IN FOCUS: The Coffee Wars- Why Coffee is the Latest Battleground
In a nation of traditional tea lovers, coffee has become big business.
Last week saw a raft of news on the coffee market. From a Market Source Information survey showing fierce and close competition in the coffee market, to J D Wetherspoon announcing their intention to battle the high street for a slice of the lucrative breakfast market via a discounted coffee offering. The question is why has coffee become a key battleground?
There are many reasons, from increased quality and range of coffee offerings to the fact that the nation's appetite for coffee, and in particular specialty coffee is growing year on year.
To find out more about the size and scope of the market, we went to The NPD Group to find out more.
Figures from NPD show that in 2014 over 2 billion cups of coffee were consumed in the food service market. Of this figure, 74% was speciality coffee, (defined as coffee types such as americano, cappuccino, espresso, latte, mocha, macchiato etc), a large increase from 54% in 2009.
Consumers are also drinking more coffee when visiting food service outlets, as figures show that speciality coffee is included in 12.8% of all visits, an increase of 3% over the same time period. This compares with a 3.8% reduction in traditional coffee purchases.
It appears that consumers are also very picky when it comes to where they get their coffee. The NPD data shows that coffee QSRs attract 19.2% market share, and are growing at the fastest rate compared to other coffee selling outlets. However, hot on their tails in terms of growth of market share are burger QSRs, which showed 1.5% pt growth to 6.2%, and bakery QSRs, which grew 1.3% pts to 4%.
What this data shows is that customers appetite for coffee, particularly speciality coffee is growing, and that they are going to specialists to get it... those same specialists who are happy to sell them a breakfast, lunch or slice of cake to go with it. For these reasons, QSRs of differing stripes are all keen to grab a piece of the market.
But the focus on coffee does present other opportunities, as NPD explain "There is a battle around coffee and it will continue in the coming years. The competition is fierce with historically small coffee players gaining importance with a larger, more qualitative offering and extended opening hours. Having a good coffee offer is becoming crucial. This also means that the staff in the outlets has to be trained to deliver a coffee of constant quality. Consumers increasingly drink specialty coffee at the expense of traditional coffee. In a country where tea is so important but so small in the foodservice market, there is a huge room to grow for specialty tea in our industry!”.
About The NPD Group, Inc.
The NPD Group provides global information and advisory services to drive better business decisions. By combining unique data assets with unmatched industry expertise, we help our clients track their markets, understand consumers, and drive profitable growth. Sectors covered include automotive, beauty, entertainment, fashion, food / foodservice, home, office supplies, sports, technology, toys, video games, and wireless. For more information, visit www.npd.com and npdgroupblog.com. Follow us on Twitter: @npdgroup.
