Coffee is a hugely popular drink in the UK, with more than eight in 10 people drinking it. The market is expected to remain stable at £1.07 billion in 2014 following a sustained period of falling wholesale prices and the impact of the Brazilian drought unlikely to be felt until 2015.

2013_Mintel_hi-resValue sales are dominated by instant coffee which accounted for 75% of value sales of at-home coffee. Coffee pods continue to be the star performing segment but still account for just 7% of total value and volume sales.

Coffee is an innovative market, with the total number of new products launched in the UK rising 25% year on year since 2011. Much of this growth is coming from fresh coffee in the form of ground coffee or beans and also pods.

Over a quarter of in-home coffee drinkers in the UK are interested in trying flavoured instant coffee. Fewer than 10% of new instant or ground coffee products launched in 2013 were flavoured , suggesting an underutilised opportunity. Interest peaks among under-35s, in line with this age group being the least likely to see standard instant coffee as tasting pleasant.

A further 30% of coffee drinkers see speciality coffees like lattes or cappuccinos as a good alternative to treats such as biscuits and chocolate. Dessert-inspired flavours should be well-placed to win these users over.The North American market can offer inspiration for NPD, with coffee in flavours like Carrot Cake, Tiramisu, Crème Brûlée and Caramel Cookie already available.

A surprisingly low proportion of coffee drinkers rank the qualities of the beans (eg origin, type of bean) as more important than brand, suggesting most should be open to shortcuts for navigating the category.

In terms of coffee pod machines, for those that don’t own a machine but are interested in buying one, cost remains a significant barrier. The cost of pods is a problem regardless of income, while the cost of the machine itself is a bigger barrier for those with lower household incomes.

The increasing number of manufacturers producing Nespresso-compatible pods in the UK is expected to drive the price of pods down, and should fuel uptake of the machines. The cheaper pods should also drive usage among current owners of pod machines.

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