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03/06/2015

Coffee-loving Canadians brewing up new store sales

New report finds budget-conscious consumers more likely to drink java at home
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Thrift and adventure are changing the consumer habits of Canadian coffee drinkers.

According to a consumer report published earlier this week by the NPD Group, out-of-home coffee servings have fallen by more than 3% annually in recent years.

The report blames the decline mostly on the rising popularity of in-home, single-serve coffee machines like the Keurig, sales of which now rival traditional drip brewers.

“Consumers are constantly looking for ways to save money and spend less,” Robert Carter, executive director at the NPD Group, is quoted as saying. “Furthermore, brewing at home is becoming more convenient and more cost effective as single-serve devices become more popular.”

Research from Nielsen estimates one third of Canadian households now have single-cup brew machines like Keurig and Tassimo.

This doesn’t surprise Kenric Tyghe.

"There's been a sea change from coffee in a can to coffee in a single serving," said Tyghe, senior VP and consumer products and retail stock analyst at Toronto-based Raymond James.

According to Tyghe, grocers stand to profit from the popularity of single-serve cups, which is estimated to be worth $750 million with an annual growth rate of 25 percent.

Roughly 40% of those sales are in traditional growth stores, with the rest divided between coffee shops and mega retailers like Walmart and Costco.

"This is the fastest-growing segment of the hot beverage industry in Canada," said Tyghe.

"I think it would make some sense for grocery store owners to display (single-serve coffee products) prominently at eye level."

The NPD report also found increasing number of the 2.1 billion servings of coffee that Canadians drink annually are specialty coffees.

The data suggests millennials consume one of every three servings of hot specialty coffee, while 65% of all specialty coffee servings are consumed by women.

Boomers remain the biggest consumers of hot brewed coffee at 37%, while millennials increased their consumption by 6% in 2014.