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Stats Show Increasing Popularity of Ready-To-Drink Coffee Products

Ground Coffee Sales Down Slightly, While Whole Beans Still Fly Out Store Doors
Wawa iced coffee
Convenience store chain Wawa sells cold brewed coffee from a self-serve dispenser which is refilled with 2.5 gal. bags Dave Schatz

NEW BRUNSWICK, NJ–Single-cup coffee pods, refrigerated iced coffee, and pre-made, ready-to-drink coffee are giving grocery retail sales a “jolt,” according to a report from the trade magazine Supermarket News (SN).

A "pod" or "k-cup" is coffee, tea, or even hot chocolate, that is sealed inside filter paper. Pods are also known as coffee capsules, or pads, and are round soft and pliable, according to coffeewarehouse.com.

Sales were up more than 8%, year-over-year, for single-cup pods, while cold cappuccino, iced coffee, and refrigerated coffee that’s ready to consume jumped even higher, increasing 16.5%, according to a study cited in the report.

The data was gleaned by IRI, a private market research outfit based in Chicago, over a one-year period ending in October.

The study used sales data from supermarkets, drugstores, mass merchandise stores such as Walmarts, and warehouse clubs Sam’s and BJ’s.

The analysis also garnered sales data from some dollar stores, excluding Dollar Tree, and military commissaries.

But the sales of a traditionally popular product – ground coffee –  a $4 billion segment of the market, fell by 2.3%, according to IRI.

Younger consumers are drinking specialized beverages and adopting “new innovations in coffee,” and therefore, “some of the products consumed by older consumers started to lose shelf space,” George Puro, president of Puro Research Group, told the trade magazine.

So now retailers have begun taking into account their entire selection “to make sure [they cater to] multiple generations.”

New products are usually born at coffee shops or cafes ahead of finding their way “into packaged goods,” says SN, citing the study, which was conducted by the market research firm Packaged Facts.

“Retailers are losing customers to people who buy things online and they recognize that e-commerce is shifting how consumers spend time … so foodservice is trying to introduce more immersive [and unique] experiences,” Puro told SN.

In New Brunswick, a relatively new local coffee shop known as Hidden Grounds has been selling lots of cold brew, and opening a second location in 2016.

Meanwhile, Dunkin' Donuts has been gearing up to serve cold brewed coffee in kegs in 2017, which entails soaking coffee grounds in ambient water for about a day, and the new product has “a beer-like head” writes SN, citing reports.

Sales of decaffeinated ground coffee were down more than 6% year-over-year, according to IRI, while instant ground coffee (which is mixed with hot water) fell 3%.

But people must still be grinding their own beans, as whole bean sales increased nearly 1.5%, year-over-year.

So-called nitro cold brew coffee is dispensed from a tap which makes it different from other iced coffees, according to Convenience Store News (CSN), which reports that cold brew has really caught on in recent years, providing "an opportunity" to generate cash for retailers. 

Cold brew "develops a beautiful cascade, yielding a head on the top and a creamy taste," writes trade magazine, CSN.

However, citing a study the publication did with Rutgers University, CSN says cold brew coffee had a third  more caffeine than standard brewed iced coffee, and it was two-thirds less acidic.

Cold brew is great for an additional “pick-me-up, or people who do not like very acidic products," writes CSN, adding that it contains no sugar, and dovetails nicely with the market for energy drinks. 

What's more, the National Coffee Association says at least 15% of regular java drinkers have tasted cold brew coffee within the past year and-a-half. 

Even convenience stores such as Wawa, which has several locations in Middlesex County, are getting in on the ready-to-drink coffee craze.

The privately-owned company says it brews over 195 million cups of its hot coffee per year, but it also sells iced coffee that is dispensed from a commercial type self-service unit.

The iced coffee product is shipped to the convenience store in boxed, 2.5 gallon bags, which are used to refill the dispensers “quite often” as one associate put it.