Service of the coffee industry is a massive global business. Coffee has various possible health benefits due to its high caffeine content, and it is known to have a psychoactive ‘effect. Coffee in the food service industry has been around for a while, but due to the introduction of new coffee flavors into the market in recent years, it has exploded in popularity. For instance, according to the National Coffee Association’s in 2010, National Coffee Drinking Trends report, more than half of adult Americans were drinking an average 3.1 cups drink coffee on a daily basis. Moreover, according to the reports by Square, a credit card processing service organization and Specialty Coffee Association, in August 2019, latte dominates the overall coffee drinks as it was most ordered between June 2017 to June 2018. Furthermore, the reports also revealed that Americans drank over 67 million lattes during 2017-18. The aforesaid are some of the key factors contributing to the market growth.
The U.S. liquid coffee for foodservice application market is projected to surpass US$ 18.4 Mn by the end of 2028, and is expected to exhibit a CAGR of 3.5% during the forecast period (2021 to 2028).
Several people are drinking coffee out-of-home which has led to increasing number of coffee shops across the country. For instance, according to National Coffee Association (NCA) National Coffee Drinking Trends report 2018, more people are drinking coffee out of home than ever, reaching a high of 46% in 2017. New coffee shops are opening across the U.S. to meet this increasing demand. Moreover, according to NCA, in 2017, there were 33,129 gourmet coffee shops in the U.S., an increase of 2% in units from 2016. Furthermore, according to the same source, total coffee shops grew by 2,990 units between 2012- 2017. There were 8.3 billion servings of coffee ordered at the U.S. restaurants and foodservice outlets in the year ending August 2017, up by 2.3% from August 2016.
Major brands are also opening their outlets at university campuses in order to meet increasing demand for coffee. For instance, in 2017, Pret A Manger (international sandwich shop franchise chain) entered into a franchise agreement with Bon Appétit Management (California-based on-site restaurant company that provides café and catering services to corporations, colleges, and universities) to open outlets at university campuses in the U.S. In the initial stage, they opened outlets in University of Pennsylvania and University of Chicago. The outlets offer a range of organic coffees, salads, and sandwiches.
Increasing penetration of single-cup brewers in households is expected to hamper the market growth of liquid coffee for foodservice application market during the forecast period. For instance, according to National Coffee Association (NCA), one-third of American households owned a single-cup brewer in 2017, up from 29% in 2016. Thirteen to 18-year olds reported that single-cup ownership in their households jumped from 23% to 31% over the last two years.
Companies operating in the liquid coffee market are focused on various strategies such as partnerships & collaborations in order to increase their presence in the market. For instance, in March 2021, J. M. Smucker Company (a U.S. based manufacturer of jam, peanut butter, jelly, fruit syrups, beverages, shortening, ice cream toppings, and other products) entered into a partnership with JDE Peet's (global coffee and tea company), which will allow JDE Peet’s to support the Smucker’s Away From Home liquid coffee business with product development, production, and foodservice equipment innovation. The partnership will allow J.M. Smucker in bringing new innovations in liquid coffee segment that will enhance its current product portfolio and drive liquid coffee segment growth. JDE Peet’s proprietary liquid coffee system delivers large quantities of premium coffee, making it the perfect solution for hospitals, universities, hotels, conference centers, and other out-of-home customers.
Figure 1. U.S. Liquid Coffee for Foodservice Application Market – Opportunity Analysis
Hot coffee is the most preferred choice among the U.S. consumers. However, Cold brew coffee is becoming more popular, particularly among younger coffee lovers. For instance, according to Coherent Market Insights’ analysis, among coffee drink type, cold brew coffee is the fastest growing beverage. More people are looking for new experiences that they cannot replicate at their homes, which has led to increasing demand for cold brew coffee. Moreover, according to NCA’s Coffee Data Trends 2020, one in five people in the U.S. are already consuming cold brew coffee regularly. Furthermore, according to the same source, word-of-mouth is spreading and the survey tells that 58% of consumers are ‘aware but not currently drinking cold brew’ and 41% perceive cold brew as ‘cool and trendy’.
|Base Year:||2020||Market Size in 2020:||US$ 14.2 Mn|
|Historical Data for:||2017 to 2020||Forecast Period:||2021 to 2028|
|Forecast Period 2021 to 2028 CAGR:||3.5%||2028 Value Projection:||US$ 18.4 Mn|
Café Amazon, Café du Monde, Caffè Nero, Coffee Beanery, Costa Coffee, Dunkin'Donuts LLC, Four Barrel Coffee, Gloria Jean’s Coffees, McCafé USA, and Starbucks Corporation
|Restraints & Challenges:||
Figure 2. U.S. Liquid Coffee for Foodservice Application Market, Revenue Share (%), by Coffee Type, in 2020
Key Takeaways of the Graph:
U.S. Liquid Coffee for Foodservice Application Market - Impact of Coronavirus (COVID-19) Pandemic
Coronavirus (COVID-19) has majorly impacted the food & beverages industry and in turn, has changed the dynamics of entire ecosystem. During the early days of the pandemic (between March to May 2020), Americans prioritized staying home in order to prevent spread of COVID-19. Non-essential services, including restaurants, bars, cafes & coffee shops were closed across the country or were operating at a much reduced capacity. Schools & colleges across the nation shifted to virtual classes. Several people adopted working from home, which resulted in consumers not visiting out-of-home venues as frequently vs. pre-COVID. This is projected to have a long-lasting impact on out-of-home coffee consumption.
For instance, according to Spring 2021 National Coffee Data Trends (NCDT) survey conducted by the NCA, COVID-19 drove record coffee consumption at home, with 85% of coffee drinkers having at least one cup at home (up 8% since January 2020) and average daily consumption was consistent at nearly two cups per capita. Moreover, according to the same survey, workplace coffee consumption was down by 55% since January 2020. Furthermore, according to the same survey, more than 40% of the Americans bought different types of coffee, which they have never tried before during the pandemic and nearly one third of them tried to replicate a favourite coffee shop beverage at home.
Major players operating in U.S. liquid coffee for foodservice application market include Café Amazon, Café du Monde, Caffè Nero, Coffee Beanery, Costa Coffee, Dunkin'Donuts LLC, Four Barrel Coffee, Gloria Jean’s Coffees, McCafé USA, and Starbucks Corporation.
A variety of coffee is available at local and franchised coffee shopsThe coffee shop market in urban and semi-urban cities has been boosted as the urban population grows, disposable income of the young population rises, and demand for new-generation cafes grows. Coffee shops are increasingly being designed for socializing, formal and informal meetings, and business meetups, marking a significant departure from the traditional coffee shop structure.
Coffee chains are expanding their units to meet the consumer demand for coffee. For instance, in May 2021, Vietnam’s coffee brand TNI King Coffee opened its first coffee-chain store in California, U.S. The coffee store will offer Vietnamese iced coffee, Vietnamese black iced coffee, and egg coffee along with other popular options such as caramel macchiato, café latte, Americano, and others.
To offer variety of roasts and flavors at campuses, many colleges and universities are partnering with local coffee brands apart from national brands such as Starbucks and Dunkin' Donuts. For instance, Florida State University entered into a partnership with Lucky Goat Coffee Company, a Florida-based roaster, tasting room, and serving company, to bring the brand at university campus. Moreover, the Portland State University in partnership with Stumptown Coffee Roasters (coffee roaster and retailer based in Portland, Oregon) serves a menu of Stumptown beverages, including drip coffee, espresso-based beverages, and nitro cold brew coffee on tap.
For instance, according to National Coffee Association (NCA), the coffee retail sales in the U.S. increased at a CAGR of 4.6% from 2012 to 2016. The rapid increase of single-cup category transformed coffee retail sales in the U.S. Moreover, a study by the National Coffee Association (NCA) shows that household penetration of single-cup brewing machines in the U.S. had peaked at around 30% in 2016, after growing rapidly from just 9% in 2011.
Key features of the study:
“*” marked represents similar segmentation in other categories in the respective.