
                                                                                                                                                            • Percol opens “the world’s most sustainable coffee shop” pop-up
                                                                                                                                                              • Nielsen Ad Intel coverage
                                                                                                                                                              • Brand Research

                                                                                                                                                                  • Brand map
                                                                                                                                                                    • Figure 28: Attitudes towards and usage of selected brands, June 2018
                                                                                                                                                                  • Key brand metrics
                                                                                                                                                                    • Figure 29: Key metrics for selected brands, June 2018
                                                                                                                                                                  • Brand attitudes: Nescafé excels on trust and value
                                                                                                                                                                    • Figure 30: Attitudes, by brand, June 2018
                                                                                                                                                                  • Brand personality: Tassimo stands out as fun
                                                                                                                                                                    • Figure 31: Brand personality – macro image, June 2018
                                                                                                                                                                  • Taylors of Harrogate and Lavazza lead on connoisseur
                                                                                                                                                                    • Figure 32: Brand personality – micro image, June 2018
                                                                                                                                                                  • Brand analysis
                                                                                                                                                                    • Taylors of Harrogate has the strongest premium image
                                                                                                                                                                      • Figure 33: User profile of Taylors of Harrogate, June 2018
                                                                                                                                                                    • Nescafé’s lead is rooted in a strong positive image
                                                                                                                                                                      • Figure 34: User profile of Nescafé, June 2018
                                                                                                                                                                    • Low usage limits strength of views on Nespresso
                                                                                                                                                                      • Figure 35: User profile of Nespresso, June 2018
                                                                                                                                                                    • Kenco is seen as the most ethical brand
                                                                                                                                                                      • Figure 36: User profile of Kenco, June 2018
                                                                                                                                                                    • Lavazza is seen most widely as sophisticated, stylish, and authentic
                                                                                                                                                                      • Figure 37: User profile of Lavazza, June 2018
                                                                                                                                                                    • Tassimo is seen as the most innovative, fun brand
                                                                                                                                                                      • Figure 38: User profile of Tassimo, June 2018
                                                                                                                                                                  • The Consumer – What You Need to Know

                                                                                                                                                                    • Four in five Brits drink coffee
                                                                                                                                                                      • Instant coffee remains dominant
                                                                                                                                                                        • Milk/cream is the most common coffee addition
                                                                                                                                                                          • Half of coffee drinkers sweeten their brew
                                                                                                                                                                            • The wider environmental impact of packaging warrants discussion
                                                                                                                                                                              • Home-brewing cold brew garners interest
                                                                                                                                                                                • More guidance is needed on caffeine
                                                                                                                                                                                  • Reusable coffee pods could help tackle environmental concerns
                                                                                                                                                                                    • Low usage underpins weak perceptions of RTD coffee
                                                                                                                                                                                    • Coffee Drinking at Home

                                                                                                                                                                                      • Four in five Brits drink coffee
                                                                                                                                                                                        • Figure 39: Types of coffee drunk, June 2018
                                                                                                                                                                                      • Instant coffee remains dominant
                                                                                                                                                                                        • Affluent consumers are most likely to use ground coffee and beans
                                                                                                                                                                                          • Coffee mixes and RTD coffees most popular among the young
                                                                                                                                                                                            • Coffee from pods is drunk by 15%
                                                                                                                                                                                              • Figure 40: Frequency of drinking coffee, by type, June 2018
                                                                                                                                                                                            • One in five drink decaf coffee
                                                                                                                                                                                              • Figure 41: Drinking of standard and decaffeinated coffee, June 2018
                                                                                                                                                                                          • What Brits Add to Their Coffee

                                                                                                                                                                                            • Most people drink their coffee with additions
                                                                                                                                                                                              • Figure 42: Coffee additions, June 2018
                                                                                                                                                                                            • Milk/cream is the most common coffee addition
                                                                                                                                                                                              • Figure 43: Examples of coffee products highlighting suitability with milk, 2017/18
                                                                                                                                                                                              • Figure 44: Examples of milk and cream marketed for coffee drinks, 2016-17
                                                                                                                                                                                            • Half of coffee drinkers sweeten their drink
                                                                                                                                                                                              • Opportunities for less bitter coffees to highlight their credentials
                                                                                                                                                                                              • Coffee Behaviours

                                                                                                                                                                                                • Packaging waste draws attention also in the coffee category
                                                                                                                                                                                                  • The wider environmental impact of packaging warrants discussion
                                                                                                                                                                                                    • Figure 45: Refill instant coffee products highlighting green packaging credentials, 2017-18
                                                                                                                                                                                                  • UK plastic collection system poses a challenge to recycling
                                                                                                                                                                                                    • Compostable packaging explored internationally
                                                                                                                                                                                                      • Figure 46: Examples of US coffee products with compostable packaging, 2018
                                                                                                                                                                                                      • Figure 47: Behaviours relating to coffee, June 2018
                                                                                                                                                                                                    • Interest in home-brewing cold brew opens new occasions for ground coffee
                                                                                                                                                                                                      • US offers inspiration for cold brew focused NPD
                                                                                                                                                                                                        • Figure 48: Launches of cold brew coffee products in the US market, 2017-18
                                                                                                                                                                                                    • Attitudes towards Coffee

                                                                                                                                                                                                      • More guidance is needed on caffeine
                                                                                                                                                                                                        • Figure 49: Attitudes towards coffee, June 2018
                                                                                                                                                                                                      • Coffee pods’ green credentials spark widespread concern
                                                                                                                                                                                                        • Reusable coffee pods garner interest
                                                                                                                                                                                                          • Figure 50: Bluecup refillable Nespresso-compatible capsules, 2018
                                                                                                                                                                                                      • Qualities Associated with Chilled RTD Coffee

                                                                                                                                                                                                        • Low usage dilutes perceptions of RTD coffee
                                                                                                                                                                                                          • Figure 51: Qualities associated with chilled ready-to-drink coffee, June 2018
                                                                                                                                                                                                        • Positive associations are strongest, but not overarching
                                                                                                                                                                                                        • Appendix – Data Sources, Abbreviations, and Supporting Information

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

                                                                                                                                                                                                                • Forecast methodology
                                                                                                                                                                                                                    • Figure 52: Total UK retail value sales of coffee*, best- and worst-case forecast, 2018-23
                                                                                                                                                                                                                    • Figure 53: Total UK retail volume sales of coffee*, best- and worst-case forecast, 2018-23
                                                                                                                                                                                                                • Appendix – Market Share

                                                                                                                                                                                                                    • Figure 54: Leading manufacturers’ sales and shares in the UK retail instant coffee market, by value and volume, 2016/17 and 2017/18
                                                                                                                                                                                                                    • Figure 55: Leading manufacturers’ sales and shares in the UK retail ground coffee/coffee beans market (excluding coffee pods), by value and volume, 2016/17 and 2017/18
                                                                                                                                                                                                                • Appendix – Launch Activity and Innovation

                                                                                                                                                                                                                    • Figure 56: Share of new product launches in the UK retail coffee market, by branded vs private label, 2014-18
                                                                                                                                                                                                                    • Figure 57: Share of new product launches in the UK retail coffee market, by launch type, 2014-18
                                                                                                                                                                                                                    • Figure 58: Share of new product launches in the UK retail coffee market, by top 10 claims, 2014-18