Say goodbye to your average cup of morning joe. Segments within the Coffee category, including RTD (ready-to-drink) and single-cup coffee are generating big gains among younger consumers. The Coffee category is projected to grow 22.7% through 2024, while RTD coffee garnered a 22% increase in market share between 2017 and 2019, according to a recent Mintel study. The RTD segment is forecasted to grow even further over the next four years thanks to its dedication to innovation and a growing demographic of consumers, including Hispanics, and lower and middle income groups.
Roasted Coffee Market Share Falls in Favor of Other Formats
Younger consumers are helping to drive RTD segment growth thanks to their willingness to explore a wider variety of coffee formats. While older consumers gravitate towards traditional regular caffeinated brewed coffee, younger consumers are spending more of their consumer dollars on everything from espresso to RTD coffee. Mintel found that consumers are adding RTD coffee consumption on top of their normal ground coffee consumption, which is good news for traditional coffee brands.
Consumers Tend to Drink RTD Coffee in Addition to the Coffee They Drink Most
Overall, coffee drinkers agree that the quality of coffee has improved of the last few years. Mintel reports that 35% of consumers say that grinding beans at home creates a tastier cup, helping to drive whole bean sales. Over half of consumers polled in a recent Mintel study agreed that instant coffee has improved over the last few years. Interestingly, consumers report an increased interest in coffee shop brands. “Most consumers who drink coffee (52%) are interested in coffee products created by a coffee shop, compared to 38% who are interested in those created by a restaurant,” reports Mintel.
Which flavors are leading the popularity polls? Mintel found that vanilla, mocha, and caramel are the most popular coffee flavors, preferred by nearly half of all coffee drinkers that were polled. Flavors that remain undesirable include spicy, citrus and floral. According to Mintel, functional ingredients are of interest to consumers, so long as the benefits are explained. “Consumers may not know the functional benefit of certain ingredients such as probiotics, CBD or collagen; as such, they are more likely to express interest in their coffee brands explaining the functional benefit to them,” stated Mintel.
Mintel advises that legacy brands differentiate their portfolios to include RTD and single-cup coffee offerings to regain some lost market share. It will be important for these brands to be mindful of changes in coffee trends as well as functional ingredients throughout the next few years.