Coffee and Tea Reports from the Front Lines
Ready-To-Drink Segment Boosting Overall Sales in Tea Market, Says Study
United States - Increased sales in the ready-to-drink tea segment, spurred on by products like green tea, known for its low caffeine and high levels of immune system-boosting antioxidants, are helping the U.S. tea market recover from sluggish sales in recent years. According to The U.S. Market for Tea and Ready-To-Drink Tea, a new report by market research publisher Packaged Facts, the retail tea market reached $5.5 billion in sales in 2003, up nearly $1 billion over 2002, surpassing the $5 billion mark for the first time.
The ready-to-drink segment towers over all other tea products in terms of market share, accounting for 75% of dollar sales. The remaining 25% of sales comprise mainly loose and bagged tea products.
“Paraphrasing Kermit the Frog, it is easy being green, at least if you’re selling tea these days,” said Don Montuori, acquisitions editor for Packaged Facts. “Green tea products, whether designed for immediate consumption or loose/bagged for later brewing, have made their way into the mainstream of the tea market - most major manufacturers in this industry now tout a green tea variation.”
The U.S. Market for Tea and Ready-To-Drink Tea profiles market leaders such as Nestle, Lipton, Tetley, Celestial Seasonings, and Starbucks, as well as other significant players, as they grapple with the challenges of fundamentally changed conditions. Analyses of sales trends, pricing, consumption rates, marketer/brand shares, growth and decline factors, mass/specialty interaction, and increasingly rapid innovation are included. This new report is priced at $3,000 and is available for purchase at www.packagedfacts.com/pub/896517.html.
Packaged Facts, a division of MarketResearch.com, produces research reports on a wide range of consumer industries, including information on domestic and global market trends and opportunities. For more information visit www.PackagedFacts.com.
Majority of U.S. Coffeehouses Independent
United States - According to MINTEL, sales through U.S. coffeehouses grew 77% since 1998 to reach $6.9 billion in 2003. The number of coffeehouses now exceeds 17,000. Primary factors driving this growth include the increased perception that coffeehouses serve superior coffee, an interest in the wide variety of flavors, blends, and drinks provided by coffeehouses, and increases in demographic groups that favor coffeehouses.
Chains with 10+ units such as Starbucks account for nearly 40% of all coffeehouses. Independents have the majority of market share with 57.5%, although this is a decrease in share since 2001 when they accounted for 61.6%. The share of chain stores continues to rise, largely as a result of the rapid expansion of industry giant Starbucks, which opened 1,800 new outlets in 2002 and 2003. The increase in the number of independents is due to an almost identical increase of 1,800 new single-site independents in 2002 and 2003.
MINTEL’s research reveals that three groups of coffeehouse customers are perceived to exist. “Lazy Lattes” include respondents who do not prepare coffee at home at all and so rely upon coffeehouses, “Java Snobs” are high-income/high-education to-go drinkers who purchase for the quality alone, and the “Caffeinated Cultured” are lower-income singles who drink their coffee in the coffeehouses to enjoy the ambience of the coffeehouse.
Among respondents to MINTEL’s exclusive research, nearly 60% frequent the chain coffeehouse, compared to roughly a third of all respondents who favor the independent. Starbucks stores account for roughly one third of all coffeehouses, and roughly one half of all sales (approximately $3.4 billion), even when sales from licensed franchises are excluded. With 5,400 coffeehouses in the U.S., Starbucks is more than 20 times the size of its closest competitor, Caribou Coffee. Absent a competitor, Starbucks will continue growing in size until its shops begin to cannibalize their own markets, making further growth unprofitable.
In terms of why one coffeehouse is selected over another, MINTEL found that a third of respondents select their coffeehouse based simply on location. Just over half of all Americans see prices at coffeehouses as too expensive. Those who visit coffeehouses once a week or more show the greatest concern with price, with over two thirds agreeing that the price is too high. Yet it appears that price is not deterring visits as significantly as one may think, as only 25% of Americans are cutting down on their purchases at coffee shops. Among those visiting once a week or more, agreement rises to 38%, more than one third of the market’s best customers.
Since at least 1998, there has been a declining at-home coffee consumption market against a rising coffeehouse market. Further, consumption in 2002 was down by 14.2% from 1980s levels, when Americans consumed 4.59 kg. per capita, while coffeehouse sales have increased by 1200% or more since the 1980s. MINTEL predicts total US coffeehouse sales to increase 46% by 2008.
MINTEL is a leading supplier of global market research and incorporates MINTEL Reports, Global New Products Database (www.gnpd.com), and MINTEL Consultancy. MINTEL operates offices in Chicago, London, and Sydney. For more information on MINTEL, visit their web site at www.mintel.com.
Tea & Coffee - April/May, 2004
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