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The explosion in working from home unleashed major growth in at-home coffee consumption and experimentation, creating more nuanced at-home and away-from-home product preferences.
Everyone knows work schedules have become less predictable in the last two years as a result of the coronavirus pandemic. What remains to be seen, however, is what the "new normal" will look like and how workplace services — such as food and refreshment services — will be impacted for the long term.
While traditional food and beverage service suffered a historic fallout as a result of the coronavirus pandemic, the future is anything but bleak for service providers who take the time to understand changing consumer needs.
That's according to Caleb Bryant, associate director of food and drink reports at Mintel, a Chicago based consumer research company. Bryant shared his research on the complex topic of remote work's impact on the coffee industry during the recent National Coffee Association Virtual Convention.
The explosion in working from home unleashed major growth in at-home coffee consumption and experimentation, Bryant said, creating more nuanced at-home and away-from-home product preferences.
And while service providers continue to struggle from the loss of away-from-home purchases, Bryant said new consumer preferences are creating opportunities for both at-home and away-from-home markets.
"The rise of remote work represents a critical moment and opportunity for coffee brands to respond to fast changing market dynamics," Bryant said.
While many coffee outlets — coffee shops, c-stores and restaurants — closed in 2020, total coffee sales rose 11%.
More importantly, coffee consumption will continue to grow.
"Coffee is unique in that the increase in remote work will deliver a long-term category gain," Bryant said.
A key dynamic Bryant focused on is the impact of at-home trends on away-from-home demand.
Nearly a third — 32% — of remote workers upgraded home coffee options during the pandemic versus 23% of non-remote workers.
While boosting demand for coffee, the pandemic also let loose a demand for home coffee experimentation that astute brands were able to capitalize on.
Examples include Nescafe barista creations, which are designed for making cold specialty drinks, and Dunkin' cold brew coffee packs. No special equipment is needed for these products.
Nestle also reported strong growth of its Nespresso single-cup machines.
Single-cup coffee posted the strongest growth while roasted coffee, relatively flat historically, saw double digit growth, Bryant said.
RTD coffee did not do as well due to the loss of impulse driven coffee trips but is expected to rebound.
And while changes were most pronounced in home market consumption, Bryant stressed that growth opportunities are not limited to the home market.
Where retail coffee brands need to empower workers to make their own specialty drinks at home, foodservice brands must create unique specialty coffee drinks that appeal to remote workers that can't be replicated at home.
Remote workers, for example, believe specialty drinks cannot be replicated in the home and are likely to view coffee and tea bought at coffee shops as affordable treats.
"Remote workers may purchase coffee away from home less frequently, but they will gravitate towards higher priced beverages they can't make for themselves," he said.
Nearly three quarters, 72%, of remote workers agree buying coffee away from home helps break up the day, and they view coffee and tea as affordable treats.
Diving further into the consumer research, Bryant said Gen Zers prefer flavorful coffee: 65% of Gen Zers say flavor is a key driver for coffee, while Millennials want less sweet but complex flavored coffees.
The home barista trend also presents opportunities for coffee additives — branded flavored creamers. Forty-percent of creamer users want blends with creamer flavors while 20% want creamers that offer functional benefits.
"Functional creamers can bridge the gap between coffee and functionality," Bryant said.
Syrup also has a big opportunity, being popular with Gen Zers.
There is also an uptick in the launch of steeped coffee bags allowing for a single cup of coffee as if it were a tea.
"Jitterless" products are emerging in the functional market as brands target those who want sustained rather than spiking energy.
Bryant cited certain opportunities as more geared to the away from home market:
Rising coffee prices, meanwhile, create opportunities for value offerings such as loyalty programs. Panera's coffee subscription offering is an example.
Looking further into the future, Bryant said a decrease in commuters and a labor shortage spell the need for smaller footprint service units with fewer employees, noting that QSRs are already pioneering this movement.
Starbucks opened its first micro café designed for mobile preorders before the pandemic, which could serve as a footprint for future locations, especially in urban areas.
Automated formats are another option. Costa Coffee, a U.K.-based coffee brand the Coca-Cola Co. acquired in 2018, is expanding via its automated coffee kiosk.
In addition, "We may see a revival of the food truck trend following the labor shortage," Bryant said.
He also sees a growth opportunity for breakfast delivery, which he said is underrepresented in the rising foodservice delivery market.
Then there's the growth in co-workspace formats.
Saks 5th Avenue has SaksWorks co-working hub that blurs retail with co-work spaces.
Capital One has Capital One Café, half café and co-work space and banking.
"Coffee shops will become smaller, more experiential and connect with consumers at home," Bryant said. "Work is never going to be the same and the coffee market is never going to be the same as it was."
Elliot Maras is the editor of Kiosk Marketplace and Vending Times. He brings three decades covering unattended retail and commercial foodservice.