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UK Insights

Flat whites and fast food: where the UK buys its coffee

Kirsty Cooke

Head of Digital Content, UK

Shoppers 28.09.2018 / 07:00

coffee collection

Pubs and restaurants see an increase in coffee sales, while instant coffee undergoes a premium makeover. Who is drinking what and where?

In the last year, £6.2 billion was spent on coffee out of the home – £202 million more than the year before, with almost three quarters of individuals enjoying at least one coffee out of home. (Kantar Worldpanel OOH sales data for 52 w/e 13 Aug 17 vs 52 w/e 12 Aug 18). However, this is driven largely by price, as people are actually having coffee out less often (35 million fewer occasions than last year). On average, we’re each spending 5p more per cup of coffee, with a mixture of inflation and premiumisation driving up prices.

But while we may be spending more on coffee, the overall consumer trend is away from hot drinks and towards cold drinks. For the first time ever, cold drinks now account for the majority of drinks consumption (at 52%, up from 48% in 2013, according to Kantar Worldpanel Usage data). In percentage terms, this may sound like a minor shift, but this equates to 2 billion fewer cups of hot beverages being consumed in the UK over that time. 

The rise and rise of the coffee shop?

Another myth to bust: we aren’t necessarily all buying from traditional coffee shops. Taryn Ferguson, Consumer Insight Director at Kantar Worldpanel, comments: “Whilst still only making up a small share of coffee sales, pub chain JD Wetherspoon has seen sales growth of over 25% when it comes to coffee, as consumers seemingly respond well to their free refill scheme. Bakery and sandwich outlets (such as Pret a Manger and Greggs), another channel increasingly building out coffee credentials, are actually growing faster than traditional coffee shops (+5.1% vs. +4.5%). Evidently, more and more retailers are looking to grow their sales through coffee.”

Looking on a shorter timescale, over one of the warmest summers on record, people unsurprisingly spent less on hot coffee compared to last summer (£44.13 vs £46.01 per person, or 4.9% less). During this period (12 w/e 12 August 2018), consumers switched to carbonated drinks and opted for cold coffee, rather than the hot alternative, claims Ferguson.

And we Brits do rely on access to a decent cup of Joe. A recent Lightspeed survey found that, while 21% of people didn’t drink coffee at all, 11% drank five or more cups a day (see chart). 

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Who is drinking what?

The flat white has become a staple of coffee drinkers and, as it becomes widely available across both traditional coffee shop outlets and more unexpected outlets (for example McDonalds), its sales have grown by 11% in the last year, whilst sales of other types of coffee have decreased by 28%. The flat white appeals most to shoppers under 25, whilst shoppers aged 55 and above more likely to choose Americanos and Café Au Lait (or, eh, coffee with milk).

Ferguson notes that shoppers under the age of 25 also choose coffee for different reasons: they are 60% more likely to choose it for “refreshment”, and twice as likely to choose it as something “social” or for “energy or stimulation.” “Engagement with coffee generally increases with age,” says Ferguson. “Whilst 83% of over-55-year-olds buy at least one out-of-home coffee a year, only 57.4% of those under 25 do the same. All drivers follow this pattern, with older shoppers purchasing more frequently (96 trips in a year – 40 more than the average under 25 year old makes!) and spending more per person (£231 per year). So it’s important that retailers do not overlook valuable older shoppers.”

Coffee -pour -takeaway

When are we drinking it?

In terms of when consumers are drinking their cup of coffee, the obvious place to start is the breakfast table. Coffee consumption as part of the most important meal of the day is growing faster than at any other mealtime (+1.3% year on year.)* However, the big opportunity for growth is to boost consumption of coffee later on in the day. Caffeine is a barrier here, as consumers taper their intake as the day goes on looking to avoid sleepless nights. Therefore there’s room for decaffeinated options to play a bigger role at evening meal and snack times.

Are we ditching instant coffee?

The out-of-home data may paint a picture of a nation that has stopped making hot drinks at home, but this isn’t quite true. In fact, the value of the hot beverages market in supermarkets has grown 6.5% (Kantar Worldpanel purchase data for 52 w/e 20 May 2018). Again, however, this is largely coming from rising prices – the average price paid for coffee has increased by 70p on average per kg (+4.5% year on year). Tea is just behind this with shoppers paying 30p more on average per kg (+3.6% year on year).

“The good news for ‘instant’ coffee is that innovations in this area are encouraging shoppers to trade up. Premiumisation has been pivotal in heating up the market of late, as manufacturers have responded to shoppers’ expectations of a more indulgent experience from day-to-day products, and to pay more for this when buying for home consumption,” says Isabel Zakers, analyst at Kantar Worldpanel.

An increasing number of innovations have enabled consumers to have the barista experience at home, with the option to take this out of their home as well. An example of this is Nescafe Azera To Go, which was a highly incremental product launch, targeted at making the coffee shop experience accessible at home and on the go. “British shoppers are moving away from basic dried coffee and towards to more premium dry, roast & ground and Pod formats, which in turn command a higher price,” explains Zakers. “With shoppers buying slightly less volume per trip (-1.1% vs last year), the increase in variety of coffee products available may well be a reason behind shoppers buying coffee more often.”

When inflation returned to the grocery market in early 2017, shoppers traded down to Own Label coffee products, something we could see across Instant and Roast & Ground coffee formats in particular. Coffee shoppers are continuing to switch their spending to the discounters and away from the major supermarkets – a trend which has been going strong since 2015. “Given Aldi and Lidl’s stated plans for continued rapid store expansion, the strong Own Label performance is likely to continue,” says Zakers. “How the other retailers respond to this will be crucial to the future of the sector.”

Source : Kantar Worldpanel, Lightspeed

Editor's Notes

*This usage data is for the 52 w/e 15 July 2018, Kantar Worldpanel

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