From functional ingredients to sustainable practices, new consumer values are transforming market trends.
The following post originally appeared in Tea & Coffee Trade Journal
The coffee industry is again going through a transformation, driven by shifting consumer values in an increasingly connected global landscape.
Today, people are using their purchasing decisions to support companies that reflect their values and introduce new innovations.
“The theme of this year’s NCA Convention [March 7-9, 2019 in Atlanta] is ‘coffee at a crossroads.’ In this time of unprecedented change, the decisions we make today as an industry will determine our direction in the years to come,” says Bill Murray, NCA President & CEO.
Here’s what to watch (and watch out for) in the year ahead:
1. Consumers Want Healthy & Functional Foods
As part of an evolving cultural quest to eat healthier (or at least feel like they are), consumers are seeking out foods that are augmented with healing or nutritional benefits, like protein or antioxidants.
While many industries have long embraced the idea of fortifying their products, the coffee industry was initially wary.
“The focus of coffee has been on ‘pure’ and ‘natural,’ so adding ‘functionality’ to coffee is adding something to coffee that is not natural,” said Eric Penicka, Euromonitor, in an NCA webinar last year.
But now, as the wellness community begins to explore everything from adaptogens to CDB-infusions, functional foods are becoming embraced by the mainstream.
And coffee is uniquely positioned as a potential functional food. It’s consumed daily by 64% of US adults, according to the NCA National Coffee Data Trends (NCDT) report.
The rise of ready-to-drink (RTD) coffee — especially with younger consumers — creates new opportunities for developing and marketing new products.
Additionally, scientific research continues to link coffee to an expanding list of potential health benefits. As our understanding of coffee as a comprehensive beverage grows, there will be more opportunities to augment these potential health befits with added ingredients.
The Watch-Out: Companies need to be cautious before making any health-related claims to consumers.
“Even for brands that are adding a functional ingredient to their formulation for the unique nutritional benefit, the types of claims they can make are very limited,” explains Dr. Mark Corey, NCA Director of Scientific & Government Affairs.
While coffee has long been considered a low-risk beverage, “coffee plus” products come with additional safety considerations.
2. Sustainability Beyond the Bean
Sustainability is critical issue for the coffee industry – and consumers.
NCDT research suggest that while consumers say they want sustainable products, they don’t always have a clear understanding of what “sustainable” means for coffee.
Consumer confusion is understandable. While ‘sustainability’ once focused on the environmental conditions at origin, the concept has evolved to include issues like packaging, waste management, and supporting coffee communities at origin.
Collaboration across the supply chain will help propel our industry forward, towards more effective solutions that benefit everyone.
For instance, block chain technology promises new levels of traceability and accountability in the supply chain. And we’re seeing advancements in genetic research to protect crops at origin against challenges stemming from climate change.
Whether working at origin or within their own facilities, it is increasingly important for companies to share their sustainability stories, so consumers can make choices that reflect their values.
The Watch-Out: Companies should be careful to avoid “greenwashing,” or exaggerating their sustainability claims. Authenticity is paramount when communicating with communication-savvy consumers.
3. Single-Serve Grows Up
After attracting mainstream attention in 2006, singe-serve coffee systems enjoyed a period of sustained astronomical growth.
While category growth has leveled of, this segment remains well entrenched as the second-most popular brewing method after drip.
Now it’s just waiting for the next innovation.
“Examples of potentially market-changing opportunities include product innovation with brewers or pods, pricing innovation that increases the value proposition, communication innovation that changes how consumers perceive single-cup, or channel innovation that puts single-cup in more locations,” says Michael Edwards, Dig Insights.
The Watch-Out: This maturing market needs to adapt and connect with the next generation of coffee drinkers.
NCA research shows that younger consumers are less comfortable brewing coffee. Fortunately, 13-18 year-olds have the strongest positive perceptions of single serve systems, with 93% giving a positive rating.
And, in the case of an economic downturn, the current trend RTD trend could reverse, creating new opportunities for in-home options.
For more insights into the coming coffee trends, join the trend makers – over 700 senior coffee industry executives – in Atlanta in March at the NCA 2019 Convention.
Share your thoughts on the top coffee trends of 2019 in the comments below