Issue link: https://read.dmtmag.com/i/491368
38 STiR tea & coffee industry international Single Serve Offers Ample Opportunity R egional roasters, contract packers, and even single location coffee shops are feeding the seemingly insatiable demand for variety with push-button conve- nience that will not be sidelined by Keurig Green Mountain's attempts to re- turn to a closed system. Goodbye ground Grocers sold $US4.5 billion worth of coffee in the 52 weeks ending July 13, according to IRI, a Chicago-based market research firm (@iriworldwide). The category showed an overall gain of 4.7% in sales but not from ground (which lost 4.8% share), not from instant (which lost 6.2% share), and not from whole beans (which lost 7.6% share). The entire lift was from single cup coffee which tallied $1.3 billion in sales with a 41.8% year-over-year gain in US food stores. The picture is even brighter in chain outlets which sold $2.8 billion worth of single serve coffee. Even drug stores showed an 85% increase in sales to $44 million, accord- ing to IRI Infoscan.* Add it all up and single serve coffee sales in conventional channels topped $4.16 billion, double last year's tally. Online and coffee shops will add another $1 billion. The average unit price in grocery was $7.19, according to IRI. Units sold in depart- ment and big box stores averaged $7.25 – a decline of 67 cents compared to last year that is largely due to pricing pressure from non-licensed private label capsules that now make up 15% of the total market. Keurig is the market leader selling 1.7 million brewing systems during the spring quarter to net $1.02 billion. Portion packs sales were $826 million, up 10% with a 15% increase in volume. A quarter of all coffee sold is in capsules, up from 6% in 2011. The number of households with single-cup brewing systems is nearing 20 million. Keurig sold 5 million home machines during holidays last year and hopes to top that in 2014. Keurig estimates its 40 partners will sell 10 billion portion packs next year. Grocery, big-box and department stores remain the primary channels for main- stream national brands but mid-sized specialty coffee roasters are driving additional sales of capsules and pods in coffee shops and cafes, offices, gourmet food stores, and restaurants. "We definitely see a market for restaurant chains that are already selling their coffee in other forms (bags for brewing pots of coffee at home) through retail, and there is another great opportunity with hotels and resorts that are already providing their own branded coffee in the hotel rooms," said Tom Martin, c.e.o. at POD Pack In- ternational, a private label manufacturer in Baton Rouge, La., that recently announced it will expand its factory to meet client demand for single-serve capsules. ECS Coffee Superstore, Barrington, Ont., Canada Once the sole domain of big-brand roasters, single-serve coffee is now a private label staple in supermarkets, department, club and drug stores and the brewing system choice for restaurant chains, resorts and hotels. By Dan Bolton *IRI Infoscan retail sales data for the 52 weeks ending July 13 include Total U.S. Food/Total U.S. Drug/Total U.S. Multi-Outlet (Supermarkets, Drugstores, Mass Market Retailers, Military Commissaries and Select Club & Dollar Retail Chains). Data excludes online sales, capsules sold in coffee shops and convenience outlets. Grocery, Chain, Drug, Club & Dollar Stores Channel Sales Sales % Multi-outlet $2.80 billion 28.9% Drug Stores $43.7 million 84.9% Grocery Stores $1.3 billion 41.8% Total $4.16 billion Single Serve Sales