The UK coffee category has grown in value by 8.2% year on year, with instant coffee accounting for 76% of all cups of coffee consumed in the home, according to Maria Kabalyk, head of category and shopper at JDE Peet’s, whose brands include Kenco, Tassimo, and Maxwell House.
Premium Instant Coffee Opportunity
Kabalyk says this dominance signals a growing opportunity for premium instant coffee products that deliver rich, indulgent taste with minimum fuss, at a significantly lower cost per drink than a typical coffee shop order. Consumers are increasingly seeking coffee shop experiences at home, not only to save money, but also to recreate the café experience within the comfort of their kitchen.
“Convenience stores are perfectly positioned to capitalise on this growing trend by offering flavour-led formats,” Kabalyk adds. The specialties and mixes segment is the standout growth-driver within coffee, she says.
Growth in Specialties and Pods
“In fact, we’ve seen a year-on-year increase in spend and consumption, with the segment gaining greater penetration than other coffee formats over the past three years,” Kabalyk says. “Retailers should look to stock a range of frothy-coffee options, such as Kenco Iced/Hot and Kenco Millicano Tins to capitalise on this growth.”
The manufacturer says it is also seeing “robust” growth in single-serve pod and capsule machines, with Tassimo accounting for 50% of the market.
Retail Recommendations
Affordability and convenience remain key, however. “Consumers want a bit of indulgence, but it needs to be convenient and at the right price-point,” says Kabalyk. “We see a growing opportunity for premium instant coffee products that deliver rich, indulgent taste with minimum fuss while also costing significantly less per drink than your typical coffee shop order.”
To support coffee sales in-store, JDE Peet’s recommends independent retailers allow good shelf space for their coffee display to help maximise visibility and attract more customers to the fixture. “Make sure to offer a breadth of brand choice to meet evolving shopper needs, with two facings per SKU,” says Kabalyk. “Encourage trade-up by placing more-affordable options on the bottom shelf, such as instant granules, more premium instant products above, and then the likes of frothy coffees and machine pods on top. Use eye-catching signage and POS to drive interest to the coffee aisle.”
Tea and Hot Chocolate Remain Key
While coffee is now the dominant sector within hot beverages, tea remains an essential sub-sector, despite declining sales. Other sub-categories, however, are also worth remembering, especially malted drinks and hot chocolate.
Kerry Cavanaugh, general manager at Mars Drinks & Treats, whose portfolio includes Galaxy Instant hot chocolate, says: “Retailers should display hot chocolate alongside other hot beverages such as tea and coffee. It is important to offer a selection of choices: instant hot chocolate, add-milk, indulgent, malted and cocoa.”
Lydia Stubbins, marketing director at Divine Chocolate, believes the hot chocolate segment is just as exciting as coffee. “Premiumisation, flavour innovation and responsible sourcing are all becoming increasingly important purchase-drivers, with shoppers looking for products that offer both great taste and a clear purpose,” she says.
