MILAN – Off-trade volume sales within the US RTD coffee market grew by 25% in 2012, a huge increase on the 8% compound annual growth rate (CAGR) seen over 2008-12. RTD coffee has been able to grow in the US as manufacturers capitalise on consumers’ love affair with sweet flavours.
Not all Americans like the bitter taste of brewed coffee; however, many have become familiar with iced coffee drinks such as Starbucks Frappuccino through visits to coffee houses.
As a premium priced, indulgent drink, RTD coffee was particularly vulnerable to the consumer shift in spending that occurred during the recent economic downturn.
Younger consumers are a focus market for RTD coffees. The continued success of energy drinks as a niche in the beverage business has inspired RTD coffee manufacturers to innovate by offering coffee drinks that provide energy.
Distribution of RTD coffees has expanded into mainstream channels like supermarkets, Wal-Mart and drugstores. RTD coffees often have their own section away from energy drinks, or are positioned on the shelf next to ground coffee in these outlets.
The North American Coffee Partnership, a joint venture set up by Starbucks and PepsiCo, continued to hold a commanding lead in the US RTD coffee market sales, with a 72% off-trade value share in 2012.
The company did see its off-trade value share decline from 77% in 2011, as it faced competition from Monster Beverage and new entrant WhiteWave Foods Co.
Starbucks Corp has been challenged by a sharp decline in its signature iced Frappuccino franchise in recent years. To combat the issue, it has taken several measures, including introducing more RTD coffee varieties.
Despite an increase in health and wellness awareness, US RTD coffee sales are expected to continue growing strongly. Off-trade value sales of RTD coffee are expected to grow by 27% between 2012 and 2017, to reach US$1.9 billion.
Total volume is expected to grow by 22% over the next five years to reach 358 million litres, compared to growth of 41% over 2008-12 .
Source: C&MReports
