Coffee, Tea Brew Up $18 Billion in Sales

Sales of coffee and tea in the foodservice sector is projected to reach $18.7 billion in 2012, according to a new Packaged Facts market report. Sales increased 11% in 2011, driven by the return of consumers to the restaurant industry, aggressive coffee and tea menu innovation, increased penetration of coffee and tea among restaurant units, and menu price increases.

According to the “Coffee and Tea Foodservice Trends in the U.S." report, 173.5 million consumers drink tea and 183 million consumers drink coffee, which creates a challenge for foodservice operators to expand varieties and occasions for use while converting home and office coffee and tea users into foodservice users.

Dunkin Donuts, Green Mountain Coffee Roasters, McDonald's and Starbucks captured the lion’s share of the market—each generating coffee and tea revenues in excess of $1 billion. Coffee and tea players continue to outperform restaurant industry growth, with restaurant brands across the foodservice spectrum pursuing incremental profits through improvements in coffee and tea quality and variety.

Data revealed most leading coffeehouse/donut shop brands have grown same-store sales since 2005. While the percentage of restaurants that offer coffee rose across the board in the 2007-2011 period, the presence of specialty coffee drinks such as cappuccinos, lattes, Americanos and Macchiatos grew 50%.

The average price for coffee on the restaurant menu has risen 25% since 2007, with the highest increase at quick-service restaurants. The price trend reflects operators passing on coffee commodity cost increases to consumers.

The rise in coffee prices has created significant challenges for industry players. Coffee commodity prices significantly affect coffeehouse expenditures, as well as those of restaurant operators with a significant coffee stake on the menu. But after rising to record levels in early 2011, coffee prices have begun to trend downward. Tea pricing stability may provide operators with higher margins than they receive for coffee, and, if history proves a barometer for the future, leave them less vulnerable to pricing volatility.