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Consumers around the globe are drinking coffee with a conscience. According to research from Mintel Global New Products Database (GNPD), nearly half (48%) of all new coffee product launches in 2020 carried an ethical or environmental claim***, close to double the number from almost a decade ago (2012) when just one in four (25%) coffee launches were sustainable.

Pods/capsules – which account for a quarter of (24%)**** of global coffee innovation – are the category’s most controversial format because of the amount of landfill waste they create. Only two in five pods (39%) globally carry a recyclable claim. Currently, one in ten pods/capsules uses a biodegradable claim (11%) and/or a compostable claim(10%).

Overall, when it comes to sustainability, coffee fares well compared to the total food and drink market where just 35% of new product launches carry a sustainable claim in Europe – in comparison to 64% of coffee launches in the region.

Jonny Forsyth, Associate Director, Mintel Food & Drink, said:

“Undoubtedly, sustainability will be the defining issue for the coffee industry over the next 20 years. Consumer expectations of coffee brands will rise dramatically as eco-anxiety replaces pandemic paranoia. Consumers are becoming more aware of carbon emissions and coffee is one of the worst offenders. The more activist-minded younger generation will show less tolerance for waste, especially pods that are recyclable but rarely recycled, with launches of ‘greener’ pods expected to grow fast.

COVID-19 has made consumers more sensitive to inequalities, and most farmers are poorly paid despite coffee’s huge profits and use of fair trade claims. Brands will need to help farmers navigate global warming to avoid the loss of supply and livelihoods. Brands will need to be much more ‘hands on’ and put their sustainable values and actions at the heart of their brand message.”

A year of packaged coffee accelerates in-home barista trend

COVID-19 has brought about an impressive 8% rise in total global packaged coffee launches during 2020, compared to 2019. Fresh varieties including pods (24%), ground (23%), and beans (15%) now account for almost two thirds of global coffee innovation collectively.

The ‘in-home barista’ trend is far more developed in Western markets***** where pods, beans, and ground coffee account for 77% of all coffee launches, compared to just 44% in Asia, Latin America, the Middle East, and Africa – where mixes (20%), instant (18%) and ready-to-drink (RTD) (19%) varieties dominate. Ground coffee has experienced a substantial jump in innovation in Western markets, accounting for 19% of new product launches in 2019 rising to 24% in 2020.

The pandemic has forced consumers to make more coffee at home and attempt to replicate the quality of the fresh, on-premise brews they are accustomed to drinking in coffee shops pre-pandemic. In the UK, retail coffee sales** increased by 13% in 2020 compared to 2019, versus a 38% decline in revenue for coffee shops.

Jonny Forsyth, Associate Director, Mintel Food & Drink, said:   

“The COVID-19 pandemic created a fascinating year for coffee, especially as it saw the reversal of a long-term trend. For years, coffee shops have taken share from retail coffee, but the pandemic forced drinkers to make more coffee in-home and replicate the quality of fresh on-premise brews.

“For many, the key to coffee making has moved beyond the desire for it to simply be ‘good coffee’; it’s now about brewing creative coffee, adding the same style and aspiration you would see in a coffee shop. We predict that in as little as two years’ time, this trend will be further developed as coffee-making technology improves and machine prices reduce. Moving forward, retail brands need to behave more like coffee shops in order to engage with consumers. This means using social media and new product innovation to offer customers choice, community, and storytelling.”

Home-bound consumers see 15% decline in RTD new product development

Finally, while consumers across the globe have become expert baristas, coffee lovers have – temporarily – turned their backs on the cold RTD format, which was growing strongly in many markets prior to the pandemic. According to Mintel GNPD, the number of global RTD coffee launches (such as chilled coffee in a can) shrunk a substantial 15% during 2020 compared to 2019, as the need for on-the-go formats declined.

Jonny Forsyth, Associate Director, Mintel Food & Drink, said:

“After years of explosive growth, ready-to-drink coffee really struggled during 2020 as the lack of on-the go occasions meant convenience wasn’t consumers’ top priority.”

Notes to editors:

* defined as: hot and cold packaged coffee.

**includes coffee sales in the retail market only. It excludes sales from coffee shops or other outlets where coffee is purchased and drunk outside the home. Sales through vending machines and self-serve coffee outlets are also excluded. 

*** all hot and cold packaged coffee carrying an ethical and environmental claim.

**** excludes concentrated/other. 

*****defined as: North America, Europe and Australasia.