Are You Meeting Consumers' New Coffee Expectations?

Progressive restaurants, retailers are brewing adventurous flavors, higher quality joe

coffee

ROCKVILLE, Md. -- Innovation in coffee is providing a much needed jolt to a very mature market by providing growth opportunities through new usage occasions and higher price points, according to the Packaged Facts report Coffee and Ready-to-Drink Coffee in the U.S.: Retail and Foodservice, 8th Edition.

"Threading this needle translates to continuing to push the variety envelope while leveraging hot coffee's dominant position. In the end, it's largely about raising the price of coffee, or at least getting more money per ounce," said David Sprinkle, research director, Packaged Facts.

Across restaurant menus, flavors that have universal appeal, such as mocha, chocolate, vanilla and caramel, have the strongest penetration. But restaurant operators know that, for savvy coffee drinkers, such pedestrian flavorings aren't going to cut it. This explains the uptick in use of seasonal flavors like mint and pumpkin among QSRs with premium-positioned coffee platforms, and it underscores the growing stream of limited-time coffee and coffee-drink selections.

Building off coffeehouse expectations, retail coffee manufacturers are embracing variety. To keep its coffee line fresh and interesting, the Eight O' Clock coffee brand in recent years began featuring seasonal varieties, such as Dark Chocolate Cherry and Cinnamon Bun, as part of its Expressions collection. Some companies also tapping non-coffee brands to blend unique yet naturally aligned properties into the mix, such as Godiva Chocolatier, which leverages premium positioning to help set an expectation for high-quality, rich coffee flavor.

But despite the proliferation of lattes, mochas and macchiatos, good old hot coffee remains the go-to beverage, with 75% of coffee/coffee-drink users choosing "hot coffee" over 10 other choices as the coffee/coffee drink they drink most often. And a notable 26% share of coffee drinkers consume in excess of four cups per day. Above all, to feed their habit, this gold mine of high-frequency users is looking for taste and quality consistency.

To meet this need, restaurant operators are increasingly tapping organic, house blend, premium, fair trade and Ethiopia coffees, each of which maintained a higher menu presence in recent years compared to just six years ago. Single-source coffee is increasingly a hit in the grocery aisle, too, with marketers ranging from Kauai Coffee Co. to Trader Joe's providing these premium offerings. In each case, restaurant operators and retailers deliver a unique beverage to the customer that can help justify a higher price point.

Packaged Facts, a division of MarketResearch.com based in Rockville, Md., publishes market intelligence on a wide range of consumer market topics, including consumer demographics and shopper insights, consumer financial products and services, consumer goods and retailing, consumer packaged goods, and pet products and services.