2005 Specialty Coffee Research Results I

With the specialty coffee industry continually changing and redefining itself, the biannual SCAA/Gourmet Retailer Specialty Coffee Survey becomes more important than ever. This, our fifth study, provides data in several categories for retailers who sell specialty coffee. From the size of the store, to beverage and bean sales, and beyond, our 2005 Specialty Coffee Survey, which covers the 2004 year, is filled with interesting current data that can be compared to past years' data for an historical overview of the industry.

In early January 2005, we mailed a four-page survey on an nth name basis to 1,200 retailers in five categories: Coffeehouses/Cafes (defined as those whose majority of business is in beverage sales), Coffee & Tea Stores (defined as those whose majority of business is not in beverage sales), Kitchenware Stores, Gift/Gourmet Stores, and Specialty Food Stores. The inclusion of the kitchenware, gift/gourmet, and specialty food stores was determined to obtain a better overall picture of the total specialty coffee market, as well as to more clearly see trends in accessory product sales, such as those of thermal carafes, mugs, teakettles, etc.
The overall purpose of the survey is to update the industry on its status and to provide real-time data relevant to operators. Our goal is to offer insight to the industry regarding the opportunities for the future of specialty coffee.
Our final tally of completed surveys totaled 450, for a 40.8-percent return rate.
Following is a brief overview of some of the survey results. We will include additional results in our June issue. The complete study is available for sale either from the SCAA or The Gourmet Retailer Magazine. The price for the full study is $200 for SCAA members and $250 for non-members. For more information, contact The Gourmet Retailer at 800-397-1137, or the SCAA at 562-624-4100.

All channels grew their sales of bagged whole-bean/ground coffee, with the exception of the Specialty Food Stores channel, which experienced a 1.2% decline in sales from 2004 over 2003. While the average growth of bagged coffee only grew 2% across all channels, it is interesting to note that there were increases of 2.1% in the Gift/Gourmet Stores segment, and 1.3% in the Kitchenware Stores segment, both venues whose primary business is not coffee.



All retail segments reported growth in beverage service (including coffee, espresso, tea, chai, granita, etc.) compared to 2003, with the average growth of all channels combined up 4.9%. By type of store, Kitchenware Stores experienced the greatest sales growth, reporting an 8% increase followed by Coffeehouses/Cafes at 5.2% and Coffee & Tea Retail Stores
at 4%.

Within the beverage service category, which included coffee, espresso, tea, chai, and granita, espresso-based beverages constituted on average $50,395 for all stores, followed by drip coffee beverages which on average rang up $33,336. Checking in at third place were cold and iced coffee beverages, at an average of $22,061.
Specifically in the espresso beverage category, Coffeehouses/Cafes rang up the most sales ($58,145), followed by Gift/Gourmet Stores at $29,083 and Specialty Food Stores with $22,773. In the drip coffee category, Gift/Gourmet Stores edged out Coffeehouses/Cafes with $40,250 in sales compared to an average of $37,023 for Coffeehouses/Cafes.

To determine Total Coffee Sales compared to the previous survey results (for the 2002 year), we combined prepared coffee beverage service sales and whole-bean/ground coffee sales for both years. In 2004, on average, all channels combined rang up $158,707 in prepared beverages service sales and whole-bean/ground coffee purchased for off-premise consumption. This number compares to the 2002 result for the same category of $132,524. While overall results reveal total sales in these beverage categories was up, the sales at Coffeehouses/Cafes and Coffee & Tea Retail Stores showed declines. In 2002, Coffeehouses/Cafes generated $199,529 in total coffee sales, and in 2004, generated an average of $187,926.
Coffee & Tea Retail Stores experienced a significant decline in total coffee beverage sales, bringing in only $161,686 in 2004 compared to $359,332 in 2002. The channel experiencing the greatest growth in these sales was the Specialty Food Store channel, which rang up $89,324 in 2004 compared to $22,680 in 2002.
Apparently, non-coffee channels have realized that coffee beverage service meets an important need for consumers, and have stepped up their efforts to offer more customers choices.


We asked respondents to note their Change in Sales in 2004 compared to 2003 for a variety of products sold off store shelves. Top honors went to Mugs -- a category that consistently grows year after year for all of the retail segments surveyed. In 2004, sales of Mugs were up 1.9%. Sales of Espresso/Cappuccino Makers and Teapots also grew, both at a rate of 1.8%. If one takes a look at overall consumer consumption trends, interest in preparing a wide variety of espresso beverages may be growing due to the introduction of machines that allow consumers to create cafe-quality espresso in their homes without much effort or expertise. Similarly, interest in specialty tea is growing, which is helping generate sales in related categories, such as teapots. The growing interest in flavoring syrups can also be attributed to the growth of interest in preparing specialty coffee and espresso beverages at home. In 2004, flavoring syrups experienced a 1.7% growth in sales over the previous year, perhaps due to their role in consumers' preparation of espresso-based beverages at home using their new espresso machines.
Those categories that experienced a decline were Drip Coffee Makers (-0.3%), Thermal Carafes (-0.3%), Stovetop Espresso Makers (-1.3%), and Permanent Filters (-0.5%).