In 2007, total foodservice and retail sales of coffee was up 11% to $43.9 billion from 2006 in the U.S. The total market is forecasted to reach $59.4 billion by 2012, representing a 35% increase over 2007, according to PACKAGED FACTS' Coffee in the U.S.: Retail, Foodservice and Consumer Trends report. Foodservice venues account for 87% of the market in 2007, while ground coffee dominates the retail category. As a result of the declining economy, Packaged Fact believes that retail channels will grow at a faster pace than foodservice as consumers trade down to coffees they can brew at home.
In the U.S., KRAFT FOODS, INC., NESTLE USA, SARA LEE CORP. and PROCTER & GAMBLE are among several of the largest coffee marketers. Overall sales of packaged coffee reached $3.6 billion, up 5%, for the 52 weeks ending Apr. 20, 2008, according to INFORMATION RESOURCES, INC. (IRI). Kraft Foods is the current market leader in the packaged coffee segment, with 29.3% market share. The company's top brands include Maxwell House, Starbucks, General Foods International, Seattle's Best and Yuban. Meanwhile, P&G controls slightly less of the market (29.2%) and its top brands include Folgers, Dunkin' Donuts and Millstone. Kraft Foods and P&G have grown their position in the packaged coffee segment by partnering with coffeehouses and fast-food restaurants. Kraft distributes a retail version of ground and whole beans Starbucks and Seattle's Best coffee under license from STARBUCKS CORP., while P&G distributes ground and whole bean Dunkin' Donuts coffee. NORTH AMERICAN COFFEE PARTNERSHIP, the joint venture between Starbucks and PEPSICO to market Starbucks ready-to-drink coffee, ranks third in this segment followed by NESTLE with Taster's Choices and Nescafe instant coffee. Several smaller marketers experiencing consistent growth include GREEN MOUNTAIN COFFEE ROASTERS and PEET'S COFFEE & TEA.
Additionally, regular ground coffee continues to remain the largest coffee category at retail, accounting for a 62% share of dollar sales through mass-market channels, according to IRI. The decaffeinated coffee market represented 10% of dollar sales through mass-market channels, down from 13% in 2003. Private-label coffee accounted for only 8.3% of dollar sales at retail, despite successful private-label programs at retailers such as SAFEWAY and WAL-MART, noted Packaged Facts. Meanwhile, the overall market for specialty coffee was $12.3 billion in 2006, up 11% from 2005, according to the SPECIALTY COFFEE ASSOCIATION OF AMERICA. Many new packaged coffee products introduced between 2003 and 2007 were positioned as upscale. Other top trends included organic/ natural, convenience and ethical/fair trade.
Although 75% of coffee consumed in the U.S. is made at home, in term of dollar sales, foodservice accounted for 87% of the total market in 2007. From 2003-2007, coffee sold through foodservice channels increased at a compound annual growth rate of 10.4%. As previously mentioned, coffee marketers and retailers are trying to tap into this market by introducing packaged versions of coffeehouse favorites. Other retailers are installing coffeehouse-branded kiosks and coffee brands, such as Starbucks, Seattle's Best or Peet's, within their retail establishments. Another carry over from retail to foodservice includes many quick-service restaurants upgrading their coffee programs. Notably, MCDONALD'S launched a Premium Roast drip coffee in 2006 to replace its original brew. As a result, coffee sales increased 40% and McDonald'scoffee was ranked No. 1 in a taste survey of coffees conducted by Consumer Reports in 2007. DUNKIN' DONUTS and BURGER KING also upgraded and expanded their coffee offerings. Ice coffee is also a growing trend at foodservice, with Americans drinking nearly 600 million servings of iced coffee in restaurants in 2007, up 37% from 2006, according to NPD CREST data. Dunkin' Donuts claims it sold more than 190 million servings of iced coffee in 2007. 7-ELEVEN is also trying to capitalize on the trend with its introduction of the Slurpuccino, a coffee flavored Slurpee. Starbucks, however, remains the number one coffeehouse in the U.S. with approximately 11,000 stores. Most other coffeehouses are regional chains, franchises, licensed stores or independents. Trailing Starbucks is CARIBOU COFFEE CO with more than 400 locations in Minnesota and Illinois. Other chains include, THE COFFEE BEAN & TEA LEAF, GLORIA JEAN'S, and Peet's Coffee & Tea.