STiR coffee and tea magazine

Volume 3, Number 1

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38 STiR tea & coffee industry international s American households retire their drip brewers to the pantry for the oc- casional family get together, roasters are exploring a number of single serve solutions. The market is far from saturated and while margins are falling, there is a frenzy of firms introducing single cup beverages, many that are new to the industry. Since mainstream retail prices will continue to fall, the greatest opportunity is for boutique roasters and small brands that focus on service and attaining the best possible cup experience. Ownership of single serve brewed and espresso makers grew to 36% in 2013 with the most affluent 18- to 34-year-olds drinking single serve 64% of the time, according to market researchers Mintel International Group. In the U.S. coffee sales were estimated at $11.7 billion in 2013, up 11.4% compared to 2012, according to Mintel. Single cup sales were $3.1 billion of this total, up 213% since 2011. Meanwhile sales of ground coffee fell 2.7% to $6.1 billion accounting for just over half (52%) of the total market, down from 67% in 2011. Consider these trends: l Expect the dozen largest roasters to follow the lead of Folgers and abandon tins and $12 bags of grocery store ground in favor of single portion packs that bring $25-50 per pound in grocery and non-traditional outlets. Their challenge is distribution and whether to license evolving technology and accept the drag on profits imposed by royalties of 6.2 cents per cup or compete with a non-licensed alternative. l Regional and private label brands and mid-sized roasters producing a million or more pounds of coffee annually are well advised to develop their own single portion products. Those supplying food service and convenience outlets and roasting office coffee will be the first to adapt. They are turning to co-packers specializing in the large Single Serve Solutions Consumer preference for convenience and taste will make single-serve the successor to drip grind in the home. Household penetration in the U.S. is nearing 20% and likely to reach 40% following a path blazed by consumers in France and Germany. Capsule and pod sales are approaching $10 billion making single-serve globally the fastest growing coffee segment in the world. Demand is far outpacing supply. By Dan Bolton A Sales of single cup coffee capsules are up 213% since 2011 reaching $3.1 billion in 2013.

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