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Coffee - UK

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Newer types of premium instant innovation are important in replacing the jar, which consumers are used to associating with lower prices and brands should look to expand and segment their ranges by introducing sachets, cubes and refill pouches. http://www.bharatbook.com/market-research-reports/beverages-market-research-report/coffee-uk.html

Jonny Forsyth, Senior Drinks Analyst

Some questions answered in this report include:

How can manufacturers combat rising commodity prices?
Does instant coffee have a future with younger consumers?
Which competitors are coffee pods stealing share from?
How much impact can Starbucks make in the retail sector?

Introduction

Definition
Abbreviations
Executive Summary

The market
Figure 1: Market size and forecast for the total UK take-home coffee market, in volume sales, 2006-16
Market factors
Figure 2: Annual changes in price (in Retail Prices Index) of coffee/other hot drinks (excl. tea) and all items, Q1 2008-Q4 2011
Companies, brands and innovation
Figure 3: Market size of top five take-home instant coffee brands in 2011, by value, and value growth rate between 2009 and 2011
The consumer
Figure 4: Most important attributes when choosing to buy one in-home coffee brand over another, February 2012
Figure 5: Attitudes towards coffee, February 2012
What we think
Issues in the Market

How can manufacturers combat rising commodity prices?
Does instant coffee have a future with younger consumers?
Which competitors are coffee pods stealing share from?
How much impact can Starbucks make in the retail sector?
Future Opportunities

The Real Thing
Slow It All Down
Internal Market Environment

Key points
Increased price volatility hits instant coffee the hardest
Figure 6: Annual changes in price (in Retail Prices Index) of coffee/other hot drinks (excl. tea) and all items, Q1 2008-Q4 2010
Premiumisation is the best strategy to counter price volatility
Figure 7: Monthly weighted average price of coffee beans on world markets, by coffee bean type, January 2010-February 2012
Gourmet coffee is now part of the national psyche
Figure 8: Visits to coffee shops in the last 12 months, 2007-11
Consumers want convenience and quality
There is not enough innovation geared to attracting younger drinkers
Figure 9: Trends in agreement with company ethics lifestyle statements, 2007-11
nor is the branding engaging enough
Figure 10: Proportion of 16-24-year-olds who think each retail coffee brand is boring compared to all adults, February 2012
Broader Market Environment

Consumer spend has been under severe pressure
Figure 11: Change in average weekly earnings compared to inflation, January 2007-January 2012*
Tentative signs that 2012 will be a more prosperous year
Figure 12: GfK NOP Consumer Confidence Index, January 2007-January 2012
Rise in ABC1s underpins the continued importance of premiumisation
Figure 13: Forecast adult population trends, by socio-economic group, 2006-16
An ageing population means instant still remains a big revenue driver
Figure 14: Forecast adult population trends, by age, 2006-16
Competitive Context

Key points
Chilled drinks are stealing share from hot beverages
Figure 15: Market value (£ millions) and share of the UK take-home non-alcoholic drinks market, chilled beverages versus hot drinks, 2000-10
Evidence that take-home coffee is stealing share from hot rivals
Figure 16: UK take-home volume sales of hot beverages, by product type, 2009-11
Coffee shops helping to drive take-home sales rather than stealing share
Figure 17: Market size and forecast of UK coffee shops, 2006-16
Coffee can be much more aggressive in challenging energy/sports drinks
Strengths and Weaknesses in the Market

Strengths
Weaknesses
Who s Innovating?

Key points
Instant coffee replaces ground in the innovation stakes
Figure 18: Product launches within the UK coffee market, by main format types, 2008-11
Convenience claim as prevalent as ethical in 2011
Figure 19: Proportion of new take-home coffee product launches, by claims category, 2008-11
Flavour innovation remains the rarity when it should be the norm
Figure 20: Proportion of new take-home coffee product launches within the UK that are flavoured, 2008-11
Figure 21: Examples of flavoured new product launches within the UK coffee market, 2011
Marketing the benefits of intensity
Figure 22: Examples of new product launches within the UK coffee market which market themselves around intensity/energy
Fitness Coffee Antioxidant Blend for consumers with healthy lifestyles
Market Size and Forecast

Key points
The coffee market has stagnated in recent times
Coffee prices are spiralling upwards
Figure 23: Market size and forecast for the total UK take-home coffee market, in volume and value sales, 2006-16
Figure 24: Value sales and forecast for the UK take-home coffee market, 2006-16
Forecast methodology
Market Segmentation

Key points
Premium segments are driving growth as instant clings on
Figure 25: Coffee volume and value sales and share in the take-home sector, by coffee type, 2009-11
Market Share

Key points
Nescafé successfully protects its share from Kenco
Figure 26: Top ten instant coffee brands in the take-home instant coffee sector, by value sales, 2009-11
Kenco and Nescafé increasingly focusing on two areas: youth and quality
Own-label suffers from trend towards premiumisation
Companies and Products

Key points
Cafédirect
Costa
Douwe Egberts
Kraft Foods
Lavazza UK
Nestlé
Starbucks
Brand Research

Brand map
Figure 27: Attitudes towards and usage of brands in the coffee sector, February 2012
Correspondence analysis
Brand attitudes
Figure 28: Attitudes, by coffee brand, February 2012
Brand personality
Figure 29: Coffee brand personality macro image, February 2012
Figure 30: Coffee brand personality micro image, February 2012
Brand experience
Figure 31: Coffee brand usage, February 2012
Figure 32: Satisfaction with various coffee brands, February 2012
Figure 33: Consideration of coffee brands, February 2012
Figure 34: Consumer perceptions of current coffee brand performance, February 2012
Figure 35: Coffee brand recommendation Net Promoter Score, February 2012
Brand index
Figure 36: Coffee brand index, February 2012
Figure 37: Coffee brand index vs. recommendation, February 2012
Target group analysis
Figure 38: Target groups, February 2012
Figure 39: Coffee brand usage, by target groups, February 2012
Group One Conformists
Group Two Simply the Best
Group Three Shelf Stalkers
Group Four Habitual Shoppers
Group Five Individualists
Brand Communication and Promotion

Key points
Coffee sees a steady increase in investment
Figure 40: Above-the-line media advertising spend for the total coffee market, 2009-11
Nestlé and Kraft invest over £50 million in three years
Figure 41: Above-the-line media advertising spend on coffee, by advertiser, 2009-11
Brand spend reflects the fragmented nature of the market
Figure 42: Above-the-line media spend on coffee, by brand, 2009-11
Consumer Usage

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Coffee - UK

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