U.S. Liquid Coffee Market Size, Share & COVID-19 Impact Analysis, By Type (Flavored and Unflavored), By End-user (Household, Food Service Industry, and Food Processing Industry), Forecasts, 2022-2029

The U.S. liquid coffee market size was valued at USD 6.01 billion in 2021. The market is projected to grow from USD 6.33 billion in 2022 to USD 9.61 billion by 2029, exhibiting a CAGR of 6.17% during the forecast period. Based on our analysis, the U.S. liquid coffee market exhibited an average growth of 3.80% in 2020 as compared to 2019.

The most commonly cultivated coffee beans are of two types, C. Robusta and C. Arabica, which are grown in over 70 countries in the equatorial regions of Southeast Asia, the Americas, Africa, and the Indian subcontinent.

Wide varieties of coffee are available at franchised and local coffee shops in the U.S. The liquid coffee shop market in semi-urban and urban cities is being stimulated as the population in the metropolitan region grows, with increased demand for new-generation cafes and an increase in the disposable income of young consumers. Instant liquid coffee is gaining massive popularity as it saves time from the busy life schedule of working professionals.

COVID-19 IMPACT

Disruption in Supply Chain and Closure of HoReCa Sector amid COVID-19 Affected Coffee Availability in the U.S.

The demand for retail liquid coffee increased during the COVID-19 pandemic period, and mandatory government laws such as complete lockdowns in the U.S. to curb the spread of the disease negatively impacted the sales. The imposed lockdown restrictions and stay-at-home orders led consumers to brew their coffee at home, which positively impacted the sales of coffee capsules and pods.

According to NCAUSA (National Coffee Association USA) data 2022, COVID-19 drove record at-home consumption of coffee, along with 85% of coffee drinkers consuming at least one cup at home since 2020, and average consumption daily was steady at around 2 cups per capita. According to National Coffee Data Trends (NCDT) 2021, nearly 60% of Americans drink coffee daily. Owing to the restrictions and closures of COVID-19, coffee consumption at the workplace has been down 55% since 2020, whereas on-the-go options such as app-based ordering and drive-through have flourished up to 30%. More than 40% of Americans purchased different types of coffee such as roast, a new kind of beans, or new brands, which they have never tried before. Thus, coffee continued to gain popularity for at-home consumption and post COVID-19 recovery.

According to NCAUSA and NCDT, there has been a rise of 55% in out-of-home coffee consumption, by Americans and also at restaurants and cafes by 20% since January 2021, thereby showing an overall increase of 16% in out-of-home consumption.

LATEST TRENDS

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Increasing Demand for Coffee Pods & Capsules is a Growing Trend in the U.S. Coffee Industry

Coffee capsules are easy to make for a single cup of coffee as they are ready-to-use sachets. These coffee capsules also do not lose aroma, intensity, or flavor once opened as they are packed in air-sealed small packets and are opted for single-use items. Along with this, coffee capsules simplify the coffee making process by permitting consumers to insert the preferred flavor capsule into the coffee machine and press the button. The increased demand for coffee capsules can be attributed to changing lifestyles and the prevalence of specialty coffee capsules in the market. Non-alcoholic beverages such as RTD coffee and tea, carbonated soft drinks, bottled water, and fruit juices have gained popularity in the past few years. This demand is expected to rise due to increased health awareness and urbanization. As the desire for instant non-alcoholic drinks has increased, coffee capsules have seen widespread acceptance. Due to their versatility, ease of use, and compatibility with a wide range of coffee items and equipment, coffee makers favor capsules.

For instance, in July 2021, NEXE, a Canada-based packaging solutions supplier, launched its wholly compostable premium coffee pods in the U.S. and Canada. These sustainable coffee pods are compatible with Nespresso Original Line machines, manufactured and packaged in NEXE's operations plant. The flavorful and rich dark roast espresso is packaged for coffee purists in sustainable coffee pods.

DRIVING FACTORS

Rise in Coffee Consumption to Favor Market Growth

Coffee consumption has increased significantly over the years. Increasing out-of-home consumption of coffee has shifted the coffee industry from a traditionally homogeneous commodity to a highly differentiated market, catering to different tastes and consumer experiences.

According to the report of the National Coffee Association, the consumption of coffee is on the rise in the U.S., which has increased by 5% since 2015. The NCAUSA's (National Coffee Association USA) survey shows that U.S. adults consume an average of 1.87 cups daily. In 2020, coffee consumption in the U.S. was 10.5 pounds per capita. Demographics play a vital role in coffee consumption, as in 2020, adults of age 70 and above consumed the most coffee, around 2.18 cups a day. According to the United States Department of Agriculture (USDA), the U.S. became increasingly dependent on unroasted Arabica coffee from Colombia and Brazil. The U.S. imports of Arabica coffee expanded from 68% of the unroasted coffee trade in 2012 to 80% in 2021. The second most significant amount of coffee beans is imported by the U.S. In 2021, the U.S. consumed nearly 26 million 60-kilogram bags of coffee.

Growing Demand for RTD Coffee Products to Boost Market Growth

The rising popularity of "cafe culture" has brought light on ready-to-drink coffee to the U.S. coffee marketplace as ready-to-drink coffee is a prime source of instant energy and is becoming more popular amongst the middle-aged working population and young adults. To attract the consumers, market players are launching various new products to the market.

For instance, in April 2022, Lavazza, an Italian coffee giant, entered the U.S. ready-to-drink coffee market with its recent launch in coffee products which includes Classic Cold Brew, Nitro Cold Brew, Cappuccino Cold Brew with milk, and Double Shot Cold Brew with oat milk. The company expanded its offerings in the rapidly growing category renowned for on-the-go consumers. The cans will offer four styles - Nitro cold brew, Double shot cold brew, Cappuccino cold brew with milk, and Classic cold brew with oat milk. In addition, the distribution of RTD coffee has also expanded to various mainstream channels such as hypermarkets, specialist stores, supermarkets, grocery stores, and convenience stores. Amongst several outlets available, grocery stores are preferred in the U.S. as they have different coffees of different brands catering to consumers' preferences, which is a significant factor driving the U.S. liquid coffee market growth. Thus, ease and convenience with supermarket purchases and rise in demographic spending are anticipated to lay a vital pathway for ready-to-drink coffee manufacturers.

RESTRAINING FACTORS

Fluctuations in Raw Material Prices to Hinder the Demand for Coffee Products

Several factors, including production costs, marketing, and advertising costs, cost of raw materials, and shipping and distribution costs, increase the final cost of coffee. Raw material cost is one of the significant factors determining the final cost of liquid coffee. The coffee bean prices, for example, are likely to fluctuate enormously depending on weather conditions and international demand. Distribution and shipping costs play a vital role in the final cost of coffee, as coffee beans need to be shipped from coffee-producing countries to coffee-consuming countries. Production costs such as equipment and cost of labor also influence coffee prices. Lastly, marketing and advertising costs are likely to drive up coffee costs, as coffee-producing companies spend significant amounts of capital on promoting and marketing their products.

Coffee prices in the U.S. have risen tremendously due to supply chain issues, pandemic shutdowns, and labor disputes. In addition, climate change has enforced the closure of numerous multi-generation farming operations and the scrambling of farmers to search for new locations to cultivate coffee plants. Thus, this has resulted in increased coffee prices as a result of environmental issues. According to the United States Department of Agriculture (USDA), the average ground coffee prices for the first eight months of 2022 were 21.9% elevated compared to the same time in 2021. Coffee prices rose slower for sugar (11.05%) and milk (15.9%) than coffee for those same months.

SEGMENTATION

By Type Analysis

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Flavored Coffee Segment to Record Substantial Growth Due to its Rising Popularity Among Gen Z, Millennials, and Working Professionals

Based on type, the market is divided into flavored and unflavored. The rising demand for flavored coffee amongst generation Z and millennials, inclined toward trying new flavors and variants of flavored coffee, is a significant factor expected to drive the flavored coffee segment. In addition, professionals and office workers consume flavored coffee as a refreshing beverage to stay refreshed during late work hours and increase productivity. Additionally, the intense focus laid by coffee producers to produce unique and authentic flavors has crucially supported in achieving consumer attention and boosting flavored coffee sales.

For instance, in 2020, Levista Coffee introduced flavored instant coffee in various flavors. The four variants of flavored coffee include choco-orange, caramel, vanilla, and hazelnut. Its supreme variant of coffee comes with 30% chicory and 70% coffee content.

By End-user Analysis

Food Service Industry Gained Traction Due to Increased Demand for Instant Liquid Coffee

By end-user, the market is divided into household, food service industry, and processed food industry. The food service industry segment dominates the U.S. liquid coffee market share and is expected to grow at a substantial CAGR during the forecast period. The food service industry is gaining maximum market share in the U.S. market as the food service industry involves a wide range of establishments including hotels, restaurants, motels, cafes, takeaway outlets, fast food restaurants, and food delivery kiosks that offer instant liquid coffee. Food service industries such as Starbucks Corporation prefer liquid coffee dispensers to serve their customers without wait time, guesswork, and mess that comes with brewing and grinding. The increased demand for instant liquid coffee is also resulting in increased use of dispensers, which pour hot coffee into individual carafes or cups for various serving options convenient for consumers and businesses. Thus, such dispensers enable the food service industries to achieve a maximum share of this market.

Furthermore, consumer behavior is inclined toward getting instant food service owing to their busy work schedule. The growing demand for premium coffee is thus leading to the increased popularity of the food service industry as the food service industry is also playing a vital role in catering to the demand for premium instant liquid coffee.

KEY INDUSTRY PLAYERS

Key Players Focus on Product Innovation and New Product Launches to Strengthen Market Growth

The key players in the U.S. market emphasize innovations and new product development processes. The companies are focused on boosting the efficiency of the coffee extraction process without affecting flavor, increasing the production capacity for cold brew coffees, and launching new flavors of liquid coffee, such as coffee spritzers and nitro coffee, to offer a blend of juices with coffee.

LIST OF KEY COMPANIES PROFILED:

• The Kraft Heinz Company (U.S.)


• The J.M. Smucker Company (U.S.)


• Eight O' Clock Coffee Company (U.S.)


• The CAFEA Group (Germany)


• Keurig Dr Pepper Inc. (U.S.)


• Neumann Gruppe GmbH (Germany)


• John Swire & Sons Ltd. (U.K.)


• All American Coffee LLC (U.S.)


• JDE Peet's (Netherlands)


• F. Gavina & Sons, Inc. (U.S.)

KEY INDUSTRY DEVELOPMENTS:

• July 2022: Keurig, Bold Coffee and BLK partnered with the new K-Cup Pod. This partnership agreement made the significant black-owned coffee brand available to 36 million + households along with a Keurig brewing system.


• February 2021: Finlays started to offer cold brew soluble coffee. The company introduced its cold brew soluble coffee in 2021. It is available to consumers at national retail stores and food service chains, and is consumed by all age groups, from baby boomers to Gen Z.

REPORT COVERAGE

An Infographic Representation of U.S. Liquid Coffee Market

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The research report analyzes the market in-depth and highlights crucial aspects such as prominent companies, competitive landscape, product types, and end-user. Besides this, the report provides insights into the market trends and highlights significant industry developments. In addition to the aspects mentioned earlier, the report encompasses several factors contributing to the market growth.

Report Scope and Segmentation