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Albany, NY -- (SBWire) -- 09/18/2014 --While tea has long been regarded as the nation’s favourite hot drink, the UK is equally a nation of coffee drinkers. While usage remains biased towards standard instant, a greater focus on the convenience and quality of micro-ground can support trading up.

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Table of Content

Introduction

Definition
Excluded
Abbreviations

Executive Summary

The market
Figure 1: UK retail sales and forecast of coffee, by value, 2009-19
Figure 2: UK retail sales of coffee, by coffee type, 2011-13
An ageing population brings opportunities and challenges
Companies, brands and innovation
Nestlé’s longstanding brands are struggling
Figure 3: Leading brands’ sales and shares in the UK retail coffee market, by value, 2013/14*
Coffee is second only to CSDs in terms of adspend among non-alcoholic drinks
Private label and pods fuel coffee NPD
The consumer
There are now as many people drinking coffee in the UK as tea
Figure 4: Frequency of drinking coffee at home, by type, April 2014
Micro-ground instant is successfully carving out an image of indulgence and quality
Dessert-flavoured coffee offers real potential
Figure 5: Selected attitudes towards coffee, April 2014
Pod machines continue to find their way into UK homes
Figure 6: Ownership of coffee pod machines, April 2014
For those who don’t want to buy a machine, hassle and space constraints are key reasons
Figure 7: Reasons for not purchasing a coffee pod machine, April 2014
What we think

Issues and Insights

The UK is a nation of coffee drinkers – The challenge is getting them to trade up
The facts
The implications
Falling prices should fuel growth in the coffee pod market
The facts
The implications
Coffee can borrow from bakery and other indulgent categories
The facts
The implications

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Trend Application

Fauxthenticity
Life Hacking
Generation Next

Market Drivers

Key points
The market will benefit from an ageing population, but certain formats face challenges
Figure 8: Trends in the age structure of the UK population, 2009-14 and 2014-19
Drought in Brazil drives wholesale price of beans up
Figure 9: Monthly average cost of coffee beans in Europe, by bean type, January 2012-May 2014
Figure 10: UK retail price index for tea, coffee & other hot drinks, and soft drinks, January 2009-April 2014
Rising consumer confidence brings opportunities and challenges for coffee
Figure 11: Financial health index, January 2009-June 2014

Strengths and Weaknesses

Strengths
Weaknesses

Who’s Innovating?

Key points
New entrants set to weaken Nespresso’s grip on pods
Figure 12: New product launches in the UK coffee market, by format, 2011-13
Ground coffee launches have been driven by private label
Figure 13: New product launches in the UK ground coffee market, by private label v branded, 2009-13
Micro-ground offers scope to halt the decline of instant coffee
The UK coffee market lacks flavour innovation
Innovation themes from around the world
European retailers introduce Nespresso-compatible own-brand capsules
Innovative approaches to convenience in ground coffee
Functional coffee is niche, but it may have a role to play

Market Size and Forecast

Key points
Coffee market value growth is expected to slow
Figure 14: UK retail sales of coffee, by value and volume 2009-19
Volume sales set for more moderate growth than over 2009-14
Figure 15: UK retail sales of coffee, by value, 2009-19
Figure 16: UK retail sales of coffee, by volume, 2009-19
Forecast methodology

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