Coffee and Ready-to-Drink Coffee in the U.S., 7th Edition

Chapter 1: Executive Summary

Introduction

Scope of Report: Foodservice and Retail

Dollar Sales Based on Retail Value

Excluded Products

Report Methodology

Market Trends

Higher Coffee Prices Drive Dollar Sales Growth

2011 Sales Approach $38 Billion

Table 1-1: Total U.S. Sales of Coffee, 2007-2011 (in millions of dollars)

Figure 1-1: Share of Total U.S. Dollar Sales of Coffee: Foodservice vs. Retail, 2007 vs. 2011 (percent)

Restaurants Gain in Foodservice Share

Ground Coffee Dominates Mass-Market Retail Sales

Projected Market Growth

Marketer Overview

Approximately 1,000 Marketers

Foodservice Marketers

Joint Ventures and Licensing Provide Synergies

Mergers, Acquisitions and Divestures

Two Spinoffs Coming Up

Top 12 Marketers Account for 84% of Mass-Market Coffee Sales

New Product Trends

Retail Product Launches Slow

Top Retail Trends: Private Label, Upscale, Organic

Figure 1-2: Number of New Coffee Introductions by Top Package Tags/Claims, 2006, 2010, and 2011

Higher Quality Coffee in Both Foodservice and Retail

Retailers Preparing for Growth in Private Label

Marketers Extend Single-Serve Coffee Options

Light vs. Dark Roasts

Single-Origin Coffees

Instant Growth

Flavored Coffees Becoming More Sophisticated

Iced Coffee is Hot

New Entries Brew in Ready-to-Drink Coffee

Foodservice and Retail Trends

Premium Coffee Is Now the Foodservice Standard

Coffee Competition Among Foodservice Players Grows

Supermarkets Lead Retail Market for Packaged Coffee

Consumer Trends

More Than Seven out of 10 Americans Drink Coffee

Older Consumers Drink Coffee More Frequently

Most Coffee-Drinkers Prefer Regular Hot Coffee

Figure 1-3: Coffee Consumption by Type in Last 7 Days: Weekends vs. Weekdays, September 2011 (percent of U.S. adults)

Three out of Five Coffee-Drinkers Strongly Agree Freshly Brewed Coffee Tastes Better than RTD

Brewing Method of Choice

Five-Year Trend by Types of Coffee Used

Brands Usage Rates

Internet Has Changed Consumers’ Lifestyles

Consumers and Traditional Media

Consumers and Social Media

Chapter 2: Market Overview

Introduction

Scope of Report: Foodservice and Retail

Dollar Sales Based on Retail Value

Excluded Products

Eight Product Types

Coffee Brewed and Served by the Cup

Ground Coffee

Whole Bean Coffee

Single-Serve Coffee

Instant Coffee

Instant Cappuccino and Latte Mixes

Packaged Ready-to-Drink (RTD) Coffee Beverages

Liquid Coffee Concentrates

SymphonyIRI Categories

Additional Descriptors

Arabica vs. Robusta

Decaffeinated Coffee

Types of Roasts

Espresso Is a Brewing Process as Well as a Roast

Blends vs. Varietals

Estate Coffee

Flavors

Third-Party Certified Coffee

Illustration 2-1: Fair Trade Certified Logo

Illustration 2-2: USDA Certified Organic Logo

Illustration 2-3: Rainforest Alliance Certified Logo

Illustration 2-4: Smithsonian Bird Friendly Coffee Logo

Illustration 2-5: UTZ Certified Logo

Market Size and Growth

Higher Coffee Prices Drive Dollar Sales Growth

2011 Sales Approach $38 Billion

Table 2-1: Total U.S. Sales of Coffee, 2007-2011 (in millions of dollars)

Foodservice Sales Approach $30.7 Billion

Table 2-2: U.S. Sales of Coffee Through Foodservice Channels, 2007-2011 (in millions of dollars)

Retail Sales of Coffee Approach $7.3 Billion

Table 2-3: U.S. Sales of Coffee Through Retail Channels, 2007-2011 (in millions of dollars)

Market Composition

Foodservice Is Larger Category in Dollar Sales

Figure 2-1: Share of Total U.S. Dollar Sales of Coffee: Foodservice vs. Retail, 2007 vs. 2011 (percent)

Restaurants Gain in Foodservice Share

Table 2-4: Share of U.S. Foodservice Dollar Sales of Coffee: By Venue, 2007 vs. 2011 (percent)

Supermarkets Ring Up 51% of Retail Sales

Table 2-5: Share of U.S. Retail Dollar Sales of Coffee: By Channel, 2007 vs. 2011 (percent)

Retail Market Composition

Ground Coffee Dominates Retail Mass-Market Sales

Table 2-6: U.S. Retail Share of Coffee Sales by Product Type, 2007 vs. 2011 (percent)

Dry Coffee Category Leads in Dollar Sales

Table 2-7: SymphonyIRI-Tracked Sales and Share of Coffee by Category, 2010 vs. 2011 (in millions of dollars)

Regular Ground Coffee Dominates Dry Coffee Category

Table 2-8: SymphonyIRI-Tracked Sales of Dry Coffee Category: Dollar Sales, Change and Category Share by Segment, 2010 vs. 2011 (in millions of dollars)

Table 2-9: SymphonyIRI-Tracked Unit and Volume Sales of Dry Coffee: By Segment, 2010 vs. 2011 (in millions)

Decaf Coffee Sales Decline to Under $347 Million

Instant Coffee Sales Perk Up

Table 2-10: SymphonyIRI-Tracked Dollar Sales of Decaffeinated Coffee: By Segment, 2010 vs. 2011 (in millions of dollars)

Table 2-11: SymphonyIRI-Tracked Dollar Sales of Instant Coffee: By Segment, 2010 vs. 2011 (in millions of dollars)

Shelf-Stable RTD Coffee Dominates Liquid Coffee Category

Table 2-12: SymphonyIRI-Tracked Dollar Sales of Liquid Coffee: By Segment, 2010 vs. 2011 (in millions of dollars)

Table 2-13: SymphonyIRI-Tracked Unit and Volume Sales of Liquid Coffee Category: By Segment, 2010 vs. 2011 (in millions)

Private Label About 9% of Retail Mass-Market Coffee Sales

Seasonality and Regionality

Retail Sales Highly Seasonal

Northwest Coffee Culture Hides Specialty Coffee’s East Coast Roots…

… But Chicago Residents Spend the Most in Coffeehouses

Market Outlook

The Economy and Its Impact on Coffee

Raw Coffee Prices Soar into Early 2011, Then Retreat

Table 2-14: Composite Green Coffee Prices, 2006-2011 (in cents per pound)

Why Coffee Prices Went Sky-High

Foodservice and Retail Coffee Prices Follow

Table 2-15: Average U.S. Retail Coffee Prices for Roasted Coffee, 2006-2011 (in dollars)

Americans Drink 18.5 Gallons of Coffee Per Capita Annually

Most Coffee Prepared at Home

Single-Serve Coffee Is Booming

Table 2-16: Comparison of Starbucks Coffee Costs by Product Type, November 2011 (in dollars)

Premium/Gourmet/Specialty Coffee Remains Strong

Growing Number of Foodservice Outlets Serve Premium Coffee

Opportunities to Market Coffee to Hispanic Consumers

Table 2-17: Demographic Snapshot of the U.S. Population

Table 2-18: Coffee Products and Brands with High Indexes Among Hispanic Consumers, 2011 (U.S. adults)

Competition from a Broad Spectrum of Beverages

Table 2-19: SymphonyIRI-Tracked Sales and Share of Major Beverage Categories, Year-End June 12, 2011 vs. Year Ago (in millions of dollars)

Health and Wellness Benefits

Projected Market Growth

Coffee Sales Will Surpass $51 Billion by 2016

Table 2-20: Projected Total U.S. Sales of Coffee, 2011-2016 (in millions of dollars)

Foodservice Sales Will Top $41 Billion in 2016

Table 2-21: Projected U.S. Sales of Coffee Through Foodservice Channels, 2011-2016 (in millions of dollars)

Retail Sales Will Grow to $10.1 Billion by 2016

Table 2-22: Projected U.S. Sales of Coffee Through Retail Channels, 2011-2016 (in millions of dollars)

Global Market Overview

A Primary Commodity

Table 2-23: World Coffee Production: Marketing Years, 2005/2006 - 2011/2012 (number of bags in millions)

South America and Central America Account for Two-Thirds of World Coffee Production

Europe and Asia Pacific Region Lead in New Coffee Product Introductions

Table 2-24: Share of Global Coffee Product Launches: By Region and Annual Total, 2006-September 30, 2011 (number of reports)

Opportunities Abroad for U.S. Players

Nestlé Leads by Number of New Coffee Product Reports Internationally

Table 2-25: Top 20 International Marketers: By Number of Coffee Product Launches, 2006-September 30, 2011 (number of reports)

Instant Gratification Conquers the World

Table 2-26: Top 20 Package Tags/Marketing Claims: By Reports of Global Coffee Product Launches, 2006-September 30, 2011

Chapter 3: The Marketers

Marketer Overview

Complex International Structure

Approximately 1,000 Marketers

Global Marketers and Investors Control Many Top Brands

Foodservice Marketers

Joint Ventures and Licensing Provide Synergies

Mergers, Acquisitions and Divestures Shape the Industry

Two Spinoffs Coming Up

Retail Marketer and Brand Share

Methodology

Top 12 Marketers Account for 84% of Mass-Market Coffee Sales

J.M. Smucker, Kraft, and Starbucks Dominate Sales

Table 3-1: Top Marketers of Packaged Coffee by SymphonyIRITracked Sales and Share, 2010 vs. 2011 (in millions of dollars)

Folgers Captures Almost One out of Four Dollars

Figure 3-1: U.S. Retail Sales of Packaged Coffee: Top Brands by Dollar Share, 2011 (percent)

Smucker Leads Ground Coffee Category with 40% Share

Table 3-2: Top Marketers of Regular Ground Coffee by SymphonyIRI-Tracked Sales and Share, 2010 vs. 2011 (in millions of dollars)

Figure 3-2: U.S. Retail Sales of Regular Ground Coffee: Top Brands by Dollar Share, 2011 (percent)

Smucker Likewise Leads in Ground Decaf

Table 3-3: Top Marketers of Ground Decaffeinated Coffee by SymphonyIRI-Tracked Sales and Share, 2010 vs. 2011 (in millions of dollars)

Figure 3-3: U.S. Retail Sales of Ground Decaffeinated Coffee: Top Brands by Dollar Share, 2011 (percent)

Single Cup Coffee

Table 3-4: Top Marketers of Single Cup Coffee by SymphonyIRITracked Sales and Share, 2010 vs. 2011 (in millions of dollars)

Figure 3-4: U.S. Retail Sales of Single Cup Coffee: Top Brands by Dollar Share, 2011 (percent)

Starbucks and Eight O’Clock Top Whole Bean Brands

Table 3-5: Top Marketers of Whole Bean Coffee by SymphonyIRITracked Sales and Share, 2010 vs. 2011 (in millions of dollars)

Figure 3-5: U.S. Retail Sales of Whole Bean Coffee: Top Brands by Dollar Share, 2011 (percent)

Instant Coffee Boosted by Starbucks’ VIA

Table 3-6: Top Marketers of Regular Instant Coffee by SymphonyIRI-Tracked Sales and Share, 2010 vs. 2011 (in millions of dollars)

Figure 3-6: U.S. Retail Sales of Regular Instant Coffee: Top Brands by Dollar Share, 2011 (percent)

Smucker Leads Tiny Instant Decaf Category

Table 3-7: Top Marketers of Instant Decaffeinated Coffee by SymphonyIRI-Tracked Sales and Share, 2010 vs. 2011 (in millions of dollars)

Figure 3-7: U.S. Retail Sales of Instant Decaffeinated Coffee: Top Brands by Dollar Share, 2011 (percent)

Starbucks Dominates RTD Coffee with an 86% Share

Table 3-8: Top Marketers of RTD Coffee by SymphonyIRI-Tracked Sales and Share, 2010 vs. 2011 (in millions of dollars)

Figure 3-8: U.S. Retail Sales of Ready-to-Drink Coffee: Top Brands by Dollar Share, 2011 (percent)

Liquid Coffee Concentrates a Miniscule Business at Retail

Chapter 4: New Product, Marketing, and Advertising Trends

New Product Trends

Retail Product Launches Slow

Figure 4-1: Number of New U.S. Coffee Introductions, Reports and SKUs, 2006-2011

Top Retail Trends: Private Label, Upscale, Organic

Figure 4-2: Number of New Coffee Introductions by Top Package Tags/Claims, 2006, 2010, and 2011

Table 4-1: Number of New U.S. Coffee Introductions by Package Tag/Claim, 2006-2011

No Clear Market Leader in U.S. Product Launches

Table 4-2: Top 10 Marketers: By Number of U.S. Coffee Product Launches, 2006-2011 (reports)

Higher Quality Coffee in Both Foodservice and Retail

Illustration 4-1: Maxwell House Gourmet Roast Coffee

Retailers Preparing for Growth in Private Label

Illustration 4-2: Fresh & Easy Donut Shop Blend

Marketers Extend Single-Serve Coffee Options

Illustration 4-3: Emeril’s Gourmet Coffee K-Cups

Illustration 4-4: Green Mountain Coffee Roasters’ New Label: Barista Prima K-Cups

Illustration 4-5: Dunkin’ Donuts K-Cups

Illustration 4-6: Dunkin’ Donuts One Cup Pods, Tested but Discontinued

Illustration 4-7: Starbucks K-Cups

Illustration 4-8: Nestlé Dolce Gusto Single Cup Coffee Brewers

Illustration 4-9: Nescafé Dolce Gusto Single Cup Capsules

Illustration 4-10: Coffee Bean & Tea Leaf Single Cup Brewer

Illustration 4-11: Coffee Bean & Tea Leaf Single Cup Capsules

Illustration 4-12: Rogers Family San Francisco Bay OneCup Capsules

Light vs. Dark Roasts

Illustration 4-13: Seattle’s Best Coffee Level System

Illustration 4-14: Peet’s Medium Roast Coffees

Illustration 4-15: Peet’s Uzuri African Blend

Single-Origin Coffees

Illustration 4-16: Wegmans Private Label Sumatra Mandheling Coffee

Limited Edition Coffees

Seasonal Blends

Illustration 4-17: Paramount Fall In Love Coffees

Illustration 4-18: Dunkin’ Donuts Spring Seasonal Limited Edition Flavors

Anniversary Blends

Illustration 4-19: Starbucks Limited Edition Tribute Blend

Limited Edition Rare Single-Origin Coffees

Illustration 4-20: Starbucks’ Reserve Coffee

Instant Growth

Illustration 4-21: Starbucks Extends VIA Ready Brew with House Blend and Breakfast Blend Varieties

Illustration 4-22: Starbucks Also Added a Caramel Variety in VIA Iced Coffee

Flavored Coffees Becoming More Sophisticated

Illustration 4-23: Starbucks Natural Fusions are its First Flavored Coffees

Iced Coffee is Hot

Illustration 4-24: Starbucks Iced Coffee Blend

Illustration 4-25: Green Mountain Coffee Roasters Brew Over Ice KCups

New Entries Brew in Ready-to-Drink Coffee

Illustration 4-26: Seattle’s Best Coffee Iced RTD Coffee

Illustration 4-27: Wolfgang Puck Iced RTD Coffee

Illustration 4-28: illy issimo Iced RTD Coffee

Illustration 4-29: Coffee Bean & Tea Leaf Iced RTD Coffee

Ideological Coffee: Organic, Natural and Fair Trade

Illustration 4-30: Tiny Footprint Carbon Negative Coffee

Functional Coffee

Illustration 4-31: Bean & Body Functional RTD Coffee

Illustration 4-32: Eight O’Clock Coffee Performance Blend Metabolism Boost

Illustration 4-33: Green Mountain Coffee Roasters Revv Pulse with Ginseng and Guarana

Illustration 4-34: Health is Wealth RTD Iced Coffee

Illustration 4-35: The Healthy Bean Antioxidant-Infused Coffee

Competition from Pistachios?

Marketing and Advertising Trends

Marketers Change Logos and Package Designs

Starbucks Drops Coffee from its Logo

Illustration 4-36: Starbucks Logos Over the Years

Seattle’s Best Packages Simplify Consumer Decisions

Illustration 4-37: Seattle’s Best Coffee: Old vs. New Logo

Illustration 4-38: Seattle’s Best Coffee: Old Package

Illustration 4-39: Seattle’s Best Coffee: New Package

Starbucks Begins Roast Level Labeling

Illustration 4-40: Starbucks New Packaging Highlights Roast Levels

Eight O’Clock Coffee Gets Packaging Redesign

Illustration 4-41: Eight O’Clock Coffee: Old vs. New Package

Caribou Coffee Makes Logo More Stylized

Illustration 4-42: Caribou Coffee: Old vs. New Logo

Sampling and Free Coffee Giveaways

Dunkin’ Donuts Cans Free Iced Coffee Promotion

Eight O’Clock Coffee: Taste What People Are Talking About

Illustration 4-43: Eight O’Clock Coffee’s “Taste What People Are Talking About” Promotion

7-Eleven’s National CofFREE Day Promotion

Illustration 4-44: 7-Eleven CofFREE Day Promotion

Events Sponsorship Creates Buzz

7-Eleven’s Dip a Drip Contest

Illustration 4-45: 7-Eleven “Dip a Drip” Promotion

Tassimo Brewbot Mobile Road Tour

Illustration 4-46: Actress Eva Longoria at the Opening of Tassimo’s Brewbot Café

illycaffè Focuses on High-End Events

Illustration 4-47: Illy AuthentiCity Lounge at the New York City Wine and Food Festival

Coffee Marketers Ally Themselves with Causes

Coffee Bean & Tea Leaf: Support the Troops

Illustration 4-48: The Coffee Bean & Tea Leaf: Support Our Troops

Maxwell House: “Drops of Good” Helps Rebuild Community Houses Across the USA

Illustration 4-49: Maxwell House “Drops of Good” Cause Marketing

Seattle’s Best Coffee: Brew-lanthropy Project

Illustration 4-50: Seattle’s Best Brew-lanthropy Finalists

Starbucks: Create Jobs for USA

Illustration 4-51: Starbucks “Create Jobs for USA” Cause Marketing

Making Use of Websites and Social Media

Starbucks Savvy About Social Media

Illustration 4-52: Starbucks Mines its Facebook Fans for Data

Illustration 4-53: Webpage Promoting Eight O’Clock Radio Commercials

Folgers Jingle Contest

Illustration 4-54: Folgers Jingle Contest

Celebrity Coffee Brands

Illustration 4-55: David Lynch Signature Coffee

Illustration 4-56: Wolfgang Puck Iced RTD Coffee

Caribou Coffee’s Ambient Advertising

Illustration 4-57: Caribou Coffee’s Toasty Warm Bus Shelter

Illustration 4-58: Caribou Coffee’s Reasons to Stay Awake

Advertising and Marketing Positioning

Key Themes

Flavor and Aroma

Illustration 4-59: Starbucks Rhapsodizes About Natural Fusions Coffee

Illustration 4-60: Dunkin’ Donuts’ Dunkin’ Turbo Coffee Has Big Flavor

Illustration 4-61: Smell the Virtual Aromas in Starbucks VIA Commercials

Illustration 4-62: A Taste Promise Guarantees Consumers Will Love Starbucks VIA

Fast and Easy to Make

Illustration 4-63: Folgers Coffee “Just Got Easier”

Illustration 4-64: Brewed Coffee in Just One Minute with Keurig

Sharing Coffee with Family and Friends

Illustration 4-65: A Husband Makes His Wife Fresh Keurig Coffee at Breakfast

Illustration 4-66a: Starbucks Five-Page Spread: Celebrate Fall with Friends

Illustration 4-66b: Starbucks Five-Page Spread: Celebrate Fall with Friends

Illustration 4-66c: Starbucks Five-Page Spread: Celebrate Fall with Friends

Illustration 4-67: Coffee-Lovers Spreading the Word About Starbucks VIA

Variety

Illustration 4-68: Choosing Keurig Coffee at Home

Real People

Illustration 4-69: Dunkin’ Donuts “What are you Drinkin?” Campaign Uses Real People

Customization

Illustration 4-70: Starbucks Personalization Commercial

Illustration 4-71: Starbucks’ “However-You-Want-It” Frappuccino

Illustration 4-72: 7-Eleven’s Website Showcases its Coffee Varieties and Toppings

Health and Wellness

Illustration 4-73: Bean & Body Positions its RTD Coffees as Promoting Health and Wellness

Seattle’s Best Uses Humor to Reposition Itself as Making Coffee Fun

Illustration 4-74: Offbeat Commercial for Seattle’s Best Coffee

Competitive Positioning: Nescafé Taster’s Choice vs. “Big Bucks” Brew

Illustration 4-75: Taster’s Choice Competitive Positioning

Ethics Make Consumers Feel Better About Themselves

Illustration 4-76: Ad for Green Mountain Fair Trade Coffee

Chapter 5: Foodservice and Retail Trends

Foodservice Trends

Foodservice Venues

Foodservice Distribution Methods

Explosion of Foodservice Locations

Foodservice Sales Strongest in All Types of Restaurants

Table 5-1: Share of Dollar Sales of Meals and Snacks Away from Home by Type of Outlet, 2006-2010 (percent)

Restaurant Industry Sales Reach New Record

Table 5-2: Restaurant Industry Sales: 2008-2011 (in billions of dollars)

Despite Proliferation of Chains, Small Businesses Predominate

Premium Coffee Is Now the Standard

Most Restaurants Rely on One Blend

Organic Coffee “Hot” in 2011 Restaurant Survey

Coffee Competition Among Foodservice Players Grows

Table 5-3: Major U.S. Foodservice Operators with a Coffee Niche, 2010

K-Cups in Boston Market Restaurants

Experian Simmons Consumer Survey Findings

Table 5-4: McDonald’s, Starbucks, and Dunkin’ Donuts by Penetration Rates and Core Customer Visits, 2011 (U.S. Adults)

Table 5-5: Top Demographic Indicators for McDonald’s, Starbucks, and Dunkin’ Donuts, 2011 (indexes)

QSR Coffee-Drinkers

Coffeehouses Encourage Patrons to Linger

Starbucks and Large Regional Coffeehouse Chains

Licensed Cafés and Kiosks

The Next Big Wave of Coffeehouses?

McCafés Top 6% of McDonald’s U.S. Sales

Burger King Switches to Seattle’s Best Coffee…

…as Does Subway

Jack in the Box Changes Its Coffee Again

Wendy’s Also Seeks to Be a Coffee Destination

Dunkin’ Donuts Leads QSRs in Coffee Servings

Tim Hortons, the Canadian Chain with a U.S. Presence

Drive-Thrus Buzzing

Coffee Tops C-Store Shopper Lists

Customer-Customized Coffee a C-Store Strength

Coffee a Hot Spot for 7-Eleven

Sheetz, a C-Store Chain with Full-Service Espresso Bars

Office Coffee Service an Important Perk

Vending Machine Sales Lagging

For Hotels, It’s “Goodbye Freeze-Dried, Hello Espresso”

Airlines Flying High with Coffee Grounds

Retail Trends

Retail Distribution Methods

Supermarkets Lead Retail Market for Packaged Coffee

Mass Merchandisers and Supercenters

Walmart a Top Coffee Seller

Warehouse Clubs

Gourmet/Specialty Food Stores

Specialty Coffee Stores

Company Snapshot: The Coffee Bean & Tea Leaf

Health and Natural Food Stores

Internet, Mail Order, and Subscriptions

Chapter 6: Competitor Profiles

Competitor Profile: Caribou Coffee Co., Inc.

Company Overview

Caribou Rebrands to Broaden Its Appeal

Coffeehouse Expansion Plans

Expanding the Food Focus

Commercial Sales Growing

Domestic and International Franchises

Rainforest Alliance Certification

Competitor Profile: Dunkin’ Brands Group, Inc.

Company Overview

Dunkin’ Donuts Leads in Hot and Iced Coffee Unit Sales

Dunkin’ Donuts Expanding Westward

Dunkin’ Donuts Coffee in Grocery Channels

Dunkin’ Donuts Partners with GMCR for K-Cups

America Runs on Dunkin’

Dunkin’ vs. McDonald’s and Starbucks

Competitor Profile: Eight O’Clock Coffee Co.

Company Overview

Competitor Profile: Green Mountain Coffee Roasters, Inc.

Company Overview

Keurig System Instrumental in Driving GMCR’s Growth

GMCR Also Expands Through Acquisitions

GMCR Makes K-Cup Deals with Smucker, Dunkin’ Donuts, and Starbucks

A Razors/Blades Business Model

High Warranty Claims for Brewers

Key K-Cup Patent Expires in December 2012

New K-Cup Brand and Brews

Environmental and Social Responsibility

Competitor Profile: Kraft Foods, Inc.

Company Overview

Kraft Foods Plans to Split the Company

Deliberate, Savvy Planning

Starbucks Ends Long-Term Partnership with Kraft

Kraft’s U.S. Coffee Business

Maxwell House is the Nation’s No. 2 Coffee Brand

Yuban Is Rainforest Alliance-Certified

Sanka Suffers an Image Problem

Maxwell House International Coffee Mixes Losing Their Luster

Gevalia Kaffe Gets New U.S. Push

Kraft Delays Gevalia Retail Launch

Single-Cup Tassimo Successful in Europe; Stumbles in U.S.

Kraft Raises, Then Cuts Coffee Prices

Competitor Profile: McDonald’s Corp.

Company Overview

McDonald’s Upgrades its Coffee…

…and Takes on Starbucks with McCafé

McCafé Expands Beyond Coffee

McCafé Boosts Coffee Share and Sales

McDonald’s vs. Starbucks

McCafés a Global Success Story

Competitor Profile: Massimo Zanetti Beverage USA, Inc.

Company Overview

Chock full o’Nuts Is a New York Favorite

Hills Bros. Popular with Heavy Coffee-Drinkers

MJB Premium Coffee in the Pacific Northwest

Chase & Sanborn Positioned on Affordable Price

Massimo Zanetti Buys Kauai Coffee Co.

Cafés and Foodservice

Competitor Profile: Nestlé USA, Inc.

Company Overview

Nestlé’s U.S. Operations: Vast and Varied

Nestlé Leads Instant Coffee Market

Nespresso an International Superpremium Success

Nestlé Sues Other Marketers for Making Nespresso Capsules

Nescafé Rolls Out Dolce Gusto

Coffee Sustainability

Competitor Profile: Peet’s Coffee & Tea, Inc.

Company Overview

Two Business Segments: Retail Stores and Specialty Sales

Peet’s Retail Stores

A Growing National Brand in Grocery Channels

Foodservice and Office Accounts

Home Delivery

Peet’s Mantra: “It’s All About the Coffee”

Peet’s Introduces Medium-Roast Coffee

Peet’s Not into Single Cup Coffee Yet

Competitor Profile: Sara Lee Corp.

Company Overview

Sara Lee Sheds U.S. Retail Coffee and DSD Foodservice Coffee Businesses

Sara Lee Hopes to Spin Off its International Coffee Business

Four Current Business Segments

Sara Lee Still Brews Up a Storm in Coffee Internationally

Senseo a Global Single-Serve Coffee Sensation

Senseo Stumbles in U.S., then Fails to Regain Lost Ground

Competitor Profile: The J.M. Smucker Co.

Company Overview

A Family Business with a Thirst for No. 1 Brands

A Focus on Breakfast

Smucker the Leader in Mass-Market Coffee

Mainstream Folgers Is the Nation’s Leading Coffee Brand

Dunkin’ Donuts License

Millstone, Smucker’s Mass-Gourmet Brand

Smucker Acquires Rowland Coffee

Smucker to Acquire Sara Lee’s North American Foodservice Coffee Business

Smucker Raises, Then Drops Coffee Prices

Competitor Profile: Starbucks Corp.

Company Overview

Starbucks History

Starbucks Launches Pike Place Roast Coffee, Oatmeal

Back on Track

The Vast Worldwide Starbucks Coffeehouse Phenomenon

Starbucks Redesigns Logo, Hints at Expanding to Other CPG Categories

Starbucks in Grocery Channels

Starbucks Ends Long-Term Grocery Partnership with Kraft

VIA an Instant Success

Starbucks Launches Blonde Roast

Starbucks Launches K-Cups with GMCR

Starbucks Acquires Juicemaker Evolution Fresh

The North American Coffee Partnership

Other Partnerships, Other Products

Foodservice Operations

Starbucks’ Seattle’s Best Coffee Co. Subsidiary

Subway and Burger King Roll Out Seattle’s Best Nationally

Lofty Goals

Seattle’s Best Introduces “Level System” for Grocery Channel

Torrefazione Italia

Starbucks a Pioneer in Corporate Responsibility and Ethical Sourcing

New Starbucks Stores Partnering with Communities

Starbucks Create Jobs for USA

Starbucks Targeting International Expansion

Starbucks vs. McDonald’s and Dunkin’ Donuts

Chapter 7: The Consumer

Methodology

More Than Seven out of 10 Americans Drink Coffee

Older Consumers Drink Coffee More Frequently

Older Consumers Are Also Heavier Coffee-Drinkers

Table 7-1: Coffee-Drinking by Age Group, September 2011 (U.S. adults, percent and index)

Table 7-2: Frequency of Coffee-Drinking by Age Group, September 2011 (U.S. adults, percent and index)

Table 7-3: Amount of Coffee Consumption by Age Group (Weekdays), September 2011 (U.S. adults, percent and index)

Table 7-4: Amount of Coffee Consumption by Age Group (Weekends), September 2011 (U.S. adults, percent and index)

Most Coffee-Drinkers Prefer Regular Hot Coffee

Figure 7-1: Coffee Consumption by Type in Last 7 Days: Weekends vs. Weekdays, September 2011 (percent of U.S. adults)

Coffee Beverages and Iced Coffee More Popular with Women

Table 7-5a: Coffee Consumption in Last 7 Days by Type and Gender: Weekdays, September 2011 (U.S. adults, percent and index)

Table 7-5b: Coffee Consumption in Last 7 Days by Type and Gender: Weekends, September 2011 (U.S. adults, percent and index)

Younger Consumers Choose Coffee Beverages and Iced Coffee

Table 7-6: Coffee Consumption in Last 7 Days (Weekdays) by Type and Age Group, September 2011 (U.S. adults, percent and index)

Table 7-7: Coffee Consumption in Last 7 Days (Weekends) by Type and Age Group, September 2011 (U.S. adults, percent and index)

Eight out of 10 Coffee-Drinkers Drank and Made Coffee at Home in Last Week

Table 7-8: Coffee-Drinking Behavior in Last 7 Days by Age Group, September 2011 (U.S. adults, percent and index)

Nine out of 10 Coffee-Drinkers Agree Freshly Brewed Tastes Better than Instant

Three out of Five Coffee-Drinkers Strongly Agree Freshly Brewed Coffee Tastes Better than RTD

70% of Coffee-Drinkers Say It’s Worth Paying More for Freshly Brewed Coffee

86% Agree Freshly Brewed Coffee Is Worth Taking the Extra Trouble

Is Starbucks the Best Coffee?

One out of Four Thinks Foodservice Coffee Tastes Better Than Coffee Made at Home

Three out of Four: RTD Coffee Is Overpriced

Almost 60% of Coffee-Drinkers Say Coffee Is Good for You

Coffee Gives 78% of Coffee-Drinkers More Energy

Table 7-9: Percent of Coffee-Drinkers Who Agree with the Statement “Freshly Brewed Coffee Tastes Better Than Instant Coffee,” September 2011 (U.S. adults, percent and index)

Table 7-10: Percent of Coffee-Drinkers Who Agree with the Statement “Freshly Brewed Coffee Tastes Better than Canned/Bottled Ready-to-Drink Coffee,” September 2011 (U.S. adults, percent and index)

Table 7-11: Percent of Coffee-Drinkers Who Agree with the Statement “It’s Worth Paying More for Freshly Brewed Coffee,” September 2011 (U.S. adults, percent and index)

Table 7-12: Percent of Coffee-Drinkers Who Agree with the Statement “It’s Worth Taking the Extra Trouble to Have Freshly Brewed Coffee,” September 2011 (U.S. adults, percent and index)

Table 7-13: Percent of Coffee-Drinkers Who Agree with the Statement “Starbucks Is the Best Coffee,” September 2011 (U.S. adults, percent and index)

Table 7-14: Percent of Coffee-Drinkers Who Agree with the Statement “Coffee Made at Home Doesn’t Taste as Good as Coffee from Restaurants, Fast Food, Coffee/Donut Shops, etc.,” September 2011 (U.S. adults, percent and index)

Table 7-15: Percent of Coffee-Drinkers Who Agree with the Statement “Individual Cans/Bottles of Ready-to-Drink Coffee Are Overpriced,” September 2011 (U.S. adults, percent and index)

Table 7-16: Percent of Coffee-Drinkers Who Agree with the Statement “Coffee Is Good For You,” September 2011 (U.S. adults, percent and index)

Table 7-17: Percent of Coffee-Drinkers Who Agree with the Statement “Drinking Coffee Helps Give Me Energy,” September 2011 (U.S. adults, percent and index)

Brewing Method of Choice

Figure 7-2: Household Ownership Rates of Coffee Brewers by Type, September 2011 (percent of U.S. households that make coffee other than instant)

Supermarkets the Most Popular Place to Buy Packaged Coffee

Table 7-18: Percent of Coffee Purchasers in Last 12 Months by Retail Channel, September 2011 (U.S. adults)

Coffeehouses Lead in Foodservice Coffee

Table 7-19: Percent of Foodservice Coffee Purchasers in Last 30 Days by Type of Outlet, September 2011 (U.S. adults)

Table 7-20: Percent of Foodservice Coffee Purchasers in Last 30 Days by Type of Coffee Ordered, September 2011 (U.S. adults)

One Out of Two Households Use Ground Coffee Most Often

Figure 7-3: Household Usage Rates of Coffee: By Product Type, 2011 (percent of U.S. households)

Five-Year Trend by Types of Coffee Used

Table 7-21: Trended Number of Coffee Users: By Product Type Used Most Often, 2007-2011 (percent of U.S. households)

Espresso/Cappuccino Has Youthful Demographic

Table 7-22a: Usage of Espresso/Cappuccino: By Household Age Group, 2011 (number in millions, percent and index)

Table 7-22b: Usage of Ground/Whole Bean Coffee: By Household Age Group, 2011 (number in millions, percent, and index)

Demographic Indicators by Product Type

Regular Ground Coffee

Ground Decaf

RTD Coffee

Regular Instant

Instant Decaf

Instant Cappuccino and Latte Mix

Sugar-Free Instant Cappuccino and Latte Mix

Whole Bean Coffee

Espresso/Cappuccino

Table 7-23: Top 10 Demographic Indicators for Selected Types of Coffee, 2011 (index of U.S. households)

Brands Usage Rate

Table 7-24: Coffee Brands Used Most Often by Percentage of U.S Households, 2011 (percent of U.S. households)

Demographic Trends: Ground Coffee Brands

Chock full o’Nuts

Dunkin’ Donuts

Eight O’Clock

Folgers

Hills Bros.

Maxwell House

Starbucks

Table 7-25: Top 10 Demographic Indicators for Selected Ground Coffee Brands, 2011 (index of U.S. households)

Demographic Trends: Selected Espresso/Cappuccino Brands

Table 7-26: Top 10 Demographic Indicators for Selected Espresso/Cappuccino Brands, 2011 (index of U.S. households)

Demographic Trends: Instant Coffee Brands

Table 7-27: Top 10 Demographic Indicators for Selected Instant Coffee Brands, 2009 (index of U.S. households)

Demographic Trends: Instant Cappuccino and Latte Mix Brands

Table 7-28: Top 10 Demographic Indicators for Instant Cappuccino and Latte Mix Brands, 2011 (index of U.S. households)

Demographic Trends: RTD Coffee Brands

Table 7-29: Top 10 Demographic Indicators for Selected Ready-To-Drink (RTD) Coffee Brands, 2011 (index of U.S. households)

Consumer Media Trends

Internet Has Changed Many Consumers’ Lifestyles

Internet Has Changed How Consumers Shop

Consumers and Traditional Media

Consumers and Social Media

Consumers’ Attitudes Toward Advertising

Table 7-30: The Internet and Lifestyle Changes: Total U.S. Adults vs. Coffee Households by Type of Coffee, 2011 (U.S. adults, percent and index)

Table 7-31: Consumer Internet Use Patterns: Total U.S. Adults vs. Coffee Households by Type of Coffee, 2011 (U.S. adults, percent and index)

Table 7-32: Consumer Use of Traditional Media: Total U.S. Adults vs. Coffee Households by Type of Coffee, 2011 (U.S. adults, percent and index)

Table 7-33: Consumer Use of Social Media: Total U.S. Adults vs. Coffee Households by Type of Coffee, 2011 (U.S. adults, percent and index)

Table 7-34: Consumer Attitudes Toward Advertising: Total U.S. Adults vs. Coffee Households by Type of Coffee, 2011 (U.S. adults, percent and index)

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