Coffee sales were projected to rise 5% in 2015, according to Packaged Facts research firm. But the researchers forecasted that this growth is expected to remain flat through 2018. Tea, on the other hand, is expected to experience steady growth through 2018.
“As consumer demand for tea options increases, more foodservice operators will use tea as a key menu item, with an increased price per cup, further increasing tea sales,” Packaged Facts projected.
The research firm suggested that “static” coffee menus encourage customers to “fall into a habitual ordering pattern” and it’s up to the respective retailer to suggest options beyond the usual.
“The incremental growth in foodservice establishment visits that would inevitably stem from piquing consumer interest with new and novel coffee offerings will help grow food sales through at least 2018,” researchers suggested.
In other words, novel coffee offerings are welcome.
Among the ways Packaged Facts suggested retailers freshen up coffee offerings is to market to specific meal or snack occasions. For example, a sweet coffee flavor would make sense as a dessert beverage. Limited-time and seasonal offers can also expose customers to flavors and formats that go beyond the usual and expected, while creating a sense of anticipation and urgency.
Consumers are also becoming increasingly interested in how and where their coffee is sourced. Single origin coffees, for example, can justify premium pricing. And, sourcing from local roasters can communicate freshness and “pay homage” to the community.
“Coffee continues to be a hot button—pun intended—in the convenience store industry,” said Ted Roccagli, director of partnerships and preferred vendor programs for Empire Petroleum Partners, which serves over 1,400 stores in 32 states. “In my travels, if I find a store not doing a proper coffee program, I know it’s losing out on huge profit margins and sales of ring-increasing companion items. This is especially true at breakfast, which accounts for between 40-50% of food sales, but you’re missing the boat if you don’t brew coffee all day long.”
Retail sales of cold brew reflect its expanding role in the coffee category with estimated 115% growth from the year prior, reaching $7.9 million in sales. Growth has been steady since 2010, increasing 339% through estimated 2015. However, cold brew remains a small part of the overall ready-to-drink (RTD) coffee segment, making up just 0.4% of sales in estimated 2015.
Overall, 24% of consumers currently drink retail-purchased cold brew coffee, according to the latest Mintel Group data. Older Millennials—those age 21-38 (55%)—and men (30%) stand out as groups most likely drinking this type. Mintel research indicated that consumers are most likely interested in cold brew because they enjoy trying new styles of coffee preparation (37%).
Whether the store uses traditional glass pots, air pots or total self-contained systems, freshness and timely brewing are the keys to a successful coffee program, he noted. So is a well-stocked fixings bar with “all the bells and whistles,” at the least various sugars and creamers, to allow consumers to customize their brews. Cappuccino and seasonal blends are important to add variety to the offering, Roccagli said.
He also advised that operators keep fresh hot water and an assortment of tea bags in the hot dispensed beverage area.
“Tea is very much a growth category for us,” Roccagli said. “We’ve seen significant all-day sales increases, especially in stores that offer a nice variety of flavors.”
Stay tuned to Convenience Store Decisions‘ March issue, where we delve into 38 in-store categories to identify emerging trends and garner retailer analysis to forecast what operators can expect for 2016 and beyond.