Coffee Industry Trends Essay

Coffee shops are considered to be specialty eateries, which also includes retail outlets that offer bagels, donuts, ice cream and frozen yogurt. In 2011 there were around 20,000 coffee shops in the United States with combined revenues of $10 billion. 70% of the sales are generated by the top 50 coffee shop operators. There are local mom and pop operators competing alongside of Starbucks and other national brands. The number of coffee shops like Starbucks rose in 2004, but leveled off in the recession of 2008. The number of establishments has grown faster than the number of firms. So while there are quite a few startups, those start- ups are starting up more and more shops. International business is becoming more and more important in this industry. Starbucks reported to have 5,500 international locations in 2010. Starbucks is getting ready to open their first shop in Vietnam. Vietnam is a country with strong coffee traditions and many local independent shops. In 2012, the National Coffee Association conducted a study and they found that over 75% of adults living in the US drink coffee and of those, 58% drink it daily. The age group 25-39 went from 44% drinking daily to 54%. Why the increase? Most felt better about their finances. There are still more Americans drinking coffee than tea. There are 183 million coffee drinkers to 173. 5 million tea drinkers. There has been a surge of national quick service and fast food chains entering the market. McDonalds introduced their specialty coffee line, McCafe in 2005, Burger King has BK Joe, Chick-Fil-A has Cafe blends, 7-Eleven has World Roasts, and Dunkin Donuts has lattes and cappuccinos that they introduced in 2003. Because of increased competition, many companies are trying to increase their sales thru whole and ground coffee. Many are selling thru grocery stores, specialty food stores, and also the internet. This helps build brand awareness and also brings people into the coffee shop itself. 85% of coffee drinkers make their coffee at home and now they have more ways to make their own specialty and espresso as well. These companies are actually competing against themselves as they manufacture coffee for the Keurig and Vue machines. The average consumption of coffee has actually fallen slightly in the last 30 years, but is projected to remain stable over the next five years.