The concept of functional coffee is still new to the U.S. market as evidenced by the small number of functional coffee launches in the past five years; however, research shows positive consumer perception and suggests there is potential in this area, according to a new report from Mintel.
In fact, 44 percent of U.S. consumers wish they could add healthful ingredients (e.g. vitamins, minerals) to their coffee- and tea-based drinks at foodservice. What’s more, 42 percent of consumers would like to see added nutritional benefits in coffee at retail (e.g. probiotics, vitamins, minerals).
Mintel Global New Products Database (GNPD) found that globally, an average of 5 percent of coffee launches/reformulations/relaunches featured functional/plus claims each year from 2010-August 2015. This was lower for the United States, which saw an average of 3 percent from 2011-August 2015; in fact, 3 percent of U.S. coffee product launches in 2015 included a high-protein claim, which is in line with continued high-protein trends across food and drink categories.
“The majority of Americans are coffee drinkers, drinking a wide variety of types. The category has great opportunity for growth, as long as it continues to evolve to meet drinker demands and innovate with current trends, including alternative preparation methods, premium or artisanal brews and better-for-you options. Traditional roasted coffee remains at the height of market penetration, helping to spark interest in newer format single-cup and ready-to-drink coffees, including cold brew. While single-cup packaging waste and low usage occasions for ready-to-drink coffee is a challenge for manufacturers, they also provide opportunities for improvement and innovation. Functional coffee is one example where the category is innovating. While still in its infancy, Mintel research indicates that core consumers welcome it as another option," said Elizabeth Sisel, beverage analyst at Mintel.
Total retail sales of coffee posted 8.7-percent gains in estimated 2015. The strong year-over-year growth seen through 2012 slowed in 2013 and 2014 as manufacturers and consumers felt coffee’s increasing prices. Interestingly, two other sectorscold-brew coffee and single-cup coffeeare finding their niche in the global coffee segment.
U.S. sales of cold-brew coffee grew an estimated 115 percent from 2014 to reach $7.9 million, reflecting a small, but expanding, role in the overall ready-to-drink (RTD) coffee segment. Since 2010, growth has increased 339 percent through estimated 2015, yet cold brew accounts for only 0.4 percent of sales in the RTD-coffee segment.
Roasted coffee, which includes grounds and beans, is the largest segment by sales in estimated 2015, comprising approximately 44-percent market share. However, it has struggled in recent years as coffee prices increase, and single-cup coffee popularity challenges its growth.
Single-cup coffee continues to see strong year-over-year growth, comprising approximately 33.4-percent market share in estimated 2015. Single-cup coffee is forecast to see 19.6-percent sales gains, the greatest gains of all coffee segments in 2015, reaching $4.3 billion. The segment continues to close the gap between it and roasted coffee, with single-cup sales forecast to surpass roasted coffee by 2018. Growth is expected to continue through 2020, growing 81 percent from 2015-20, reaching $7.75 billion.