Sales of single-serve coffee have tripled since 2011

Americans are forgoing traditional roasted coffee and increasingly choosing pods used in machines such as Green Mountain's Keurig brewer.

By MSN Money Partner Nov 21, 2013 3:35PM
Credit: © Herb Swanson/Bloomberg via Getty Images
Caption: Keurig's Vue individual coffee roasting systemBy Quentin Fottrell, MarketWatch

Coffee snobs are slowly losing ground to the plastic pod people. 

Americans are opting for quick-and-easy single cups, like those used by Green Mountain’s (GMCR) 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.


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 (SBUX). 


“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.”


More from MarketWatch


 

Tags: GMCRSBUX
3Comments
Nov 22, 2013 1:46AM
avatar
Exactly. While certainly cheaper than the coffee shop, this is a very expensive habit. If you get yourself a thermos (or a coffeemaker that brews right into a thermos carafe), you can save yourself a bundle daily and still have fresh (and hot) coffee. It's mainly the exposure of the carafe to air, along with the constant heating, that causes the pot of coffee to oxidize and taste bad. A sealed thermos fixes that. And you can choose your own beans and grind them yourself for freshness, and still save money overall.
Nov 22, 2013 7:50PM
avatar

I am working with Intelligent Blends a co-packer for Single Serve here in San Diego CA. We are working with some of the best coffees on the planet and premium roasters to bring the coffee house experience into your home and are very close to releasing a recyclable single serve kup onto the marketplace. And there will be more and more beverage choices available in the near future as this segment expands into other types of beverages & soups. I will predict the grocery stores will have whole aisles of products in single serve cups in the coming year. With price, convienience & ecofriendly kups what is there not to love? Please contact me if you have any questions.

Keith Wright VP Sales Intelligent Blends   Ph (858)888-7999

Nov 22, 2013 3:58PM
avatar

We're hoping that this trend can be reversed as Keurig sold 8.4 billion kcups in FY2013.  That's a lot of garbage.  Reusable brew cups are the answer.  Single Cup Accessories, Inc. makes a brew cup refilling system that makes filling AND cleaning brew cups nearly as easy as KCups.  Check it out at SingleCupAccessories.com.

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