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Hot US Economy Isn't Good News For Everybody In Coffee Industry

Published on Feb 6 2018 12:00 PM in Supply Chain tagged: Coffee / US Retail / Coffee Shops

Hot US Economy Isn't Good News For Everybody In Coffee Industry

When the economy’s booming, Americans are more likely to get their daily caffeine fix at the corner coffee shop. That’s bad news for roasters that sell beans at supermarkets.

Total retail sales, the measure for home brewing, will probably drop this year to 764,000 metric tonnes from 766,000 in 2017, according to Eric Penicka, an analyst with market researcher Euromonitor International.

What’s more, they’ll probably stay flat through 2022 as consumers flock to coffee shops and restaurants, where sales are expected to increase about 1% annually over the period.

“The coffee industry as a whole can’t expect everyone to be growing together,” Penicka said. “Coffee’s been a mainstay of American culture for hundreds of years and is not about to die. There’s going to be pockets of growth. But the flip side of that is that it will come from already existing segments.”

Retail Trends

Sales are also expected to slow in the single-serve category, where Keurig Green Mountain has been a leader for the past decade. Growth for the segment is “decelerating pretty rapidly,” with expansion expected at 5.8% this year, he said. That compares with as much as 32% as recently as 2014.

It’s not all gloom and doom as food-service demand helps the total market expand by about 1.1% in the five years ending in 2022.

While that’s not a huge gain, bright spots include ready-to-drink products such as Starbucks' bottled Frappuccino drinks and cold-brew beverages. Boutique shops such as Intelligentsia Coffee and Stumptown Coffee Roasters are also poised to benefit.

The US is the world’s biggest coffee consumer.

News by Bloomberg, edited by ESM. Click subscribe to sign up to ESM: The European Supermarket Magazine.
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