Description

“The COVID-19 pandemic brought a pervasive feeling of fear and anxiety for many. As Canadians were asked to shelter in place, many sought comfort in what they know, including coffee and tea. During the early days of the pandemic, coffee sales at retail increased amid the closure of many coffee shops as lockdown measures were in full-force. This raises the question: what long-term impact will COVID-19 have on coffee and tea? The answer will be determined by how broader behaviours impact the role of coffee shops. Coffee and, to a lesser extent, tea will undoubtedly remain important to Canadians, but where Canadians get these beverages may be impacted.”

– Joel Gregoire, Associate Director Food & Drink

This report covers the following issues:

  • Retail sales of coffee and tea benefited in the early days of the pandemic as many Canadians “sheltered in place” and coffee shops and other foodservice locations shut for a period of time. Foodservice traffic will likely be impacted throughout the duration of the pandemic. However, the long-term impact is yet to be understood and will be dependent partly on how the broader work and commuting landscape changes, such as whether working-from-home remains the norm.
  • Given the habitual nature of coffee and tea, the impact of a recession on overall consumption patterns will likely be nominal. The most pervasive impact may be seen in a shift from out-of-home to in-home purchases, influenced by a reduction in disposable income for many, spurred on by higher unemployment rates. That said, Canada has a very robust out-of-home coffee industry, and larger players in the space will likely weather any economic storm brought on by the virus.
  • Feedback shows that coffee proves more popular with Canadians than tea. Coffee benefits from its particularly habitual nature, leading to a heightened desire for familiarity among many coffee drinkers, while unique flavours garner more interest when it comes to tea.
  • Tea is strongly associated with physical and emotional wellbeing. In the context of COVID-19, which has led to heighted levels of anxiety among consumers, tea is well-positioned as a beverage that can help alleviate stress and support a sense of balance and calm.

Table of Contents

  1. Overview

    • What you need to know
      • Definition
        • Consumer research
          • Market sizes
          • Executive Summary

              • Top takeaways
                • Market overview
                  • Impact of COVID-19 on coffee and tea
                    • Figure 1: Short, medium and long-term impact of COVID-19 on coffee and tea, July 2020
                  • Opportunities and challenges
                    • The ‘coffee shop’ may be reimagined
                      • Warm weather offers opportunity to expand patios
                        • COVID-19 will spur on coffee shops to further integrate tech
                          • Less dominant coffee chains need to consider strategic changes
                            • Opportunity to bring more premium coffee experiences into the home
                              • Figure 2: Nescafé Gold® SPECIALTY – Barista Romance, May 2020
                            • Tea is well positioned during a health crisis given its focus on well-being
                              • Can tea encroach on coffee’s biggest advantage: habit?
                                • Key trends
                                  • Coffee biggest advantage over tea is habit…
                                    • …but tea elicits an openness to flavour innovation
                                      • Tea proves more popular with younger Canadians
                                        • Immigration supports tea growth in Canada
                                          • Supporting coffee consumption among women remains an opportunity
                                            • For men, coffee quality has more influence on where they eat breakfast
                                              • Tea remains underdeveloped out-of-home relative to coffee
                                                • Figure 3: Where coffee and tea is sourced in a typical month, April 2020
                                            • The Market – Key Takeaways

                                              • COVID-19 likely benefits coffee sales at retail
                                                • Tea stands to receive a modest bump at retail due to COVID-19
                                                  • Slow economic recovery leads to uncertainty
                                                  • Market Size and Forecast

                                                    • COVID-19 likely benefits coffee sales at retail
                                                        • Figure 4: Total Canada retail coffee sales and fan chart forecast of market, at current prices, 2014-24
                                                        • Figure 5: Total Canada retail coffee sales and forecast of market, at current prices, 2014-24
                                                      • Tea stands to receive a modest bump at retail due to COVID-19
                                                        • Figure 6: Total Canada retail tea & infusion sales and fan chart forecast of market, at current prices, 2014-24
                                                        • Figure 7: Total Canada retail tea & infusion sales and forecast of market, at current prices, 2014-24
                                                      • Impact of COVID-19 on coffee and tea
                                                        • Figure 8: Short, medium and long-term impact of COVID-19 on coffee and tea, July 2020
                                                      • Lockdown
                                                        • Re-emergence
                                                          • Recovery
                                                            • COVID-19: Canada context
                                                            • Market Factors

                                                              • Increase in working-from-home negatively impacts coffee and tea sales at foodservice
                                                                • Slow economic recovery leads to uncertainty
                                                                  • Immigration is fuelling Canada’s population growth…
                                                                    • Figure 9: Percentage of Canadians who are visible minorities or not visible minorities, by age, 2016
                                                                  • …and Asia is the primary source
                                                                    • Figure 10: Distribution of immigrants living in Canada, by region of birth, 1996-2036
                                                                  • What a brand stands for matters more than ever
                                                                    • Figure 11: starbuckstshirt Instagram post, June 2020
                                                                • Key Players – What You Need to Know

                                                                  • Retail coffee sales peaked during the early days of lockdown
                                                                    • Coffee and tea launches cross over into each other’s ‘turf’
                                                                      • Functional benefits in tea can extend beyond ‘relaxation’
                                                                      • What’s Working

                                                                        • Retail coffee sales peaked during the early days of lockdown
                                                                        • Challenges

                                                                          • COVID-19 accelerates change in business models
                                                                          • Opportunities

                                                                            • Coffee and tea launches cross over into each other’s ‘turf’
                                                                              • Figure 12: Wildcrafter Spiritual Chill Decaffeinated Organic Ground Coffee (US), June 2020
                                                                              • Figure 13: Copper Cow Coffee Lavender Latté Vietnamese Coffee Pour Over Set (US), May 2020
                                                                              • Figure 14: Orientis Gourmet Invigorating Blend of Spice (Canada), May 2020
                                                                            • ‘Plant-power’ makes inroads into RTD coffee
                                                                              • Figure 15: Stumptown Coffee Original Cold Brew Coffee with Oat Milk (US), March 2020
                                                                              • Figure 16: Chameleon Cold Brew Original Organic Oat Milk Coffee (US), April 2020
                                                                            • Bedtime relaxation claims can support routine tea drinking
                                                                              • Figure 17: Imperial Organic Organic Easy Night Herbal Tea (Canada), June 2020
                                                                              • Figure 18: teapigs Snooze Sleepy Tea (US), October 2019
                                                                              • Figure 19: Higher Living Organic Sweet Dreams Tea (US), December 2019
                                                                              • Figure 20: Solimo Night Time Herbal Tea (US), June 2020
                                                                            • Functional benefits in tea can extend beyond ‘relaxation’
                                                                              • Figure 21: Earth Mama Organics Organic Heartburn Tea (Canada), March 2020
                                                                              • Figure 22: Veda Wellness Teas Focus Tea (Canada), November 2019
                                                                              • Figure 23: Palais des Thés Japanese Relaxation Detox tea (US), July 2020
                                                                              • Figure 24: The Republic of Tea Blueberry Lavender Tea (US), February 2020
                                                                              • Figure 25: Brüst Beverage Cold Brew Protein (Canada), March 2020
                                                                            • Coffee/tea and indulgence go hand in hand
                                                                              • Figure 26: InoTea Brown Sugar Bubble Tea (US), June 2020
                                                                              • Figure 27: Starbucks Coffee Smoked Butterscotch Latte (US), February 2020
                                                                              • Figure 28: Baileys Salted Caramel Cold Brew Coffee (US), October 2019
                                                                              • Figure 29: Forto The Original Donut Shop Sweet & Creamy Latte Coffee Shot (US), December 2019
                                                                              • Figure 30: Godiva Chocolatier Chocolate Truffle Ground Coffee (US), June 2020
                                                                              • Figure 31: Barissimo Dulche de Leche Ground Coffee (US), May 2020
                                                                              • Figure 32: Coca-Cola with Coffee (Romania), April 2020
                                                                          • The Consumer – What You Need to Know

                                                                            • Canadians prefer coffee over tea
                                                                              • Gap between in-home and out-of-home broader for tea
                                                                                • Brand and price are most important to consumers when purchasing coffee and tea
                                                                                  • Flavour innovation proves more important in tea
                                                                                    • Coffee’s advantage over tea lies in routine
                                                                                      • Tea and well-being are synonymous
                                                                                      • Coffee versus Tea Usage

                                                                                        • Canadians prefer coffee over tea
                                                                                          • Figure 33: Percent of Canadians who drink any coffee and/or tea in a typical month, April 2020
                                                                                          • Figure 34: Percent of coffee drinkers who drink tea and tea drinkers who drink coffee in a typical month, April 2020
                                                                                        • Difference between coffee and tea usage expands with age
                                                                                          • Figure 35: Percent of Canadians who drink any coffee and/or tea in a typical month, by age, April 2020
                                                                                          • Figure 36: Percent who drink any coffee and/or tea in a typical month, by age and gender, April 2020
                                                                                          • Figure 37: Percent who drink any coffee and/or tea in a typical month, Asian Canadians vs overall, April 2020
                                                                                        • Brewed coffee dominates, but plenty of room exists for other formats
                                                                                          • Figure 38: Types of coffee drunk in a typical month, April 2020
                                                                                          • Figure 39: Types of coffee consumed in a typical month, by age, April 2020
                                                                                          • Figure 40: Types of coffee drunk in a typical month, students vs non-students, April 2020
                                                                                          • Figure 41: Types of coffee drunk in a typical month, Chinese Canadians and South Asians vs overall, April 2020
                                                                                        • Relative parity between consumption of black and green tea
                                                                                          • Figure 42: Types of teas drunk in a typical month, April 2020
                                                                                          • Figure 43: Types of teas drunk in a typical month, by age, April 2020
                                                                                          • Figure 44: Types of teas drunk in a typical month, Chinese Canadians and South Asians vs overall, April 2020
                                                                                      • In-home Versus Out-of-home Behaviour

                                                                                        • Gap between in and out-of-home broader for tea
                                                                                          • Figure 45: Where coffee and tea are sourced in a typical month, April 2020
                                                                                        • Age and different demographic breaks impact where coffee and tea are consumed
                                                                                          • Figure 46: Where coffee and tea are sourced in a typical month, by age, April 2020
                                                                                          • Figure 47: Where coffee and tea are sourced in a typical month, students vs non-students, April 2020
                                                                                          • Figure 48: Where coffee is sourced in a typical month, Chinese Canadians and South Asians vs overall, April 2020
                                                                                          • Figure 49: Where coffee and tea is sourced in a typical month, Quebec vs overall, April 2020
                                                                                      • Important Factors When Purchasing Coffee and Tea

                                                                                        • Brand and price are most important to consumers when purchasing coffee and tea
                                                                                          • Figure 50: Important considerations when buying coffee and/or tea, April 2020
                                                                                        • Older and younger coffee drinkers consider different factors when purchasing coffee…
                                                                                          • Figure 51: Important considerations when buying coffee, by age, April 2020
                                                                                          • Figure 52: Important considerations when buying coffee, Chinese Canadians and South Asians vs overall population, April 2020
                                                                                        • …as is similar for tea
                                                                                          • Figure 53: Important considerations when buying tea, by age, April 2020
                                                                                          • Figure 54: Important considerations when buying tea, Chinese Canadians and South Asians* vs overall population, April 2020
                                                                                      • Areas of Interest in Coffee and Tea

                                                                                        • Flavour innovation proves more important in tea
                                                                                          • Figure 55: Interested in trying in regards to coffee and tea, April 2020
                                                                                          • Figure 56: Copper Cow Coffee Cream Vietnamese Coffee Pour Over Set (US), May 2020
                                                                                        • Women show greater openness to innovation in tea, while men show greater openness to innovation in coffee
                                                                                          • Figure 57: Interested in trying in regards to coffee and tea, by gender, April 2020
                                                                                        • Younger consumers show greater interest in both coffee and tea innovation
                                                                                          • Figure 58: Interested in trying in regards to coffee and tea, by age, April 2020
                                                                                          • Figure 59: Interested in trying in regards to coffee and tea, students vs non-students, April 2020
                                                                                          • Figure 60: Interested in trying in regards to coffee and tea, Chinese Canadians and South Asians vs overall, April 2020
                                                                                      • Attitudes toward Coffee Versus Tea

                                                                                        • Coffee’s advantage over tea lies in routine
                                                                                            • Figure 61: Statements that are true for coffee and tea drinkers, April 2020
                                                                                            • Figure 62: Statements that are true for coffee and tea drinkers around “drinking more”, by age, April 2020
                                                                                            • Figure 63: Statements that are true for coffee and tea drinkers around routine, by age and gender, April 2020
                                                                                          • Ethnicity and region impact attitudes toward coffee and tea
                                                                                            • Figure 64: Statements that are true for coffee and tea drinkers around routine, Chinese and South Asian Canadians vs overall, April 2020
                                                                                            • Figure 65: Statements that are true for coffee and tea drinkers around routine, Quebec vs overall, April 2020
                                                                                        • Attitudes toward Coffee

                                                                                          • Routine dominates as an association with coffee
                                                                                            • Figure 66: Statements that are true for coffee, April 2020
                                                                                          • Two-in-five consumers willing to pay more for higher-quality coffee
                                                                                            • Figure 67: “Higher-quality coffee is worth paying more for”, by age, April 2020
                                                                                            • Figure 68: “Higher-quality coffee is worth paying more for”, by age and household income, April 2020
                                                                                          • Women are more likely to moderate their coffee consumption
                                                                                            • Figure 69: “I try to limit the amount of coffee I drink”, by gender, April 2020
                                                                                            • Figure 70: “I try to limit the amount of coffee I drink”, by age, April 2020
                                                                                            • Figure 71: “I try to limit the amount of coffee I drink”, students vs non-students, April 2020
                                                                                          • Men prefer stronger flavoured coffee
                                                                                            • Figure 72: “I prefer strong flavoured coffee”, by gender, April 2020
                                                                                            • Figure 73: “I prefer strong flavoured coffee”, by parental status and age of children, April 2020
                                                                                            • Figure 74: “I prefer strong flavoured coffee”, university/college students vs non-students, April 2020
                                                                                          • Men are more likely to consider coffee when deciding where they eat breakfast
                                                                                            • Figure 75: “If a restaurant has inferior coffee, I won’t go there for breakfast”, by gender, April 2020
                                                                                            • Figure 76: “If a restaurant has inferior coffee, I won’t go there for breakfast”, Chinese Canadians, other Asians vs overall, April 2020
                                                                                          • Younger drinkers are more likely to have environmental concerns over coffee pods
                                                                                            • Figure 77: “The convenience coffee pods offer makes up for the waste they generate”, by age, April 2020
                                                                                        • Attitudes toward Tea

                                                                                          • Tea and wellbeing are synonymous
                                                                                            • Figure 78: Statements that are true for tea, April 2020
                                                                                          • Younger consumers are more likely to associate tea with wellbeing
                                                                                            • Figure 79: “Tea is healthier to drink than coffee” and “tea helps me relieve stress”, by age, April 2020
                                                                                            • Figure 80: “Tea is healthier to drink than coffee” and “tea helps me relieve stress”, by gender, April 2020
                                                                                          • Younger tea consumers are more likely to consider tea a good substitute for coffee
                                                                                            • Figure 81: “Tea is a good substitute for coffee”, by age, April 2020
                                                                                            • Figure 82: agree “Tea is a good substitute for coffee”, household income <$70K vs $70K+, April 2020
                                                                                            • Figure 83: agree “Tea is a good substitute for coffee”, Asian Canadians vs overall, April 2020
                                                                                          • Background impacts the importance of cultural heritage in tea
                                                                                            • Figure 84: “The cultural heritage of tea is part of the reason I drink it”, by background, April 2020
                                                                                            • Figure 85: Retail market volume consumption per capita of tea and infusions, by country, 2018
                                                                                        • Appendix – Data Sources and Abbreviations

                                                                                          • Data sources
                                                                                            • Sales Data
                                                                                              • Consumer survey data
                                                                                                • Consumer qualitative research
                                                                                                  • Abbreviations and terms
                                                                                                    • Abbreviations

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