coffee - uk - 2021

This report looks at the following areas:

•• The impact of COVID-19 on the retail coffee market•• Key trends in recent launch activity and opportunities going forward•• Usage of coffee and where people purchase it•• Consumer behaviours and attitudes related to coffee•• Factors that consumers would pay more for in a coffee product

Coffee products with functional benefits (such as helping people to relax)appeal to 48% of coffee drinkers and buyers. With energy and focus being keymotivations to drink coffee, and there being approved claims for someingredients which target these areas, this presents a real opportunity for coffeebrands. Furthermore, with functional claims within the UK coffee marketcurrently rare, these could also provide products with considerable stand-out.

COVID-19 saw much trading up to more expensive coffee formats as peoplesought to recreate coffee shop experiences at home. Some also invested incoffee makers. While out-of-home occasions will begin to play a bigger roleonce more, this trading up for at-home coffee is likely to be permanent, thepandemic thus accelerating the long-term decline of instant coffee.

44% of coffee drinkers and buyers agree that standard coffee tastes just asgood as premium coffee. This suggests that premium brands may need to workharder to convince younger people through education about why they shouldpay more for them.

While 58% of those who have not drunk decaffeinated coffee in the last monthsay they would rather drink less coffee than switch to decaffeinated coffee, 31%disagree. With some people reporting sleep problems, this presents asignificant opportunity for decaffeinated variants if people are limiting theircoffee intake to improve their sleep.

Coffee - UK - 2021

Report Price: £1995.00 | $2693.85 | €2245.17 The above prices are correct at the time of publication, butare subject to change due to currency fluctuations.

“COVID-19 prompted many totrade up between coffeeformats, as they sought torecreate the coffee shopexperience at home. Moreremote working goingforward will continue toprovide support to themarket.”– Alice Pilkington, Food andDrink Analyst

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Table of Contents

• Key issues covered in this Report• COVID-19: market context• Economic and other assumptions• Products covered in this Report• Excluded

• Impact of COVID-19 on coffeeFigure 1: Short, medium and long-term impact of COVID-19 oncoffee, 2021

• The market• Volume sales boom for coffee due to COVID-19 in 2020• 2021 sales set to fall as COVID-19 boost wanes• Market expected to return to slight growth in 2022

Figure 2: COVID-19 scenario value forecasts for coffee2016-26

• Ground coffee and coffee pods continue to chip away atinstant coffee’s leadFigure 3: UK retail value sales of coffee, by segment, 2019-21

• UN report declares climate change is ‘code red forhumanity’

• Companies and brands• Nescafé remains leader in instant coffee sales

Figure 4: Leading brands’ shares in the UK instant coffeemarket, by value, 2019/20* and 2020/21**

• Taylors and Cafédirect are big winners in ground coffee;Starbucks and Costa continue to build footholdFigure 5: Leading brands’ shares in the UK ground coffee(excluding coffee pods) and coffee beans market, by value,2019/20* and 2020/21**

• Nescafé leads coffee pod segment, but coffee shop brandsencroachFigure 6: Leading brands’ shares in the UK coffee podsmarket, by value, 2019/20* and 2020/21**

• Nestlé continues to lead on launch activity in 2020• High street brands continue to expand into retail space• Nestlé continues to dominate ad spend in 2021• The consumer• Instant coffee remains the most used coffee type

Figure 7: Types of coffee used at home, 2019 and 2021

OVERVIEW

EXECUTIVE SUMMARY

Coffee - UK - 2021

Report Price: £1995.00 | $2693.85 | €2245.17

The above prices are correct at the time of publication, but are subject to change due to currency fluctuations.


What's includedExecutive Summary

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Did you know?This report is part of a seriesof reports, produced toprovide you with a moreholistic view of this market.

All Mintel 2020 reportscontain specific COVID-19related research andforecasts. The world’sleading brands rely onMintel reports for the mostcomplete, objective andactionable marketintelligence.


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• Ground/whole bean coffee sees substantial growth infrequent usageFigure 8: Frequency of usage of selected coffee types, 2020*and 2021

• Decaffeinated coffee offers huge opportunity for coffeebrands

• 44% always looking for new coffees to tryFigure 9: Behaviours related to coffee, 2021

• A quarter of coffee buyers would pay more for a low carbonfootprintFigure 10: Factors that people would pay more for in a coffeeproduct, 2021

• 48% find coffee products with functional benefits appealingFigure 11: Attitudes towards coffee, 2021

• 45% agree that standard coffee tastes just as good aspremium coffee

• Grinding coffee beans at the supermarket appeals to 44%

• Ethical certifications no longer provide enough stand-out• 44% are always looking for new coffees to try• Coffee products with functional benefits appeal to 48%

• Volume sales boom for coffee due to COVID-19 in 2020• 2021 sales set to fall as COVID-19 boost wanes• Market expected to return to slight growth in 2022• Ground coffee and coffee pods continue to chip away at

instant coffee’s lead• UN report declares climate change is ‘code red for

humanity’

• Impact of COVID-19 on coffeeFigure 12: Short, medium and long-term impact of COVID-19on coffee, 2021

• Volume sales boom for coffee due to COVID-19 in 2020Figure 13: UK retail value and volume sales of coffee, 2016-21

• 2021 sales set to fall as COVID-19 boost wanes• Market expected to return to slight growth in 2022

Figure 14: Market forecast for the value of the UK coffeemarket, at current prices, 2021-26

ISSUES AND INSIGHTS

THE MARKET – KEY TAKEAWAYS

MARKET SIZE AND PERFORMANCE

MARKET FORECAST

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Figure 15: Market forecast for the volume of the UK coffeemarket, at current prices, 2021-26

• Market drivers and assumptionsFigure 16: Key drivers affecting Mintel’s market forecast,2015-25 (prepared on 5 March 2021)

• Forecast methodology

• Mintel’s approach to predicting the impact of COVID-19• Fundamental differences in how COVID-19 is affecting

consumer markets• The risk of vaccine-resistant strains of COVID-19 adds

uncertaintyFigure 17: COVID-19 scenario value forecasts for coffee,2016-26Figure 18: COVID-19 scenario volume forecasts for coffee,2016-26

• A small sales difference between Mintel’s rapid COVIDrecovery and extended COVID disruption scenarios in 2021

• A setback to the vaccination programme could extendsocial distancing into 2022

• Mintel’s rapid recovery scenario indicates a near return topre-pandemic sales by 2022

• COVID-19 market disruption: risks and outcomesFigure 19: Summary of Mintel scenario expectations and theimpact on the foodservice market, 2021

• Ground coffee and coffee pods continue to chip away atinstant coffee’s leadFigure 20: UK retail value and volume sales of coffee, bysegment, 2019-21

• Coffee prices surge due to freak weather in Brazil• Brexit appears to have little impact on coffee market• UN report declares climate change is ‘code red for

humanity’• Drinking coffee linked to lower risk of liver disease• Ageing population will lend long-term support to instant

coffee

• Nescafé remains leader in instant coffee sales

COVID-19 SCENARIO PERFORMANCE

MARKET SEGMENTATION

MARKET DRIVERS

COMPANIES AND BRANDS – KEY TAKEAWAYS

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• Taylors and Cafédirect are big winners in ground coffee;Starbucks and Costa continue to secure foothold

• Nescafé leads coffee pod segment, but coffee shop brandsencroach

• Nestlé continues to lead on launch activity in 2020• High street brands continue to expand into retail space• Nestlé continues to dominate ad spend in 2021

• Nescafé remains leader in instant coffee sales• Nescafé Gold continues to build on 2020 boost

Figure 21: Leading brands’ sales and share in the UK instantcoffee market, by value and volume, 2018/19-2020/21Figure 22: Leading manufacturers’ sales and share in the UKinstant coffee market, by value and volume, 2018/19-2020/21

• Taylors of Harrogate and Cafédirect are big winners inthriving ground coffee segment

• Continued growth of Starbucks and Costa points toenduring desire to recreate coffee shop experience athomeFigure 23: Leading brands’ sales and share in the UK groundcoffee (excluding coffee pods) and coffee beans market, byvalue and volume, 2018/19-2020/21

• Nescafé leads coffee pod segment; coffee shop brandsencroach on its shareFigure 24: Leading brands’ sales and share in the UK coffeepods market, by value and volume, 2018/19-2020/21

• Nestlé continues to lead on launch activity in 2020Figure 25: New product launches in the UK coffee market, bytop 10 companies, 2017-21 (sorted by 2020)

• 2021 sees Nestlé channel artisan coffee trend in newlaunchesFigure 26: Nescafé’s new artisan-style launches, 2021Figure 27: Nescafé Azera My Way Latte Instant CoffeeBeverage, 2021

• Nescafé Gold Iced range launched for Summer 2021• Nescafé Original relaunches with an improved recipe

Figure 28: Nescafé Original relaunches with smoother recipe,2021

• Supermarket and discounter activity in 2020 driven byrange extensions and relaunches

MARKET SHARE

LAUNCH ACTIVITY AND INNOVATION

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• Taylors of Harrogate aims to ‘combat coffee confusion’ withnew range

• Taylors core range sees packaging refreshFigure 29: Recent NPD and new packaging designs fromTaylors of Harrogate, 2020-1

• High street brands continue to expand into retail space• Pret, Caffè Nero and Leon explore new retail channels

Figure 30: Recent examples of high street brands enteringthe retail coffee space, 2020-21

• Nestlé launches Starbucks seasonal favouritesFigure 31: Nestlé launches seasonal Starbucks variants andextends Nespresso and Dolce Gusto offerings, 2020-21

• Japanese Ueshima Coffee Company enters UK market forthe first timeFigure 32: Ueshima Coffee Company enters into UK coffeemarket, 2021

• Ethical claims remain dominant in launches but providelittle stand-outFigure 33: New product launches in the UK coffee market, bytop 10 claims, 2017-21 (sorted by 2020)

• Bags and pods continue to attract the most launches in2020Figure 34: New product launches in the UK coffee market, byformat, 2017-21

• Waitrose claims supermarket first with launch ofcompostable pods…Figure 35: Recent examples of compostable coffee pods,2020-21Figure 36: Lavazza Eco Caps Espresso Dek CremosoCapsules explaining the compostable chain, 2021

• …while Rombouts unveils a world first with homecompostable filtersFigure 37: Rombouts Decaf One Cup Filter Coffee givingdetails on what its home compostable filters are made of2021

• Nestlé launches the first-ever plant-based coffee podFigure 38: Examples of Nescafé Dolce Gusto’s new plant-based pod range, 2021

• Decaffeinated coffee made up 8% of launches in 2020Figure 39: Recent examples of decaffeinated productscalling out preservation of flavour and naturalness, 2020

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• Nestlé continues to dominate ad spend in 2021Figure 40: Total above-the-line, online display and directmail advertising expenditure on coffee, by leadingadvertisers, 2019-21 (sorted by 2020)

• Nescafé Gold Blend Roastery focuses on the expertisebehind itFigure 41: Total above-the-line, online display and direct mailadvertising expenditure on coffee, by leading brands,2019-21 (sorted by 2020)

• Nescafé Gold Blend helps to make moments matter…• …while Nescafé Original focuses on the morning routine• Azera My Way Latte and Craft Coffee launches supported

by new campaigns• Taylors of Harrogate wonders what the world would be like

if everything was so simple• Lavazza updates its ‘More than Italian’ campaign

emphasises its Italian origins in Christmas campaign• Cafédirect returns to TV screens after a 10-year hiatus• Nielsen Ad Intel coverage

• Brand mapFigure 42: Attitudes towards and usage of selected brands,2021

• Key brand metricsFigure 43: Key metrics for selected brands, 2021

• Nescafé Gold Blend leads on consistently high-qualityperceptionsFigure 44: Attitudes, by brand, 2021

• Taylors of Harrogate is seen as the most exclusive brandFigure 45: Brand personality – Macro image, 2021

• Nescafé Gold Blend and Kenco share top spot fordeliciousnessFigure 46: Brand personality – Micro image, 2021

• Brand analysis• Taylors of Harrogate leads on being a special brand

Figure 47: User profile of Taylors of Harrogate, 2021• Tassimo matches Nespresso on innovation

Figure 48: User profile of Tassimo, 2021• Nespresso is seen as the most stylish brand

Figure 49: User profile of Nespresso, 2021• Nescafé Gold Blend is the most trusted brand

ADVERTISING AND MARKETING ACTIVITY

BRAND RESEARCH

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Figure 50: User profile of Nescafé Gold Blend, 2021• Lavazza is seen as an authentic brand by 23%

Figure 51: User profile of Lavazza, 2021• Kenco matches Nescafé Gold Blend in terms of positive

endorsementFigure 52: User profile of Kenco, 2021

• Reading word clouds

• Ongoing lockdowns in first half of 2021 continue to provideboost to retail coffee

• Long-term focus on sustainability predicted• Ground/whole bean coffee sees significant growth in

frequent usage• Decaffeinated coffee offers huge opportunity for coffee

brands• 44% always looking for new coffees to try• A quarter of coffee buyers would pay more for a low carbon

footprint• 48% find coffee products with functional benefits appealing

• Ongoing lockdowns in first half of 2021 continue to provideboost to retail coffee

• COVID-19 prompts some to make meal and beverageoccasions more of an event

• Easing of restrictions will have seen some shift back to out-of-home consumption

• Increased working from home predicted to be long-termconsequence of COVID-19

• Pandemic sees significant changes in grocery shoppinghabits

• Long-term focus on sustainability predicted• COVID-19 worries affect people’s sleep

• Instant coffee retains top position…• …but ground/whole bean coffee sees significant growth in

frequent usageFigure 53: Types of coffee used at home, 2019 and 2021

• Coffee pod usage remains steadyFigure 54: Frequency of usage of coffee, by type, 2020* and2021

THE CONSUMER – KEY TAKEAWAYS

IMPACT OF COVID-19 ON CONSUMER BEHAVIOUR

USAGE OF COFFEE

Coffee - UK - 2021

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• Coffee pod machines see boost in 2021…Figure 55: Types of coffee systems in the household, 2020 and2021

• …as do espresso/cappuccino and bean to cup machines

• Supermarkets are the most popular in-store location to buycoffee

• 22% buy their coffee at discountersFigure 56: Where coffee is bought in-store, 2021

• 27% bought coffee from online supermarkets• Increased penetration of online shopping predicted going

forward

• Decaffeinated coffee offers huge opportunity for coffeebrandsFigure 57: Behaviours related to coffee, 2021

• Providing reassurance around flavour remains pertinent fordecaffeinated variantsFigure 58: Recent examples of coffee brands providing tastereassurance on-pack in decaffeinated variants, 2021

• Targeting the evening occasion could help decaffeinatedcoffee gain a new roleFigure 59: Recent examples of herbal tea with a night-timepositioning, 2021

• Building associations between coffee and relaxation ispossibleFigure 60: Wildcrafter Spiritual Chill Decaffeinated OrganicGround Coffee – US, 2020

• Other unlikely categories targeting sleep and relaxationcan offer inspirationFigure 61: Recent examples of unexpected categoriestargeting sleep and relaxation, 2019-21

• 44% always looking for new coffees to try• Supermarkets could look to a ‘Coffee of the Month’ and

providing more on-shelf knowledgeFigure 62: Sainsbury’s world of coffee display, 2021

• Smaller packs and variety bundles can help encourageexperimentation

• Coffee subscription services and online stores can also offercues

OWNERSHIP OF COFFEE SYSTEMS

WHERE COFFEE IS BOUGHT

BEHAVIOURS RELATED TO COFFEE

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• Deforestation and fair wages are the most influential to paymoreFigure 63: Factors that people would pay more for in acoffee product, 2021

• Putting tangible numbers on what brands pay workers canhelp consumers differentiateFigure 64: Cafédirect No.3 Smooth Freeze Dried InstantCoffee calling out going above and beyond Fairtrade onback-of-pack, 2021

• More clarification is needed on Rainforest Alliance coffeehelping to prevent deforestation

• Brands can also look to making reforestation andconservation more centre-stage in messagingFigure 65: Recent examples of US coffee variants makingreforestation more prominent in messaging, 2021

• A quarter of coffee buyers would pay more for a low carbonfootprintFigure 66: Recent examples of UK coffee brands calling outcarbon neutral accreditations, 2020

• Providing tangible details also chimes in relation to carbonfootprintFigure 67: The Meatless Farm Co. Meat free mince calling outwater and carbon reductions, 2018

• 48% find coffee products with functional benefits appealingFigure 68: Attitudes towards coffee, 2021

• Boosting energy is key area of interest for consumers• Coffee brands can push the natural properties of caffeine

moreFigure 69: Recent example of a coffee product with morecaffeine, 2020

• B vitamins can also tap into interest in energyFigure 70: Recent examples of fruit juice and smoothies whichmake energy-related claims, 2020

• Ginseng also holds potentialFigure 71: Recent examples of coffee products in Italycontaining ginseng, 2019-21

• 45% agree that standard coffee tastes just as good aspremium coffee

• Providing virtual tasting experiences can encourage peopleto notice the difference

FACTORS THAT PEOPLE WOULD PAY MORE FOR IN COFFEE

ATTITUDES TOWARDS COFFEE

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• Brands can utilise online supermarket data to send samples• Interest in personalised advice still suggests considerable

openness of this cohort• Grinding coffee beans at the supermarket would be

appealing for 44%Figure 72: Waitrose Unpacked in-store coffee beans andgrinder display, 2019

• Abbreviations• Consumer research methodology

Figure 73: Leading manufacturer sales and share in the UKground coffee (excluding coffee pods) and coffee beansmarket, by value and volume, 2018/19-2020/21Figure 74: Leading manufacturer sales and share in the UKcoffee pods market, by value and volume, 2018/19-2020/21

• Market forecast and prediction intervalsFigure 75: Market forecast and prediction intervals for UKvalue sales of coffee, 2021-26Figure 76: Market forecast and prediction intervals for UKvolume sales of coffee, 2021-26

• Market drivers and assumptionsFigure 77: Key drivers affecting Mintel’s market forecast,2021-26

• Forecast methodology

• Scenario performanceFigure 78: Scenario performance for value retail sales ofcoffee, 2016-26Figure 79: Scenario performance for volume retail sales ofcoffee, 2016-26

• Rapid COVID recovery, central and extended COVIDdisruption scenarios outline

• Scenario methodology

APPENDIX – DATA SOURCES, ABBREVIATIONS ANDSUPPORTING INFORMATION

APPENDIX – MARKET SHARE

APPENDIX – CENTRAL FORECAST METHODOLOGY

APPENDIX – COVID SCENARIO PERFORMANCEMETHODOLOGY AND ASSUMPTIONS

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