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+--- Thread: Peet's sees U.S. premium coffee demand soaring, driven by millennials (/showthread.php?tid=694)
Peet's sees U.S. premium coffee demand soaring, driven by millennials - IceWizard - 08-28-2015
Thu Aug 27, 2015 | 9:55 AM EDT
By Luc Cohen
NEW YORK(Reuters) -
Millennial consumers are driving a shift in coffee consumption away from traditional economy brands and toward pricier, higher-quality beans, the chief executive
officer of Peet's Coffee said in an interview.
The growth in the premium coffee segment
comes as the third major coffee category in the United States, single-serve, has exploded in recent years.
Taken together, the rise of single-serve and
premium has boosted overall coffee
consumption, and both are catching up with the economy coffee sector, dominated by the
biggest U.S. roaster J.M. Smucker Co, maker of
Folgers, and Kraft Heinz Co, maker of Maxwell House.
"We're seeing now a whole generation of
millennials. They're coming into their own as
coffee drinkers," Dave Burwick, Peet's chief
executive officer, said in an interview last week.
"They're the ones who are choosing better
coffee right out of the gate." Nielsen data provided by Peet's shows that 58 percent of American households purchased coffee in the second quarter of 2015, up from 57 percent in the same period in 2014.
This was driven by growth in household
penetration of the premium segment, defined as coffee sold in bags, to 18 percent from 16
percent last year.
On the other hand, economy coffee, defined as coffee sold in canisters, reached 28 percent of American households, down from 29 percent.
The country's largest brands showed almost no growth in dollar sales in the 52 weeks ended July 4, the data showed, with Maxwell House growing by 1 percent and Folgers registering flat growth.
To be sure, that period coincided with higher
prices for major economy brands, due to a
drought in top-producer Brazil, which hurt sales.
Smucker and Kraft cut prices 6 percent in early
July, though it is not yet clear if sales have
improved.
But premium, higher-priced brands like Starbucks and Dunkin Donuts grew 11 percent
and 5 percent, respectively, during that period.
Peet's, which prices its products 10 percent to
12 percent above Starbucks, saw the highest
growth of any major coffee brand over the period, at 22 percent.
This shows that in addition to millennials'
preference for premium, consumers in general
are paying up to switch to higher-quality blends, Burwick said.
"It's not about the cheapest cup of coffee
anymore. It's about the best, or most
convenient," he said. "Once you go to a darker
roast or a better quality, it's very unlikely that
you go back to the economy segment."
(Editing by Lisa Shumaker)
RE: Peet's sees U.S. premium coffee demand soaring, driven by millennials - whatapain - 09-03-2015
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