While the convenience of on-the-go food and drink options is on the rise, coffee houses are making their move. New research from Mintel reveals the US coffee house market continues to experience healthy growth with sales reaching an estimated $23.4 billion in 2017, a growth of 41 percent from 2011.
Mintel forecasts coffee house sales will reach $28.7 billion by 2021. Although sales are heating up, the boom in new coffee shops entering the market is cooling down. The total number of coffee shops in the US is forecast to grow by just 2.17 percent this year, the slowest growth rate seen in the last six years.
Still, the coffee space is hot. The group behind Tartine Bakery and Tartine Manufactory plans to open a large space in early 2018 in Los Angeles that will feature a bakery, a pizza restaurant and an entire section dedicated to coffee. The new roasting facility and coffee lab will not only produce the brand’s coffee line, but will also feature guest roasters, coffee-related experiments and other innovative ideas.
A potential threat to the coffee house market, ready-to-drink coffee is the fastest growing segment (20 percent market share) of the $13.6 billion retail coffee market, according to Mintel. The convenience and broad variety of flavors that RTD coffee offers prove to be popular as consumers increasingly seek out on-the-go and premium options. Mintel forecasts the RTD coffee segment will experience 67 percent growth from 2017-22.
Caleb Bryant, senior foodservice analyst at Mintel, says they expect to see coffee shop sales continue on an upward trajectory over the next five years. However, increased competition from the ready-to-drink coffee category could pose a substantial threat. “We also see many brands driving innovation in the category such as the emergence of nitro ready-to-drink coffees.”
Meanwhile, cold brew coffee continues to enjoy popularity in the US, with total retail sales of refrigerated cold brew coffee growing 460 percent from 2015-17 to reach an estimated $38.1 million this year. While cold brew at retail is on the rise, just seven percent of coffee drinkers say they have made their own cold brew coffee at home, with 11 percent agreeing cold brew takes too long to make.
Innovation may help persuade consumers to enjoy cold brew at home. One in eight (12 percent) are interested in roasts specially made for cold brewing coffee at home, and one in 10 (10 percent) are interested in RTD nitro cold brew. What’s more, 13 percent of coffee drinkers over the age of 21 say they would be interested in alcoholic cold brew coffee.
“Despite the fact that cold brew has revolutionized coffee house menus and garnered increased media attention due to its popularity, the average consumer is not highly engaged with iced coffee or cold brew. This is likely due to consumers preferring to buy cold brew coffee at coffee houses and other foodservice retailers, as well as reserving cold brew coffee for the occasional treat rather than incorporating it into their daily routines,” says Megan Hambleton, beverage analyst at Mintel. “Innovations such as alcoholic cold brew could broaden usage occasions, driving more frequent consumption at night, and ultimately encouraging at-home consumption more often.”