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US at-home coffee market set to grow almost 5% in 2020: Mintel

With Americans encouraged to work from home, Mintel says the COVID-19 pandemic is injecting some much needed new energy into coffee sales.

New research from the market intelligence agency suggests the at-home coffee market is set to grow by 4.9 per cent this year alone to reach US$15.6 billion, compared to a total of 3.9 per cent growth experienced between 2015 and 2019.

Mintel’s consumer research also shows that as many as two in five (39 per cent) Americans are willing to pay more for premium coffee at home, with coffee drinkers clearly seeing the value of quality and flavour when it comes to getting their caffeine fix.

It’s the foodservice branded coffees, like Starbucks, Caribou, and Peet’s, that Mintel says are really flying off the shelves, as Americans look to recreate their favourite brews at home – turning their kitchen into coffee shops.

“With Americans working from home and unable to visit their favourite coffee shops as a result of the pandemic, they have been honing in on their barista skills to get their coffee fix at home. They are also buying coffee shop branded coffee to recreate that authentic coffee shop experience,” says Caleb Bryant, Associate Director, Food and Drink, Mintel.

“Despite the fact that many Americans are facing economic uncertainty, premium and foodservice-branded coffees have an opportunity to market themselves as affordable luxuries. The purse strings may need to tighten, but a premium home-brewed coffee is still less expensive than drinks from a coffee shop.”

Gen Z – the RTD coffee generation
Leading the way in this at-home craze is Gen Z – which Mintel defines as born between 1995 and 2007 – with 46 per cent drinking ready-to-drink (RTD) coffees.

Only 45 per cent of Gen Z consumers drink ground coffee compared to 63 per cent of Millennials – born between 1977 and 1994.

Mintel says Gen Z has not yet adopted regular brewed coffee, nor has it developed its preferred coffee brands. Only 33 per cent say they typically stick to the same brand of coffee, compared to 44 per cent of Gen X and 50 per cent of Baby Boomers.

It says coffee brands have the opportunity to build long-lasting loyalty among Gen Z consumers and can use flavoured coffee varieties to appeal to young consumers, as 42 per cent of them are interested in unique flavours of coffee.

“Gen Zs in particular are set to adopt the trend for enjoying specialty coffee at home. Before COVID-19, many Gen Z consumers bought their coffees out, treating themselves to cold coffees from their preferred coffee chain. But with these younger consumers experiencing the sharpest rise in unemployment and already on lower incomes, they are the most price-sensitive to coffee drinks. We’re likely to see Gen Zs reduce their coffee shop purchases, possibly dramatically depending on the severity of the recession, giving retail coffee brands a golden opportunity to connect with this next generation of coffee lovers,” says Bryant.

Dalgona coffee craze
Mintel says it’s the recent photogenic Dalgona frothy coffee drink craze that highlights what coffee brands need to do if they’re to fully capitalise on this upswing in interest for coffee at home.

From 1 March 1 to 15 June 2020, there were more than 440,000 posts mentioning Dalgona coffee on Instagram, Pinterest, and Twitter. As a result, sales of instant coffee – the primary ingredient for Dalgona – are set to see a 5 per cent rise in sales growth this year. With social media interest translating into a sharp rise in sales of instant coffee, Mintel says the wider coffee market needs to take note.

“Dalgona coffee became a sensation, in part, because consumers were starved of ‘specialty’ coffee drinks from foodservice outlets as a result of the pandemic. People needed a way to get their coffee shop caffeine at home. While

Dalgona coffee is a fad rather than a long-term trend, the craze around the drink shows that not only do brands need to be quick off the mark to capitalise on future social media hits, but that Americans are now ready to embrace homemade ‘specialty’ coffees,” Bryant says.

“Consumers are discovering it is safer and more cost-effective to have their own coffee at home and this trend is likely to continue even once the virus is under relative control. This shift opens up a real opportunity for products, machines, and gadgets that will help people create their favourite coffeehouse drinks at home.”

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