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Saturday, March 11, 2017


GUEST BLOG / By the National Coffee Association USA--America’s love affair with coffee is more complicated than ever before.

Millennials are changing the world of coffee – one purchase (or app) at a time. And it’s more than just the mason jars in the local coffee house, as shown by the data in the National Coffee Association’s 2016 National Coffee Drinking Trends (NCDT) report, which has followed America’s evolving relationship with the beverage for the past 67 years.

From the latest preparation techniques to sourcing the beans themselves, the new generation of coffee lovers isn’t satisfied with their parent’s drip brew.

Daily consumption of espresso-based beverages has nearly tripled since 2008, according to the latest data from the 2016 NCDT.

Between 2008 and 2016, past-day consumption of gourmet coffee beverages soared from 13% to 36% among 18-24 year olds, and from 19% to 41% for those 25-39.

For espresso-based beverages alone, the jump become 9% to 22% for the 18-24 group and 8% to 29% for those 25-39.
Against this backdrop, for the first time in NCDT history, the prevalence of drip coffee brewers among-past day consumers declined to only half of all coffee drinkers. Taken as a whole, the data reflects a generational transition: a slight decrease in overall consumption (2%, or slightly more than the report’s margin of error), even as younger consumers have become more invested in their coffee than ever before, through espresso and gourmet beverage choices.

In fact, the market share of “gourmet coffee beverages” (GCB) continued to increase in 2016 – particularly among younger audiences. The GCB category includes what we think of as “specialty coffee,” featuring gourmet traditional coffee, espresso-based beverages, and iced or frozen drinks.

Older Millennials, between the ages of 25-39, are the most likely age group to drink espresso based beverages, cappuccino, mocha, espresso, gourmet coffee, caffè Americano, flat white, cold brew, and nitrogen infused in the past week – according to new NCDT data.

Premium coffee comes at a premium cost – and consumers have shown that they’re willing to pay.

While the number of cups consumed in the U.S. may have declined slightly in 2016, the retail earnings have continued to increase. The food service coffee market alone increased 14.2% over the past 4 years, according to research from Packaged Facts.

Historically, coffee sales remained strong even after the 2008 recession, when economists predicted that retail profits would plummet. Coffee has always been important (soldiers even tried brewing it from chicory during the civil war), but purchasing behavior during the downturn proved that coffee today is truly a priority among Millennials.

As many marketers have realized, Millennials, whose purchasing power is growing (with about $200 billion in purchasing power each year) are conscientious shoppers, and want to feel good about where they spend money. They prefer to support companies that reflect their own values on an organizational level, and products and services which add value to their lives.

According to 2015 research from Nielsen, 66% of surveyed consumers say they will pay more for products and services that come from companies that are committed to positive social and environmental impact, up from approximately half from the previous year.

For example: The average retail price that select specialty roasters charged for lots that included growers’ names was an average of $9.95 higher per pound than the average retail price of those that didn’t, according to December 2015 research from Transparent Trade Coffee (TTC).

Yet 28% of the 2016 NCDT respondents say that they don’t know if coffee is grown in a sustainable way. This suggests an untapped communication opportunity for the industry.

This 2016 NCDT data shows that the factors driving coffee consumption are fundamentally changing. The next generation of consumers has a more personal relationship to the products and brands they support. The things they use reflect their larger worldview.

“Value” is not always a question of price per ounce, nor is it a static proposition. Today, value can mean many things, depending upon customer demographics. For some consumers, “value” may be more about a brand’s philosophy, authenticity, and commitment than anything measured in dollars and sense.

More than 50% of Millennials make an effort to buy products from companies that support the causes they care about, according to research from Barkley, an independent advertising agency.

These expanding and diverging definitions of value are driving the third, and now fourth, wave of coffee consumers who bring a whole new perspective to the coffee drinking experience – creating ongoing opportunity for coffee suppliers.

What Millennials are drinking is also influenced by where they’re drinking it.

Coffee used to be brewed primarily at-home (and still is, among older demographics). It was a private ritual. And no frills – a cup of coffee was a cup of coffee.

However, more Millennials are drinking coffee out-of-home, turning coffee consumption into a public expression of individuality. In the age of Instagram, every detail needs to be on-brand – nothing is really private.

This makes personalization a high priority for this new consumer. Fortunately, with the seemingly unlimited options available today, there’s a beverage for every emoji. Whether it’s extra agave or an artisanal glass cup, Millennials expect to get exactly what they want. (Boomers may prefer the term “spoiled.”)

And as more startups and shared workspaces embrace high quality coffee, more Millennials view the beverage as an office culture perk – a trend that some larger organizations are starting to notice.

Workplace consumption has slowly trended up from a low of 16% in 2013 to 21% in 2016, according to NCDT data. Yet 54% of coffee drinkers reported that they are still less than “very satisfied” with their workplace coffee situation.

 Millennials are also increasingly sophisticated consumers. A few years ago, it was a lot harder to learn about coffee. Now, all the information you could ever want available with a click (or a tap). They know how to the technology at their fingertips to hone on exactly the information that they want.

As a result, they’re also more open to innovations in the coffee market. Younger audiences are generally more open to experimenting with new beverages or preparation methods. This is reflected by the addition of three new beverages in the 2016 NCDT: the flat white, cold brew, and nitrogen-infused.

How can coffee companies reach new consumers in a changing market?
There’s an app for that. And if there isn’t yet, there will be.

The best way to reach the next generation of consumers is through their smartphone. To get (and keep) their attention, you need to offer a service, product, or information – it has to be interesting, and it has to be easy.

“Apps are changing the way that people are buying their coffee,” said David Sprinkle, Research Director, Packaged Facts, during a recent NCA webinar on food service coffee. But avoid a straight sales pitch, he advices. “Don’t just hawk your product, but provide information and services that are of interest to your consumer.”

Apps can also facilitate e-commerce opportunities. Nearly 70% of U.S. online adults shop on the Internet at least monthly, with 33% shopping online every week. But don’t jump into the digital space before you’re ready. Millenials expect technology to just work – and will become quickly frustrated if they encounter friction.

Subscription services are becoming increasingly popular, for everything from makeup to produce. This format give coffee drinkers both a customized experience and exposure to new options.

21% of coffee drinkers would be interested in having readymade coffee delivered to their home or workplace and 16%would consider having freshly roasted ground coffee sent to their home, according to the research agency Mintel.

Door-to-door delivery opens the door to more intimate interactions. By building relationships (and trust) over time, subscription services are positioned to educate and inform consumers on key issues facing the coffee industry.

Workplace coffee. 70% of the cups of coffee consumed at work come from the office coffee area, according to 2016 NCDT data. Yet over half of the respondents said that they weren’t happy with their OCS situation.

Part of this shift in consumption place is driven by the changing day-to-day realities of younger professionals. With more millennials working remote or sharing co-working spaces, they line between work and home blurs, creating interesting opportunities for OCS coffee companies.

The startup culture has embraced specialty coffee options, with many traditional organizations following the trend.

Younger audiences are immersed in technology, and are open to change. They’re drawn to new ideas and innovative products. This can be seen in the growing number of consumer-facing trade expos and new products hitting the market.

Consumers are increasingly invested in their coffee. The foodie-driven rise of online review culture intensifies consumer desire to have the “best” equipment for their favorite beans.

Many new preparation gadgets have been wildly successful on crowdfunding sites such as Kickstarter.



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