STiR coffee and tea magazine

STiR coffee and tea 49 0.0 0.5 1.0 1.5 2.0 2.5 2.1% 1.9% 1.3% 1.7% 1.5% 1.0% 1.2% 2014 2015 2016 2017 2018 1H2019 13/18 CAGR R RTD Coffee Sales Double etail sales of ready-to-drink cof- fee have doubled in the past five years, rising to $4.25 billion in 2018, according to Beverage Marketing Corp (BMC). Cold brew and nitro coffee in cans and bottles are evidence of innovation within the category, "and innovation is what's driving sales," BMC managing director of research Gary Hemphill told industry executives during an October webinar hosted by the National Coffee Association (NCA). RTD coffee is among the best bever- ate performers in the first half of 2019, he said, citing 7.7% growth through June compared to total liquid beverage catego- ry growth of 1.4%. Energy drinks grew by 12.1% during the same period. "The most successful recent inno- vations have been more process-driven. Cold-brew and nitro coffees, for ex- ample, have helped to spur category growth," said Hemphill. People remain very precise about how they like their coffee. They prefer a great variety of choices, explained Hemp- hill, "just listen to orders for a barista." Consumer preferences heighten competition in the category. In grocery and especially convenience, you now see selections that include Monster Energy Coffee, Starbucks Tripleshot Energy, Coke (Honest Coffee), and Rock Star as RTD coffee has experienced stiff competition from coffee shops selling freshmade cold brew but sales continue to grow in double digits. Source: Beverage Marketing Corp. US Coffee Volume Change 2014 - 2019 (half year) Coca-cola owned Honest Tea in September launched organic cold brew coffee iadding to its line of teas and juices By Dan Bolton well as Forto Organic Energy Coffee, Califa nitro latte with oat milk. It's becom- ing more crowded, with the fiercest competition involving health and wellness, he explained. Beverages overall have reduced the average daily calories they deliver from 263 per capita per day 20 years ago to 193 calories per capita per day in 2018, said Hemphill. Sub-segments that provide consumers with perceived or actual functional health benefits are experiencing the strongest growth. Coca-Cola owned Honest Coffee is "a lower-sugar, black cold brew variety with- out dairy... which is important to our target millennial consumer," said brand general manager Clare Verdery. "It is important what we abide by our brand guardrails of being organic, lower calories than the competition, and Fair Trade certified whenever possible," she said during the product launch at Expo East in September The US cold brew coffee segment is up 600% since 2015 said Hemphill, who noted that after five years of consecutive increases, volume growth slowed during the first half of the year. Post-recession revenues, averaging 2.2% between 2013-18, has consis- tently outpaced volume growth in recent years, he said. Carbonated soda is the largest market share loser during the past five years, falling from 21.1% of volume to 19.4% in 2018. "Coffee [all segments] has experienced a modest share gain of 1.5% over this time," he said. In contrast, cold brew grew by 142 million gallons during the period 2009-19, a combined average growth rate of 12.1%. RTD is convenient and growing in popularity but supermarket roast and ground continues to dominate the segment, accounting for 73.2% market share. Coffee pods now account for 16.3% market share with whole bean at 4.4%. RTD coffee accounts for 2.8% market share, about double coffee mixes and slightly ahead of instant's 2.2% market share, according to BMC. RTD coffee grew 13.5% during the past five years but from a small base, said Hemphill, noting "it has experienced stiff competition from the large number of coffee stores in the US selling fresh ready-to-serve coffee." The PepsiCo-Starbucks partnership that introduced the market to bottled Frap- puccinos in 1996 retains 51.9% market share "but competition is heating up as the category continues to grow," said Hemphill. Coca-Cola held a 2.6% share in 2013. The company has since climbed to 3.1% in 2018. Monster coffee holds a 12.1% share and Danone products garner a 7.8% share of the US RTD market, according to BMC.

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