Coffee snobs are slowly losing ground to the plastic pod people. Americans are opting for quick-and-easy single-cups, like Green Mountain’s GMCR -2.26% Keurig machines, new research finds, rather than drinking traditionally brewed coffee.
As the single-cup market grows, roasted coffee sales are actually falling, according to a recent survey from research company Mintel Group. U.S. coffee sales are expected to hit $11.7 billion in 2013, up 11.4% from 2012. Although single-cup coffee sales still account for half the volume of regular coffee, they’re forecast to rise by 213% to an estimated $3.1 billion this year from 2011. Roasted coffee, meanwhile, is projected to fall 2.7% to $6.1 billion over the same period. Single-cup has eroded the roasted coffee segment’s market share to 52% of the estimated sales in 2013 from 67% in 2011, the report says.
Keurig
Green Mountain and competitors like Nespresso are also increasingly popular among young adults, the research shows. Ownership of single-cup brewing coffee or espresso makers among all adults has grown to 36% in 2013 from 24% a year ago. Drinking single-cup coffee is highest among well-off young adults: 18 to 34 year-olds earning over $75,000-a-year drink single-cups 64% of the time compared with just 51% for those earning less than $75,000. “Roasted coffee’s dominance is forecast to erode as more people opt for one cup at a time,” the Mintel report concludes.
Using the coffee machine at home or the office saves time spent in line at Starbucks. “You see single-cup machines popping up in more businesses and even apartment buildings,” says Ken Perkins, associate equity analyst at Morningstar. One-quarter of consumers who buy coffee drink at home more often this year than last, according to Mintel. What’s more, oversize kitchens and dining spaces are becoming more popular in workplaces, says Colin Bryce, principal at architecture and design firm Mapos in New York. “Employers are creating spaces for workers to hang out over coffee,” he says.
While the rise of coffee pods helps minimize unused pots of cold coffee, Perkins says, they’re not cheap. “People like the fact that even though single-cup coffee is more expensive per serving, they can make just one cup,” he says. “It works out at 60 cents to 70 cents per cup, but it’s still cheaper than a roasted brew at your local coffee shop.” Nespresso prices range from $6.50 to $7 for 10 capsules—or $65 to $70 for 10 sleeves. And Keurig’s K-Cups cost between $12 and $24 for a box of 24 capsules, depending on the coffee; Starbucks’ “Breakfast Blend” costs $22.50 for 24 K-cups.
Could it ever beat a freshly brewed cup? Andrew Hetzel, owner of CafeMakers, a coffee-consulting business in Hawaii, says there’s at least a consistency with single cups. “Companies are using some pretty high quality coffees, which are arguably on a par or better than typical coffees you would find in chain coffee shops,” he says. “Unless you’re going to a well-trained barista you risk getting your coffee brewed incorrectly anyway.” But Fergal Halligan, a graphic designer in Brooklyn, calls it “bullet coffee.” He loves his morning coffee, “but I’m far more dependent on the ritual of preparing it.”
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