Canada Coffee & Coffee Shops Market Report 2023

Overview

• What you need to know
• This Report looks at the following areas
• Definition

Executive Summary

• Top Takeaways
• Consumer trends
• Winning share is difficult with coffee drinking habits so deeply rooted
• Brands can capitalize on coffee’s versatility
• Canadians respond to bolder flavours
• Competitive strategies
• Coffee’s value can be bolstered by added benefits
• Adapting to the post-pandemic work environment is crucial to the growth of coffee shops
• Coffee brands must offer budget-friendly solutions
• Market predictions
• Coffee needs to balance familiarity with newness
• Despite economic uncertainty, coffee shops remain crucial to Canada’s foodservice culture
  • Figure 1: Category outlook for coffee and coffee shops, 2023-28
• Opportunities
• Beyond supplying a boost of energy, coffee can also support balance
• It’s important to ‘chill out’ when communicating with younger adults
• Climate change’s impact will amplify sustainability’s importance as it relates to coffee
• The Quebec coffee consumer
• Newer Canadians and coffee

Market Drivers

• Coffee is not immune from inflation’s impact
  • Figure 2: Canadian year-over-year consumer price index (annualized inflation rate) for all items and food from retail, by month, January 2019-June 2023
  • Figure 3: Monthly average retail prices for coffee, January 2017 – May 2023
• Many continue to work from home, yet foodservice has rebounded
  • Figure 4: Where employed Canadians work, 2022 vs 2023
• • Figure 5: Dollars spent at limited-services eating places in Canada by month, 2019-23
• Climate change is likely to impact coffee production, yet Canadians are not overly-concerned
  • Figure 6: Global annual mean surface air temperature change, 1880-22
  • Figure 7: Important considerations when choosing coffee, by select countries, 2023
• • Figure 8: This is Atomo!, August 2021

Competitive Strategies and Market Opportunities

• Opportunity to supply added benefits
  • Figure 9: Four Sigmatic Balance Adaptogen Ground Coffee with Ashwagandha (Canada), April 2023
  • Figure 10: Four Sigmatic Perform Ground Coffee with L-Theanine & Cordyceps Mushrooms (US), November 2022
• • Figure 11: Rokit Pods Immunity Boost Nespresso Compatible Pods (UK), March 2023
  • Figure 12: Laird Superfood Functional Focus Medium Roast Ground Peruvian Coffee (US), September 2021
• • Figure 13: Chamberlain Coffee Sleepy Sloth Decaf Blend Coffee (US), July 2022
  • Figure 14: Vital Proteins Unflavored Crystallized Coffee (US), February 2022
• • Figure 15: Innerbloom Elixir Cold Brew Coffee (New Zealand), March 2023
• Less caffeine doesn’t have to mean no caffeine
  • Figure 16: Lost Sheep Coffee Fifty Fifty Half Caffeine Compostable Capsules (UK), March 2022
  • Figure 17: Kicking Horse Coffee Half Ass Decaffeinated Organic Whole Bean Coffee (Canada), February 2022
• Sustainability and coffee pair well together in different ways
  • Figure 18: Café Royal CoffeeB Espresso Balls (France), March 2023
  • Figure 19: Segelwerk Lazy Organic Roast (Germany), April 2023
• • Figure 20: Kalamazoo Coffee Co Moonlight Maple Walnut Flavored Whole Bean Coffee (US), September 2022
  • Figure 21: PC President’s Choice Espresso Forte Coffee (Canada), March 2023
• • Figure 22: Nescafé Freeze Dried Soluble Coffee (Ireland), March 2023
• Less tangible experiences and unique formats can be a differentiator for coffee brands
  • Figure 23: Coffee Uplifts People Honey Berry Mocha Java Medium Roast Ground Coffee (US), December 2021
• • Figure 24: Copper Cow Coffee Classic Black Premium Vietnamese Pour Over Coffee (US), March 2022
  • Figure 25: Mud Coffee Mudtrucker Coffee (US), October 2022
• • Figure 26: The Get Down Coffee Co. Drip Drip Whole bean Coffee (US), March 2023
  • Figure 27: Goshen Coffee Roaster Bright Eyed Breakfast Blend Light Roast Whole Bean (US), November 2022
• • Figure 28: Industry Beans Sparkling Single Origin Cold Brew Coffee (Australia), January 2023
  • Figure 29: Whole Foods Market Organic Dark Roast Coffee (US), July 2022
• • Figure 30: Starbucks Coffee On Tap Cold & Crafted Cold Brew Unsweetened Black Coffee (US), June 2022
• Coffee makes a great base for a range of flavours
  • Figure 31: Starbucks Cold Brew Coconut Chocolate Flavored Coffee Concentrate (US), August 2022
  • Figure 32: Oatly! Camellia Flavour Oat Latte (China), March 2023
• • Figure 33: Good & Gather Hot Buttery Rum Coffee (US), December 2021
  • Figure 34: Giant Eagle Brown Sugar Bourbon Single Serve Brew Cups (US), December 2022
• • Figure 35: Barissimo Coffee Bourbon Pecan Coffee K-Cups (US), November 2021
  • Figure 36: Cookie Jar Coffee Peanut Butter Cookie Flavored Coffee (US), August 2022
• • Figure 37: International Delight Reese’s Iced Coffee (US), March 2022
• Technology enables more automation at foodservice, but will this cheapen the experience?
• • Figure 38: Coffee Robot C1 Pro V103, August 2023
• The at home barista movement enables more opportunity for smarter coffee machines
  • Figure 39: Artly Coffee Instagram post, July 2023
• • Figure 40: Thomas Mair Design Instagram post, October 2022

The Coffee & Coffee Shop Consumer – Fast Facts

In-home vs Out-of-home Coffee Usage

• Nearly all Canadian adults drink coffee
  • Figure 41: Where Canadians drink coffee, 2023
• Younger adults are as likely to drink coffee out-of-home as they are in-home
  • Figure 42: Where Canadians drink coffee, by age, 2023
• • Figure 43: Where Canadians drink coffee, newer Canadians vs overall, 2023
• • Figure 44: Where Canadians drink coffee, by location, 2023

Types of Coffee Drunk at Home

• Ground coffee is the coffee of choice for Canadians when at home
  • Figure 45: Types of coffee drunk at home, 2023
• Instant and RTD coffees hold particular appeal with younger adults
  • Figure 46: Types of coffee drunk at home (select), by age, 2023
• • Figure 47: Types of coffee drunk at home, newer Canadians vs overall, 2023
• • Figure 48: Types of coffee drunk at home (select), by location, 2023

Change in at Home Coffee Usage By Type

• Claimed usage of single-cup pods has jumped versus before the pandemic
  • Figure 49: Change in at home coffee usage among those who use each type, 2023
• Younger consumers are driving coffee’s growth at home
  • Figure 50: Consumers who are drinking more coffee at home among those who use each type, by age, 2023
• • Figure 51: Consumers who are drinking more coffee at home among those who use each, newer Canadians vs overall, 2023

What Matters When Purchasing Coffee

• Price and brand are foundational considerations
  • Figure 52: What’s important when choosing which coffee to purchase, 2023
• • Figure 53: Five Elephant House Blend Premium Quality Filter Coffee (Germany), October 2022
• Different preferences matter more to men
  • Figure 54: What’s important when choosing which coffee to purchase (select), men vs women, 2023
• • Figure 55: What’s important when choosing which coffee to purchase (select), by age, 2023
• • Figure 56: What’s important when choosing which coffee to purchase (select), newer Canadians vs overall, 2023
• • Figure 57: Importance of coffee being responsibly sourced, British Columbia vs overall, 2023

Where Coffee is Purchased Out-of-home

• Tim Hortons is the main choice for Canadians when getting coffee from foodservice
  • Figure 58: Where coffee is purchased out-of-home, 2023
• Younger women are more likely to drink coffee from Starbucks
  • Figure 59: Where coffee is purchased out-of-home (select), men vs women, 2023
• • Figure 60: Where coffee is purchased out-of-home, by age, 2023
• • Figure 61: Where coffee is purchased out-of-home (select), newer Canadians vs overall, 2023
• One’s education level impacts where they purchase coffee
  • Figure 62: Where coffee is purchased out-of-home (select), by level of education, 2023
• • Figure 63: Purchase of coffee at Tim Hortons, by work location, 2023
• Starbucks’ strength is in cities
  • Figure 64: Where coffee is purchased out-of-home (select), by location, 2023
• • Figure 65: Where coffee is purchased out-of-home, by region, 2023

Change in Where Coffee is Purchased Out-of-home by Operator

• Tim Hortons has best weathered the prolonged impact of the pandemic
  • Figure 66: Change in where consumers get coffee out-of-home versus the start of the pandemic among those who visit each operator, 2023
• Demographic factors affect growth
  • Figure 67: Visiting “more often” to get coffee versus the start of the pandemic among those who visit each operator, by age, 2023
• • Figure 68: Visiting “more often” to get coffee versus the start of the pandemic among those who visit each operator (select), newer Canadians vs overall, 2023

What Matters When Choosing Coffee Shops

• Quality dominates when choosing which coffee shops to visit
  • Figure 69: What’s important when choosing coffee shops, 2023
• Different considerations matter more to men and women
  • Figure 70: What’s important when choosing coffee shops (select), men vs women, 2023
• • Figure 71: What’s important when choosing coffee shops, by age, 2023
• • Figure 72: What’s important when choosing coffee shops (select), newer Canadians vs overall, 2023
• • Figure 73: What’s important when choosing coffee shops (select), student vs non-students, 2023
• City dwellers are more likely to consider a wider variety of factors
  • Figure 74: What’s important when choosing coffee shops (select), by location, 2023

Areas of Interest in Coffee

• Coffee with ‘mental benefits’ ranks surprisingly high as an area of interest
  • Figure 75: Areas of interest when it comes to coffee, 2023
• Women show more interest in a number of areas
  • Figure 76: Areas of interest when it comes to coffee (select), men vs women, 2023
• • Figure 77: Areas of interest when it comes to coffee, by age, 2023
• • Figure 78: Areas of interest when it comes to coffee (select), newer Canadians vs overall, 2023

Attitudes toward the Pandemic’s Impact on Coffee

• Half of Canadians say the pandemic has affected their coffee shop behaviours
  • Figure 79: Attitudes toward the impact of the pandemic on coffee habits, 2023
• Working from home more often has impacted perceived coffee drinking habits
  • Figure 80: Attitudes toward the impact of the pandemic on coffee habits (% agree), by work location, 2023
• The pandemic has had a greater impact on younger consumers’ coffee-related behaviours
  • Figure 81: Attitudes toward the impact of the pandemic on coffee habits (% agree), by age, 2023
• • Figure 82: Attitudes toward the impact of the pandemic on coffee habits (% agree), men vs women, 2023
• • Figure 83: Attitudes toward the impact of the pandemic on coffee habits (% agree), newer Canadians vs overall, 2023

Attitudes toward Budgeting and Coffee

• Nearly all consumers agree brewing coffee at home is an effective way to save
  • Figure 84: Attitudes towards budgeting and coffee, 2023
• Age and perceived financial health affect whether consumers are willing to compromise on the quality of their coffee
  • Figure 85: Willingness to compromise on the quality of my coffee to save money (% agree), by age, 2023
• • Figure 86: Willingness to compromise on the quality of my coffee to save money (% agree), by perceived financial health, 2023

Attitudes toward Coffee Drinking Habits

• Coffee can be considered the Groundhog Day beverage
  • Figure 87: Attitudes towards coffee drinking habits, 2023
• • Figure 88: Attitudes towards coffee drinking habits (% agree), by age, 2023

Attitudes toward Coffee Occasions

• Coffee offers more than an energy boost
  • Figure 89: Attitudes toward coffee occasions, 2023
• Younger consumers are less likely to view coffee as being a beverage to relax with
  • Figure 90: “It’s difficult for me to relax when I drink coffee” (% agree), by age, 2023
• • Figure 91: “It’s difficult for me to relax when I drink coffee” (% agree), fathers vs mothers vs overall, 2023

Appendix – Data Sources and Abbreviations

• Data sources
• Consumer survey data
• Abbreviations