A so-called “coffee shop culture” is driving growth for in-home coffee pod manufacturers, according to new research.
IRI found that brands such as Tassimo and Dulce Gusto saw year-on-year growth from 2014 to 2015 of more than 50%. With sales revenues of £102m, the coffee pod category now accounts for 38% of the £267m ground coffee segment, it added.
IRI analyst Jen Ayling said: “The coffee menu in supermarkets has expanded rapidly with coffee shop favourites such as cappuccino, latte and macchiato. As a result the average in-store range is now at 23 items compared to 14 items five years ago. This has increased the drinking occasions and made it more relevant for the under 35s, who shun traditional hot drinks in favour of water and soft drinks.”
It also found that manufacturers were increasing their promotional output in order to “lock” buyers into their brand. Consumer loyalty and a lack of shelf space were contributing to the dominance of the biggest brands and leaving others behind, Ayling said.
“Supermarkets that are focusing on reducing ranges for both bigger stores as well as smaller convenience store formats may struggle to find sufficient shelf space, since packs of coffee pods tend to take up more space than a 100g jar of coffee. We expect to see more stores stocking just bestselling products. Brands get around this by selling pods through their own websites, which is possible because they have a customer base that tends to remain loyal to the brand of their purchased coffee machine.”
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