Total category sales increased at a compound annual growth rate (CAGR) of 5.9% between 2012 and 2017 reaching $14.6bn in 2017 with volume growth outpacing dollar sales growth.
Packaged Facts predicts that US retail dollar sales of coffee and the ready-to-drink category will exceed $18bn by 2022.
At-home coffee consumption shifting
At the same time, traditional coffee products such as ground coffee and instant coffee have taken a hit, according to the report.
Household consumption rates for ground and whole bean coffee in 2017 were nearly the same as they were ten years prior in 2007.
The percentage of households using decaffeinated coffee declined through the period 2007 to 2017, while consumption of regular (caffeinated) coffee experienced an increase in terms of household use.
For the period 2010 to 2017, flavored instant coffees saw a slight increase in household consumption levels while unflavored instants experienced a decline. The decline for flavored instants occurred in both the regular and sugar-free varieties.
Starbucks was the most consumed brand across households that drank espresso and coffee drinks (Starbucks Frappuccino and Starbucks Doubleshot) making up 8.9% and 10% of the market respectively, according to the report.
Veteran instant coffee brand Folgers saw a decline in household penetration, losing out to more premium forms of instant coffee like Nescafe Classico.
However, Folgers took a plunge into the premium space with its 1850 brand earlier this year in an effort to revive the 167-year-old brand.
Cold brew and other innovations
Cold brew continues to be a trend to watch in the coffee category, according to Packaged Facts.
While cold brew is still not something consumers can make readily at home as it usually is an overnight steeping process, the drink has moved away from a featured item on coffee shop menus to a “highly-popular” RTD coffee product available at multiple retailers from c-store to specialty channels, Packaged Facts pointed out.
Butter-infused coffee (eg. Bulletproof) is another trend catching on as consumer attitudes towards fats shift and more consumers actively incorporate different ‘healthy fats’ into their day-to-day diets.
Category blurring in the form of ‘crossover’ products has also gained prominence in the coffee category, according to Packaged Facts.
“Coffee marketers are participating in the overall beverage industry trend of creating crossover products with other beverage categories, including carbonated beverages, dairy and non-dairy alternative beverages, and energy and sports drinks,” the report stated.
For example, the beverage company So Good So You has launched a line of organic, dairy-free, caffeinated beverages that blend coffee with cashew milk available in five flavors including cashew coffee, vanilla nutté, lavender nutté, cashew mocha, and cashew chai.
Alternative forms of coffee, particularly in RTD, will continue to drive growth in the category, especially among millennials who are more likely to think of themselves as “connoisseurs of gourmet, smaller batch, local, niche, and artisanal coffees,” Packaged Facts reported.