Multinationals reinvent coffee concept for ready to drink growth
The combined markets of Japan, North America and West Europe for ready to drink (RTD) coffee amounted to 3,163 million litres in 2006, according to a new report from global drinks consultancy Zenith International. Japan, home to the RTD coffee concept and a driving force in product innovation, accounts for a massive 88% of the total, but sales there are starting to dip for the first time.
"Recent strategic partnerships and marketing initiatives in North America and West Europe have become the main sources of momentum," commented Zenith Market Intelligence Director Gary Roethenbaugh. "While Japan's maturing market is forecast to decline by 1% a year up to 2011, we expect to see compound annual growth of 9% in West Europe and 6% in North America."
Zenith's 2007 RTD Coffee report finds a number of multinationals overcoming obstacles that once threatened to make the drink appear unhealthy, opening up consumption opportunities and broadening the target market by turning the original RTD concept on its head.
"RTD coffee companies have moved on from merely tweaking the coffee-sugar-milk ratio to appeal to different consumer tastes," added Gary Roethenbaugh. "They are now focusing on a whole new generation of consumers by balancing sometimes conflicting demands for products that are weight and health conscious, energy boosting, indulgent and perhaps also offer added functionality."
In a major twist, multinationals are forming strategic brand alliances to make positive plays on the natural properties of RTD coffee ingredients. Its naturally occurring caffeine content could see it attract a share of the growing appetite for energy drinks. Any dairy content can appeal in its own right or be enriched to enhance a product's natural nutritional status. Even sugar, when blended with a premium coffee bean, may transform a fattening drink into an indulgent treat, sometimes as an alternative to a dessert.
But ingenuity needs to be accompanied by distribution strength. While The Coca-Cola Company leads in Japan with innovative products such as the Georgia brand's GABA coffee, it has struggled to break the US stranglehold of the PepsiCo/Starbucks Coffee Company partnership. Many eyes are now on China as the alliance rolls out Starbucks Frappuccino across the country, but others await developments from fresh links between the Coca-Cola system and illycaffÃ©.
Zenith predicts North America's share of the combined market will rise from 8% to 11% by 2011, with West Europe's share up from 3% to 5%. Certain markets in West Europe, such as Austria and Norway, are set to see consumption per person rates that outstrip the United States.
RTD Coffee 2007 provides market data, analysis and comment on the markets of Japan, North America and West Europe. It looks at the category's evolution and explores current industry dynamics as well as the factors driving new product development. It contains profiles of 40 leading RTD coffee companies. Contact Zenith International on tel +44 (0)1225 327900, fax +44 (0)1225 327901 or e-mail firstname.lastname@example.org
Notes for Editors
1. Zenith's definition of RTD coffee does not include coffee-flavoured soft drinks.
2. GABA (gamma-amino-butyric acid) is a non-essential amino acid that functions as a neurotransmitter.
3. For further information, please contact:
Gary Roethenbaugh or Stuart Foxon, Zenith International Ltd
7 Kingsmead Square, Bath BA1 2AB, United Kingdom
t +44 (0)1225 327900, f +44 (0)1225 327901