Hot coffee is still very much the dominant choice in the region, although iced coffee continues to expand its presence in countries such as the UK and Germany. Taste is the single most important driver to both hot and iced coffee purchase, but attitudes then diverge somewhat. In hot coffee, there is some disagreement as to whether coffee is energizing or relaxing, with 32% of participants saying they drink it to keep themselves going while 25% say it is to relax and wind down (Innova Consumer Survey 2019). Meanwhile, in iced coffee, “happiness” and “treating” are more important than either of these, and suppliers feel that healthy consumers are happy consumers, with low sugar and dairy-free claims fast gaining ground.
For innovators, premiumization is a significant focus across the board. In hot coffee, for example, capsules for in-home machines represented over half of all hot coffee launches in 2019, up from less than a third in 2015. “Premium terminology is also adding value in this market,” says Lu Ann Williams, Director of Insights and Innovation at Innova Market Insights. “For example, use of the term ‘barista’ in coffee product names increased fivefold between 2015 and 2019, while the share of ‘cold brew’ products in the iced coffee arena alone increased from 1% of launches in 2015 to 19% in 2019.”
Looking ahead, ethical issues will continue to impact on hot coffee in particular, with the capsules category working hard to improve its eco-credentials. Meanwhile, the lines between the out-of-home and in-home markets are blurring all the time, which could be important for the wider category at a time when out-of-home opportunities have been restricted by the global COVID-19 pandemic.