Market Data & Insights:

Out of home coffee market – the Covid impact

The inevitable impact

When we looked at the Kantar out of home (OOH) coffee market data to 14th June 2020, it confirmed what we all anticipated, namely that the sector had taken the hardest of hits. OOH coffee was valued at £5.3bn, down 17.1%*. Unsurprisingly – given that the segment represents 43% of the OOH coffee market – coffee shops have been hit hardest, losing £162m in value in the 12 weeks to 14 June*.

One significant exception was the symbols and independent sector where retailers have posted 48.9% value growth for out of home coffee in the same period, valuing the channel at £16.8m. Increases in frequency of shop visit, as well as success in attracting new customers, have been key drivers of this success.

Coffee bags leading the way

In many ways, this is reflective of a widening trend that we believe will continue as we emerge from the lockdown period: consumers will prefer to stay local at first and support their trusted outlets more and this has been evident in the resilience of independents over recent months.

More widely, the retail sector has gained from the migration of consumers from the out of home sector. Kantar’s latest figures for the in-home coffee market show growth of 12% in the latest 12 week period, to reach £338m***. By sector, it is coffee bags and whole beans that have strongest growth in share of the in-home coffee market, rising 22% to be 5% of the in home coffee spend*. Inevitably, the lockdown has had a severe impact on all hospitality venues, not least for coffee specialists, but the positive gains in the grocery retail category demonstrate that consumers’ appetite for great tasting coffee remains undimmed. It’s not the desire for coffee that has changed: rather, it’s where it is bought from which temporarily changed.

Consumer confidence is returning

While consumers have been developing new ways to enjoy coffee at home – 13% of consumers have recreated their ‘morning coffee ritual at home’ during lockdown**** –  the full experience of drinking it out of home is harder to replicate. Nothing quite matches the draw of the out of home coffee experience, whether in cafés, garden centres, pubs or hotels: the smell, choice and quality are important, but the social aspect makes coffee one of the biggest attractions as we return to normal.

Although recovery will remain steady – albeit faster in some sectors than others – Lincoln & York remain excited about the industry’s prospects. Interest in newer formats such as coffee bags and cold brew are a terrific way of encouraging trial of new coffees, whether in the home or in socially distanced venues; just as important, demand for recyclable packaging will only continue to grow. Indeed, if anything Lincoln and York believe that the importance of sustainability has gained a greater recently.

CGA reports that 1 in 3 consumers have felt “less nervous”~ having visited hospitality venues since 4th July and this – in addition to the Eat Out to Help Out scheme – is surely key to building on the strength of the recovery in the sector. Lincoln and York are keen to support customers large or small who are keen to get cracking with the “new normal.” 

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