CHD Expert Provides Beverage Industry Trends: Find Out What’s Hot in Foodservice

17 Jan

Independent and chain coffee shops are dominating new restaurant growth in North America. According to CHD Expert, strong customer loyalty and affordable convenience are just a few reasons the hot beverage industry is poised for continued growth in 2012.

The hot beverage market continues to grow, with over two-thirds of coffee consumption being out of home. Don’t think that quick service restaurants haven’t noticed. QSRs have dramatically increased product offerings to include more hot beverages. McDonald’s, for one, has increased their McCafé offerings helping them increase their same store sales for 55 consecutive months. Even convenience stores are upgrading their hot beverage selection to try to compete with the quick service options.

Specialty Hot Beverage Operators currently make up 5% of the consumer spends in the Limited Service Market. In terms of number of operators, independents (1 to 9 units) and large chains (501 + units) dominate the hot beverage market. The medium size coffee and tea companies (10 to 500 units) only account for 8% of the market, whereas independents constitute 53% of the industry.

The hot beverage market doesn’t seem exciting on paper. After all, the chance a prisoner opts for a cup of coffee as a last meal over a juicy steak is pretty slim. However, a $14.4 billion market in a declining economy is simply something manufacturers cannot, and should not ignore. The hot beverage market is one of the few markets that have shown continued growth over the past 4 years. The global market for hot beverages (coffee and tea) is forecasted to reach $69.77 billion in value and 10.57 million tons in volume by the year 2015.

According to Cathy Kearns, General Manager at CHD Expert, “We have seen independent and chain coffee shops continue to dominate new restaurant net growth in North America. The Hot Beverage market transactions have nearly tripled between 2000 and 2011 whereas the Limited Service Foodservice transactions have decreased by 7% during the same period.”

Why is Hot Beverage market on the rise?

Future growth in worldwide coffee and tea industries is expected to rely on a few key factors – quality, health and convenience.

Widespread awareness of health benefits associated with hot tea continues to drive the beverage to new heights of popularity. Hot tea is one of the healthy beverages recommended by the American Journal of Clinical Nutrition. So go ahead and have that second helping of fries, just make sure to wash it down with a nice cup of hot tea.

Gourmet coffee continues to be a significant portion (37%) of total coffee consumed; indicating that consumers want to maintain coffee quality despite the economy. The constant demand for Coffee had helped it sustain extraordinary sales levels even in an uncertain economy. As the economy recovers, rising levels of affluence, consumer awareness and greater per capita consumption in developing economies, is slated to accelerate future growth. No matter the consumer age group, coffee consumption is on the rise:

40% of 18-24 year olds drink coffee daily, up from 31% in 2010
54% of 25-39 year olds drink coffee daily, up from 44% in 2010

An increase in consumption among younger drinkers demonstrates strong category loyalty, which suggests a solid customer base for future growth.

Whether it is a case for our cell phones, or the toppings on our pizza we want everything we have OUR way. Ordering coffee with two creams was a thing of the 90s, I’ll take a tall half-skinny half-1 percent extra hot split quad shot latte with whip. Thanks.


2 Responses to “CHD Expert Provides Beverage Industry Trends: Find Out What’s Hot in Foodservice”

  1. Erle Dardick (Author) January 22, 2012 at 6:31 am #

    This is a really great article. Thank you for sharing it. I am wondering if you have any insight as to where the coffee segment is headed as it relates to off premise catering/delivery? I believe there is a fantastic opportunity here for some of the larger operators to see a lift in sales through redefining this catering channel. I look forward to your thoughts.

    • Mike Smith CHD-Expert February 2, 2012 at 11:25 pm #

      We feel that because of the rise of hot beverage offerings at major chains and restaurants around the country, the delivery/catering coffee segment will have trouble getting a foothold. In other words, because there is a McDonald’s, Starbucks, Duncan Donuts etc. on every corner there is less of a need for delivery/catered hot beverages. I hope that answers your question. Feel free to contact me if you would like to discuss it (312)-768-6926.


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