High-end, personalized coffee trends for at-home consumption
Kansas City To spur development, producers of coffee products for consumption at home are leveraging novel forms and leveraging consumer trends such as personalization and premiumization.
Benefiting from limitations imposed during the pandemic and the shift to remote work, the at-home coffee business saw notable expansion in recent years. The National Coffee Association’s data indicates that although at-home coffee consumption rates peaked very early—in January 2021, 85% of past-day coffee users brewed their coffee at home—they are still higher than pre-pandemic levels. According to the group, 82% of coffee consumers in the previous day drank their coffee at home as of September 2023.
Despite the steady consumption rates, firms are now reporting inconsistent outcomes for their at-home coffee devices. For example, during the first fiscal quarter that concluded on July 31, Bustelo and Folgers of the J.M. Smucker Co. had rises in net sales of 22% and 6%, respectively, and Nestle’s Nespresso division witnessed growth in its second fiscal quarter after a period of loss. In the meanwhile, KDP’s US Coffee division had a 6% decline in net sales for the second quarter that concluded on June 30. The firm also saw a 2.3% decline in US retail dollar consumption of K-Cup pods at same time. The KDP CEO, Robert J. Gamgort, remained upbeat about the future of at-home coffee while attributing the drop to increased customer mobility.
“Traditional coffee consumption at home is definitely declining,” Mel Elias, co-founder of single-serve coffee company Bruvi, stated. “There is less demand for entry-level pods, but consumers are switching from traditional, less expensive coffee pods to more expensive options.”
According to research from Mintel’s Global New Products Database, over 615 coffee products with premium claims have entered the market since 2020, including Bruvi, one of several firms that have recognized the need for premium and specialty at-home options. According to Mr. Elias, the business concentrated entirely on the $8 billion single-serve coffee industry and created cutting-edge extraction technology to produce coffeehouse quality in individual capsule form. In addition to producing seven distinct types of coffee, such as iced coffee, espresso, and cold brew, Bruvi has teamed with eleven other businesses to create specialty roasts.
Caleb Bryant, assistant director of food and drink at Mintel, stated that “consumers are bypassing the coffee shop and making their own specialty coffee beverages at home, often replicating the cold coffee drinks seen on their social media feeds.” “Rising consumer demand for high-end, at-home coffee experiences will propel retail coffee sales and present significant growth opportunities for coffee brands and complementary coffee categories.”
Beverage firm Frazy has made personalization the cornerstone of its business strategy for its coffee concentrates, as consumers’ need for personalized products grows. Customers may design their own coffee with the help of this service by selecting from a range of alternatives, such as flavor combinations, sweetness levels, caffeine concentration, and milk types (whole, oat, soy, and non-fat milk or non-dairy creamer). The 2.5-oz bottles of Frazy’s concentrates come with a separate packet of powdered milk. The beverage can be consumed directly from the bottle or combined with either hot or cold water to make an 8-oz concoction.
According to Balaji Krishnan, the creator of Frazy, “I think there’s a big space for customized beverages prepared fresh at home.” “This is an area where innovation can be applied to provide users with an experience that is comparable, if not superior, to what they receive from baristas with just a single click.”
Mr. Krishnan further underlined how important personalization is to customers since it enables them to consider their unique health requirements, including controlling sugar consumption or eliminating certain allergies.
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Additionally, the format for coffee concentrates is becoming more popular. Tim Hortons, a division of Restaurant Brands International, Inc., introduced a cold-brew coffee concentrate in August, which was the brand’s first nationally available retail product in the US. Mark T. Smucker, the CEO of Smucker’s, informed attendees at a Sept. 7 conference that the company was keeping an eye on the liquid concentrate trend.
“We think there’s a big opportunity there to capture that consumer as they continue to create those ‘cold coffee cocktails at home,'” he said, adding that consumers are still trying to customize and recreate their favorite coffee shop beverages at home, such as those multi-serve bottles with up to 20 servings.