STATE OF THE COFFEE MARKET IN NORTH AMERICA
A REVIEW OF THE TOP COFFEE TRENDS IN THE
US, CANADA AND MEXICO
MARK STROBEL & ERIC PENICKA
INTRODUCTION
Euromonitor International
© Euromonitor International
2
3
INTRODUCTION
A complete view of the coffee industry
Foodservice
(On-Trade)
Coffee
Retail (OffTrade) Coffee
Packaged
RTD Coffee
Global
Coffee
Industry
Coffee
Machines
Volume v Brewed Volume
Retail/off-trade; Foodservice/on-trade
Mexico is included in North America
RTD = ready-to-drink
CAGR (Compound annual growth rate) over 2009-2014 unless stated
© Euromonitor International
NORTH AMERICA: A KEY COFFEE MARKET
COUNTRY FOCUS: US, CANADA AND MEXICO
CONCLUSION
84.5
US$ BILLION
2014 RETAIL
VALUE RSP
5.0%
COMPOUNDED
ANNUAL GROWTH
SINCE 2009
18.3
US$ BILLION
ABSOLUTE
RETAIL VALUE
GROWTH
SINCE 2009
6
NORTH AMERICA: A KEY COFFEE MARKET
Coffee is among the most consumed beverages by volume globally
Global Beverage Market, Total Liquid Volume, 2014
350
Billions of Liters
300
250
171
200
BILLION LITERS
150
100
50
0
© Euromonitor International
7
NORTH AMERICA: A KEY COFFEE MARKET
Coffee has a greater share of throat in North America
Coffee as a Percent of Total Non-Alcoholic Drinks Volume Consumption
World
North America
14%
86%
Coffee
Other Non-Alcoholic Drinks
© Euromonitor International
21%
79%
Coffee
Other Non-Alcoholic Drinks
8
NORTH AMERICA: A KEY COFFEE MARKET
Which regions spend the most on coffee?
Coffee Retail Value Sales and Growth by Region
30
25
20
15
10
5
0
Western
Europe
North
Asia Pacific
America*
Latin
America
Retail Value Sales 2014 (US$bn)
* Mexico is included in North America
© Euromonitor International
Eastern
Europe
Middle East Australasia
& Africa
% CAGR 2009-2014
10%
9%
8%
7%
6%
5%
4%
3%
2%
1%
0%
NORTH AMERICA: A KEY COFFEE MARKET
A glimpse at coffee expenditure by country
Retail Value Sales
>10 bn
2-10 bn
1-2 bn
0.5-1 bn
<0.5 bn
Not represented
© Euromonitor International
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NORTH AMERICA: A KEY COFFEE MARKET
Top markets globally in retail volume in 2014
Rank
Country
1
Brazil
1,001
2
USA
978
3
Germany
430
4
Italy
210
5
France
200
6
Japan
197
7
Indonesia
164
8
Spain
137
9
Philippines
136
10
South Korea
134
12
Canada
124
17
Mexico
107
© Euromonitor International
Volume (tonnes ‘000)
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NORTH AMERICA: A KEY COFFEE MARKET
Top markets globally in retail value in 2014
Rank
Country
1
2
3
USA
Brazil
Germany
4
5
Japan
France
6
7
8
9
10
Russia
United Kingdom
Italy
Canada
Mexico
© Euromonitor International
Value (Dollars)
$12.8 bn
$6.4 bn
$6.4 bn
$4.6 bn
$4.2 bn
$3.7 bn
$2.5 bn
$2.4 bn
$2.1 bn
$1.8 bn
12
NORTH AMERICA: A KEY COFFEE MARKET
Top markets globally in per capita retail value in 2014
Rank
Country
1
Austria
$105.4
2
Norway
$99.8
3
Finland
$98.5
4
Switzerland
$88.7
5
Netherlands
$87.0
6
Denmark
$81.3
7
Germany
$78.7
8
Belgium
$73.2
9
Sweden
$66.5
10
France
$65.1
13
Canada
$59.9
19
USA
$40.3
39
Mexico
$15.3
© Euromonitor International
Value (Dollars)
NORTH AMERICA: A KEY COFFEE MARKET
COUNTRY FOCUS: UNITED STATES
CONCLUSIONS
14
COUNTRY FOCUS: UNITED STATES OF AMERICA
A leading non-alcoholic drink in volume terms, a value driver
60
4.0%
3.0%
50
2.0%
1.0%
40
0.0%
30
-1.0%
-2.0%
20
-3.0%
-4.0%
10
-5.0%
0
-6.0%
Carbonates Bottled Water
Coffee
Total Volume Sales (bn litres)
© Euromonitor International
Tea
Juice
Retail Value % Growth 2013-2014
15
COUNTRY FOCUS: UNITED STATES OF AMERICA
Pod coffee retail value sales over $4 billion in 2014
2009-2014 CAGR
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
7.0%
© Euromonitor International
2014
2013
2012
2011
2010
2009
2008
2007
2006
0.0%
2005
Billion US$
Pod Coffee Retail Value
Sales
Total Retail Excluding Pods
Coffee
16
COUNTRY FOCUS: UNITED STATES OF AMERICA
While value share has erupted, volume share is modest
Retail Coffee Pod Share
35%
30%
25%
20%
Brewed Volume
Value
15%
10%
5%
0%
2009
© Euromonitor International
2010
2011
2012
2013
2014
17
COUNTRY FOCUS: UNITED STATES OF AMERICA
Pod coffee is three times more expensive than coffee beans
Coffee retail price
per brewed 8-oz. cup
Instant
$0.07
Ground
$0.08
Instant Coffee
Ground Coffee
7.4X
Image: Flickr user Chris RubberDragon
6.9X
Image: Flickr user yoppy
Coffee Beans
Beans
Pods
© Euromonitor International
$0.16
3.3X
$0.53
Image: Flickr user babbagecabbage
18
COUNTRY FOCUS: UNITED STATES OF AMERICA
The Great Recession
Consumers
turned away
from
foodservice
Balance of
cost,
convenience,
and quality
Coffee driven
by necessity
© Euromonitor International
Volume Growth in 2009:
Foodservice  0.3%
Retail  5.2%
Quality
Cost
Image: Flickr user bnpositive
Brewed volume up 3.8%
19
COUNTRY FOCUS: UNITED STATES OF AMERICA
Specialty Coffee Shops Sales Double Over 15 Years
60
20
Billion Dollars
33%
70
50
15
40
30
10
20
5
10
67%
Starbucks
Others
2014
37%
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
0
Dollars per person
25
2008
Value Sales
63%
Per Capita
Starbucks
© Euromonitor International
Others
20
COUNTRY FOCUS: UNITED STATES OF AMERICA
Coffee innovation, a history
2000:
Fun
Indulgence
1980:
Staple
Caffeine
© Euromonitor International
2015:
Artisanal
21
COFFEE
The return of filter coffee
The next phase of innovation
“Third-wave” coffee shops less espressodriven, more about new methods of brewing
New ways of enjoying an old favorite
© Euromonitor International
66.3 mn
POPULATION OF
MILLENNIAL CONSUMERS
IN THE US IN 2014
$1.1 tn
COMBINED POST-TAX
INCOME OF MILLENNIAL
SHOPPERS IN 2013*
29.8
AVERAGE AGE OF
MILLENNIALS IN 2013*
Image: Flickr user Patrik Nygren
* SOURCE: CONSUMER EXPENDITURE SURVEY, BLS
23
CONCLUSION
Key takeaways: United States
Pods slowing
Specialty
coffee
Growth from
Millennials
© Euromonitor International
NORTH AMERICA: A KEY COFFEE MARKET
COUNTRY FOCUS: CANADA
CONCLUSIONS
25
COUNTRY FOCUS: CANADA
Canada is not a little USA!
≠
© Euromonitor International
26
COUNTRY FOCUS: CANADA
Canada has a much more developed hot drinks culture
Per Capita Hot Drinks
Retail Brewed Volume
(liters)
180
160
140
120
100
80
60
40
20
0
US
Canada
% Split in Retail Brewed
Volume
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
US
Canada
Coffee
© Euromonitor International
Tea
27
COUNTRY FOCUS: CANADA
Canada is a more mature coffee market
Per Capita Coffee Retail
Value Sales
(US$, 2014)
Per Capita Specialist
Coffee Shop Transactions
(2014)
70
16
60
14
50
12
10
40
8
30
6
20
4
10
2
0
0
US
© Euromonitor International
Canada
US
Canada
28
COUNTRY FOCUS: CANADA
Ubiquitous Tim Horton’s supports strong coffee consumption
Canadian Consumer Foodservice
Transaction Breakdown 2014
In Toronto
40%
30%
20%
10%
0%
Tim
McDonald's Starbucks
Hortons
Subway
A&W
Consumer Foodservice Percent
of Total Transactions 2014
0%
Source: Google Maps
© Euromonitor International
10%
20%
Tim Hortons (CA)
30%
40%
Dunkin Donuts (US)
29
COUNTRY FOCUS: CANADA
Canada is a more competitive coffee market
Specialist Coffee Shop Value Sales Brand Share Breakdown
US
Canada
Others
Others
Starbucks
Starbucks
Peet's
Coffee &
Tea
Coffee
Bean &
Tea Leaf
© Euromonitor International
Café
Depot
Timothy's
Blenz
Second
Cup
Van
Houtte
30
COUNTRY FOCUS: CANADA
Strong growth despite being a mature and competitive market
Retail Volume Sales
(Tons)
90
Retail Value Sales
(US$ bn)
2.5
80
70
60
50
40
30
20
2
1.5
1
0.5
10
0
© Euromonitor International
0
31
COUNTRY FOCUS: CANADA
Fresh ground coffee pods add value to the Canadian coffee market
Retail Value Sales by Coffee Type in Canada (US$ mn)
1,000
900
800
700
600
500
400
300
200
100
-
Fresh Coffee Beans
Standard Fresh Ground Coffee
© Euromonitor International
Fresh Ground Coffee Pods
Instant Coffee
32
COUNTRY FOCUS: CANADA
Similar to the US, but pods have a much stronger impact in Canada
Brewing Method
Breakdown
Per Capita Retail Value Sales of
Fresh Ground Coffee Pods (US$)
US
Canada
58%
53%
Single-Cup 20%
25%
Espresso
9%
8%
Instant
10%
15%
Drip
Source: The Coffee Association of Canada
US - Price Per Cup: ~0.75
CA - Price Per Cup: ~0.83
Image from cw-usa.com
© Euromonitor International
50
45
40
35
30
25
20
15
10
5
0
US
Canada
33
COUNTRY FOCUS: CANADA
As pods approach maturity, differentiation is key
% Year-on-Year Growth in Retail
Value Sales of Fresh Ground
Coffee Pods in Canada
600%
500%
400%
300%
200%
100%
0%
© Euromonitor International
Image from vendingtimes.com
34
COUNTRY FOCUS: CANADA
Differentiation is key across all coffee categories
Buzzwords in
Consumables
Natural
Organic
Retail Value Sales of Organic
Coffee (US$ mn) in Canada
250
200
150
100
50
0
Fair Trade
2009 2010
2011
2012
Non-GMO
Gluten Free
© Euromonitor International
Image provided by Keurig Canada Public Relations
2013
2014
35
COUNTRY FOCUS: CANADA
As well as in consumer foodservice
RSP Share of Specialist
Coffee Shops
50%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
2009
2014
Starbucks
© Euromonitor International
Second Cup
Images from secondcup.com/press-room
36
COUNTRY FOCUS: CANADA
Opportunity in RTD coffee and functional products
RTD
Coffee
2014
Total
Total
Volume
Value RSP
(mn litres) (US$)
US
401.1
2,189
Mexico
11.5
73.4
Canada
2.2
21.8
Image from Real Beanz Facebook page
© Euromonitor International
Convenient/
On-the-go
Refreshing
Indulgent
Functional
37
CONCLUSION
Key takeaways: Canada
Canada is
NOT the 51st
State
Growth
persists
Opportunities
exist
© Euromonitor International
NORTH AMERICA: A KEY COFFEE MARKET
COUNTRY FOCUS: MEXICO
CONCLUSIONS
39
COUNTRY FOCUS: MEXICO
Mexico’s emerging coffee culture presents an opportunity
Per Capita Coffee
Retail Value Sales
(US$)
Mexico: Per Capita Coffee Retail Value
Sales (US$)
18
16
Canada
14
12
Costa Rica
10
USA
8
6
Brazil
4
Colombia
2
0
20
© Euromonitor International
40
60
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
0
Mexico
40
COUNTRY FOCUS: MEXICO
The economy is polarizing consumers
Per Capita Disposable Income (‘000)
US$28.8
US$41.0
US$8.3
© Euromonitor International
Low to
middle
class
consumers
Middleupper to
upper
class
consumers
41
COUNTRY FOCUS: MEXICO
Specialist coffee shops are on the rise in Mexico
Specialist Coffee Shops Outlets
2,500
2,000
1,500
Specialist Coffee Shops Foodservice RSP (US$ mn)
800
700
600
500
400
1,000
500
0
© Euromonitor International
300
200
100
0
42
COUNTRY FOCUS: MEXICO
The Starbucks Factor
Starbucks Share of Specialist Coffee Shops RSP
50%
40%
30%
20%
10%
0%
200420052006200720082009 2010 2011 2012 2013 2014
Source: Euromonitor In-Country Analyst
© Euromonitor International
COUNTRY FOCUS: MEXICO
Starbucks extends its Reserve concept to Mexico in 2015
• Artisanal coffee
• Exotic and rare coffee beans
• Modern and luxurious design
Images provided by Starbucks media relations
© Euromonitor International
43
44
COUNTRY FOCUS: MEXICO
Retail sales continue to dominate the Mexican coffee market
Breakdown of Retail and
Foodservice Coffee Volume
Sales
25%
75%
Breakdown of Fresh and
Instant Coffee Volume Sales
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
USA
Foodservice
© Euromonitor International
Retail
Fresh Coffee
Canada Mexico
Instant Coffee
45
COUNTRY FOCUS: MEXICO
Instant coffee is an integral part of lifestyles
Average Retail Cost Per Cup
by Format in Mexico (US$)
Value
0.8
0.7
0.6
Convenient
0.5
0.4
Custom
0.3
0.2
0.1
0
Pods
© Euromonitor International
Beans
Ground Instant
46
COUNTRY FOCUS: MEXICO
Opportunity in the middle ground
Lower income
looking for a
reasonably priced
gourmet experience
Premium Retail Coffee
Images from nescafe.com.mx and italiancoffee.com
© Euromonitor International
Affordable Specialist
Coffee Shops
Middle income
seeking a less
expensive luxury
47
CONCLUSION
Key takeaways: Mexico
Growth
Opportunity
Specialist coffee
shops on the rise
Value is still key
Finding the
middle ground
© Euromonitor International
NORTH AMERICA: A KEY COFFEE MARKET
COUNTRY FOCUS: US, CANADA AND MEXICO
CONCLUSIONS
49
CONCLUSION
Key takeaways
North America is a highly
important coffee market
Each country has a unique
coffee culture in a different
stage of development
The US, Canada and Mexico all
have distinct opportunities that
can be leveraged
© Euromonitor International
THANK YOU FOR LISTENING
Mark Strobel: Mark.Strobel@Euromonitor.com
Eric Penicka: Eric.Penicka@Euromonitor.com
Connect with Euromonitor at:
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