Beyond the buzz created around the early release of Starbuck’s Pumpkin Spice Latte, there is something big brewing in the U.S. coffee market. American’s consumption habits are shifting across the beverage industry, and consumers are increasingly seeking their next caffeine fix from chilled, on-the-go coffee options over energy drinks and carbonated soft drinks.
NielsenIQ data shows that the ready-to-drink coffee category is hot. In fact, dollar sales within the latest 52 weeks (ending July 27, 2019) netted $3 billion, up 16% versus a year ago. And a steady stream of innovation is fueling this dollar sales growth.
Serving up new roasts
From cold brew to mushroom-based coffee, innovation is brewing across the coffee category. To quench America’s thirst for their cup of joe, manufacturers big and small have invested in this space, bringing interesting ingredients and flavors to shelves and highlighting artisanal brewing techniques. According to NielsenIQ Innovation Measurement data, since August 2018, 1,019 new coffee products have been launched to the U.S. market. That’s 30% more than the same period in 2017. And ready-to-drink options are driving much of this growth. In fact, within the past year, 158 new ready-to-drink coffee offerings (up 14% year-over-year) have hit shelves, with 89 new cold brews and an additional 30 iced coffee varieties brought to market.
The innovation within the coffee space is even blurring category lines and encroaching into the alcohol beverage category, making way for new creative offerings like Pabst Blue Ribbon hard coffee and Jaegermeister’s new cold brew coffee. And with the continued disruption of cannabis, we anticipate cannabis-infused coffee could also become a popular contender in the foreseeable future. New data from NielsenIQ’s Thinking Beyond the Buzz CBD Study (U.S.) 2019 showed that 13% of consumers surveyed stated that they would use CBD-infused coffee beans or ground coffee over the next 12 months if it were available.
Are flavor innovations the cream of the crop?
Growth in the coffee category isn’t just coming from ready-to-drink options. The emergence of fun flavors like white chocolate, toasted marshmallow, and sticky cinnamon bun have certainly sweetened sales in this category. In fact, growth in the U.S. coffee creamer market has actually outpaced that of traditional packaged coffee sales. Over the past four years (ending June 29, 2019), U.S. sales of creams and non-dairy creamers rose an average of 2.8% each year, compared with packaged coffee sales that rose an average of just 0.8% during the same time.
However, the latest NielsenIQ Innovation Measurement data shows that there has been a 42% decrease in the number of coffee cream innovations that were brought to the market in the past year, indicating that the market may have reached a flavor overload. That said, ingredient and format innovations continue to push the category forward. Today, new creamer forms are keeping consumers interested—such as nitrogen-infused creamers and dairy alternative creamers that are enabling at-home coffee drinkers to further elevate their coffee experience.
Coffee trends spread beyond the bean and across the store
That said, we would be remiss if we didn’t mention the seasonal coffee flavor that has evolved into a store-wide trend. What started as an innovative coffee flavor, pumpkin spice sparked a flavor craze that now defines an entire season. Populating shelves across a multitude of categories, pumpkin spice inspired products have grown to become a half a billion dollar industry. In fact, in the last year alone, pumpkin-flavored products across grocery brought in $511 million dollars, which is an increase of 4.7% from a year ago.
So while the arrival of pumpkin spice season has people talking, all eyes should be on the impressive growth happening within the U.S. coffee market. For brands and retailers, inspiration for the next big trend across categories could be in their morning cup.
