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Consumer and Innovation Trends and Future Growth Opportunities in Coffee

Consumer and Innovation Trends and Future Growth Opportunities in Coffee 28
Consumer and Innovation Trends and Future Growth Opportunities in Coffee Tanvi Savara Food and Drink Analyst, Datamonitor Consumer ICO Coffee Seminar 2014 March 2014 Agenda About Datamonitor Consumer preferences for coffee Five key subtrends affecting the coffee industry Coffeefruit: one to watch SummaryAbout Datamonitor Consumer Consumer Innovation Market Insight Tracking Assessment Real insight on Uncover new trends in Identify new hot spots real consumers products and in the marketplace packaging 3 Source: Datamonitor ConsumerAgenda About Datamonitor Consumer preferences for coffee Five key subtrends affecting the coffee industry Coffeefruit: one to watch SummaryCoffee preferences are driven by taste, price, and health Most highly influential factors when choosing hot drinks (including coffee) Global Australia Brazil China Germany UK US average 1 1 2 1 1 1 1 Taste 2 4 5 2 2 2 2 Price 3 2 1 4 3 3 3 Healthiness Natural 4 3 3 3 4 4 4 Ingredients Source: Datamonitor's Consumer Survey 2011; 20 countries surveyedThe importance of eyecatching innovation How do you usually choose which coffee to buy Source: Datamonitor's Consumer Survey 2011Consumers are open to new innovation in coffee What is your approach to buying new coffee products Source: Datamonitor's Consumer Survey 2011What percentage of new products failIt is estimated that 80 of new products fail within the first year of launch Source: Datamonitor analysis. Depending on how failure is defined and measured, this number can vary between 50 and 90"Innovation is one of the main drivers for organizational success. Despite constant developments in product design and marketing, most new products fail … However, the failure of innovations is most often due to a lack of understanding of consumer needs." Bartels and Reinders, Journal of Business Research, 2011Agenda About Datamonitor Consumer preferences Five key subtrends Coffeefruit: one to watch SummaryDatamonitor's TrendSights framework consists of eight megatrends Health Wellness Individualism Expression Sensory Indulgence Evolving Landscapes Sustainability Ethics Smart Connected Easy Affordable Comfort UncertaintyFive key subtrends affecting the coffee industry 1. Cocooning 2. Sensory Fusion 3. Made for Me 4. OnTheGo 5. Weight Management Cocooning Deconstructing the trend WHAT • Creating "insperiences" that bring traditional outof home experiences into the comfort of the home. WHY • People are doing far more from home now than in the past, and doing it with added sophistication. HOW • Replicate the café experience at home. The quest for value is creating demand for athome alternatives 66 47 are giving up some of are making an effort to their favorite brands to save more money save money. following the economic downturn. Source: Datamonitor's Consumer Survey May/June 2011; images: shutterstock.com "People during the downturn are more worried about going out, so instead of drinking coffee outdoors, we're seeing more people preferring to consume the drink at home without compromising on quality." David Rogers, home sales and marketing director for Lavazza Coffee UK, quoted in The Wall Street Journal, October 2012Singlepod coffee machines offer a bettervalue alternative to outofhome purchases Tassimo Vivy is a compact Nespresso U – "Consumers coffee solution that will help now appreciate the full café consumers to "get their experience (aroma, choice, coffee shop fix for less at quality) and want to recreate home."² this at home."¹ Source: 1 Appliance Retailer, August 2013 – Image: Appliance Retailer 2013; 2 Bosch UK June 2013 – Image: Bosch UK WebsiteFoodservice brands are exploiting growth opportunities in the retail market Costa Coffee Starbucks Verismo Dunkin' Donuts Tassimocompatible system – "Your ground pumpkin capsules – favorite Starbucks coffee – "Bring home "Experience the magic beverages. All at the best flavor of the of Costa in the comfort home, all from one season."² of your own home."³ machine."¹ Source: 1 Verismo Website 2 Dunkin Donuts Website 3 Costa Coffee UK website Kenco Millicano recreates the café experience at home Finely milled whole bean coffee combined with instant coffee for a "rich and full bodied" taste. "Coffee shop culture" has driven demand for premium tasting coffee at home. Sales grew £3.3m (5.4m) from July 2012 to July 2013. Source: Datamonitor's Successes and Failures: Kenco Millicano Sensory Fusion Deconstructing the trend WHAT • Pursuit of exciting and novel sensory experiences that combine taste, texture, smell, sound, and/or shapes. WHY • To meet growing consumer demand for more sensually indulgent products. HOW • Maximise sensory appeal by developing exotic flavor blends, converging with other product categories (e.g. hot drinks and carbonates).New product opportunities are spurred by consumers' willingness to experiment 60 50 find new and exotic of consumers keep an eye flavors in food and drink out or actively monitor products to be somewhat/ new coffee products. highly appealing. Source: Datamonitor's Consumer Survey 2011 and 2013 Examples we like: flavor innovation in coffee INO fruitflavored coffee – Coffeestar crèmebrûlée Coffee married with organic flavored coffee – Flavored fruit to create the world's first coffee said to have "velvety "fruit coffee" custard taste with subtle hints of chocolate and caramel." Source: Datamonitor's Product Launch Analytics Examples we like: category crossover between coffee and other beverages Perk by Rainforest Coco Café – Cherizena Beverages – "Coconut Water Colombian Coffee "Sparkling Chilled Café Latte²" with Cider Apple Coffee¹" Source: 1 BevNet January 2013; 2 Coco Café website; Datamonitor's Product Launch Analytics Potential threat Canada Dry hot ginger ale – the world's first hot carbonated drink. It was made following extensive research into how to combine heat and bubbles in a can. The drink has the potential to erode the market share of hot drinks segment. Source: Datamonitor's Product Launch Analytics MadeForMe Deconstructing the trend WHAT • Innovation centred around customizing the consumption experience is booming. WHY • Individualistic consumers are being encouraged to express and act upon their opinions and beliefs by making identityrelated purchases. HOW • New technologies like singlecup coffee makers and flavored syrups to allow a new level of flavor customization.Individualistic consumers are drawn towards making "identityrelated" purchases 73 58 say that individuality find customization/ and being able to personalization express themselves benefits very is important/ very important in a luxury important. brand. Source: Datamonitor's Consumer Survey 2011 170,000 ways to customize your drink at Starbucks Flavor shots Drink type Iced, hot, or (e.g. caramel, (e.g. cappuccino, extra hot mocha, coconut, latte, espresso) vanilla) Addons Number of (e.g. whipped Cup size espresso shots cream, syrup drizzle) Milk type Decaf or (e.g. 1, 2, regular soya, heavy cream) Source: 1 BeverageWorld, June 2012 Retail brands have capitalized on the trend towards drinks customization Flavored coffee meringues Café Kiss coffee syrups – – Add these meringue pieces Can be added to coffees to to coffee to change the flavor. create the desired flavor at the consumers' discretion. Source: Datamonitor's Product Launch Analytics Eightpointnine allows consumers to customize their own coffee blend Consumer uses online flavor profiling tool to adjust flavor, body, and mouth feel, as well as type of grind to their preferences Source: eightpointnine.com OnTheGo Deconstructing the trend WHAT • Increased demand for onthego products WHY • Busier lifestyles mean timescarce consumers place high value on maximizing their free time HOW • Promote efficacy attributes through easytouse and easytoconsume packaging formats Packaging formats that offer efficiency and convenience will appeal to consumers Consumers who pay high attention to the following packaging benefits when choosing grocery products Source: Datamonitor's Consumer Survey 2011 Suntory X Thermos My Bottle Drink Drop An innovative Thermos beverage container takes the pod coffee concept and applies it to portable hot and cold beverages Just add hot or cold water and drink from the Thermos mug or pour into a cup. Suntory X Drink Drop comes in 12 flavors of coffee, tea and juice drinks, all in 25ml mini cups. 32 Source: SuntoryFoods.co.jp; Datamonitor's Product Launch Analytics. Photos courtesy of SuntoryFoods.co.jp. Alternative, portable, and onthego caffeinated products Buzz Strong's "real Energems – "3 Awake bar – "Same coffee" cookie – "1 gems = 1 cup of amount of coffee as a Cookie = 1 cup of coffee." cup o' Joe or 250ml coffee." energy drink." 33 Source: awakebar.com; buzzstrong.com; energems.net Weight Management Deconstructing the trend WHAT • Consumers are adopting a purposeful approach to nutrition and their physical appearance WHY • Growing awareness of effects of excess weight on the body HOW • Formulate products with functional ingredients to target weight loss Consumers are concerned about their weight 39 buy functional food and drink products with added health benefits Source: Datamonitor's Consumer Survey 2011 and 2013Kao Healthya Coffee: a readytodrink coffee with "fat burning" benefits This "fatburning" RTD coffee contains chlorogenic acid – a "natural" substance derived from coffee beans. Approved as FOSHU due to its effect of using body fat as energy. 30 million cans were sold within first four months of its launch. Source: Datamonitor's Successes and Failures: Kao Healthya Coffee, January 2014 ; Datamonitor's Product Launch Analytics (PLA) Agenda About Datamonitor Consumer preferences Five key subtrends Coffeefruit: one to watch SummaryCoffeefruit: the "superfruit" that offers health and sustainability benefits Very high in antioxidants. Mild flavor makes it highly versatile. A waste product of coffee production. Source: Datamonitor (2013) "ForeSights: Coffeefruit", April 2013 Bai 5 Antioxidant Infusions "The fruit literally will get thrown away … So I had this idea to take a byproduct of the coffee harvest and use it as a functional ingredient. Although coffeefruit is an irrelevant part of coffee harvest, it was a very relevant idea." Ben Weiss, CEO and founder of Bai (via beveragedaily.com) Source: drinkbai.com; beveragedaily.comAgenda About Datamonitor Consumer preferences Five key subtrends Coffeefruit: one to watch SummarySummary Consumers want innovation, but failure rates are high. Not meeting consumer needs is the key reason for failure. Use Datamonitor's TrendSights framework to guide consumerinspired innovation around key consumer trends. Portability, flavor innovation, and coffeefruit are hot trends to capitalize on.Thank you Tanvi Savara tsavaradatamonitor.com +44 (0) 207 017 7358 Follow me on Twitter: tsavconsumer
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