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Coffee: Still King of the College Dorm


Written by: Brian Sudano

In our recent BMC report, U.S. College Student Beverage Consumption and Attitudes, we took a deep dive into college student beverage consumption behavior, which we think is a great way to peer into the crystal ball of the future of the industry. We took an especially long look at student attitudes toward coffee, every co-ed's early morning eye opener or late-night study aid. Here's what we found.

First, college kids love their coffee, especially Brewed. In 2017, for the college students in our survey, Brewed Coffee held the number two spot among all beverages, behind beverage industry leader Bottled Water. Our survey estimates Brewed Coffee represented 13.2% share of throat among college students in 2017, up 0.5% from 2016. When we add together the share of throat for Brewed Coffee (13.2%), Specialty Coffee Drinks (6.5%) and Bottled/Can Coffee (1.9%), nearly 22% of all reported college student beverage consumption is coffee of some type. That's up more than 1% in total share of throat from 2016, with the volume coming from the shrinking Carbonated Soft Drink, Energy Drink and Bottled/Can tea categories.

Furthermore, as a "pick-me-up" beverage of choice, coffee is by far the favorite, with 52.4% of college students choosing it. This is up from the nearly 49% of students who chose coffee as the primary 'pick-me-up" drink in the 2016 survey. Somewhat surprising is that energy drinks are fifth on the list of preferred "pick-me-up" beverages, far behind coffee, tea, water and soda.

As for Specialty Coffee, the influence of Starbucks and high-end foodservice coffee in general can be seen fully in our results. For students, when choosing Specialty Coffee, taste is the most important factor when it comes to selection: 25.8% of students asked view taste as their primary purchase reason. This compares to only 19.0% who say the same for Brewed Coffee. The difference is more apparent when excluding non-users: 47.9% of regular Specialty Coffee drinkers claim taste is primary in selection choice, compared to 28.4% of Brewed Coffee users.

Second, college students drink significantly more Bottled/Can Coffee drinks than the overall population, however, rejection rates are still sky high. In 2017, 85% of our college survey respondents said they do not consume RTD coffee at all. This compares very unfavorably to other coffee categories as only 37% of students reject Brewed Coffee and 53% reject Specialty Coffee. That's a massive gap, but also a massive opportunity.

To put this in context, RTD coffee overall has had a terrific run. From our proprietary DrinkTell™ database, RTD coffee grew to 64.5 million cases in 2017 at a CAGR of +12.2% since 2011. The PepsiCo-Starbucks partnership dominates the category with 60% share, although share is down slightly since 2011 as other products have entered the market.

As for RTD coffee, although college student rejection rates are high, there appears real potential here. Greater availability and product innovation have played a driving role as the category has diversified from sweet, milky coffee drinks like category-dominant Frappuccino to include drinks with less or no dairy (black/dark coffee or containing almond milk instead of milk as a lightener) and less sugar. There are also emerging energy hybrids with a more male-friendly positioning to attract college-age drinkers.

What's most positive for the category looking forward is that the rapidly growing cold-brew coffee sub-segment has introduced real innovation in terms of less-acidic-tasting liquids. Much of the incremental growth in Bottled/Can coffee is expected to be driven by that cold-brew segment and we expect young consumers to play a role in that growth

Finally, coffee's future purchase intent with college students looks very healthy. Brewed coffee is just one of six beverages which students expected to drink more of in 2018. In our survey, 60% of respondents indicated they would consume either the same amount or more Brewed Coffee in the upcoming year. Less than 30% of those surveyed foresee a year abstaining from coffee, although this percentage is up by slightly versus the previous year. This compares very favorably to Bottled/Can Coffee, where only 26% intend to drink the same or more in the upcoming year, with 67.5% abstaining completely.

Not surprisingly, Specialty Coffee fell between Brewed and Bottle/Can coffee in our purchase intent survey. In that survey, 45% of respondents indicated they would drink the same or more Specialty Coffee in the upcoming year and only 41% of respondents report no plans to consume Specialty Coffee at all in the upcoming year, much lower than Bottle/Can.

However, hanging over Specialty Coffee is the college student's desire to reduce consumption due to (coffee) buyer's remorse, which often includes either "I'm spending too much on lattes" or "Frappuccinos have way too many calories." Regardless, specialty coffee drinks continue to hold their own with college kids. The rise of cold-brew techniques in cafés is one way that marketers can ensure that young consumers won't get too negative on their latte or frappe habits.

So overall, Generation Starbucks is all in on coffee and that's not changing anytime soon.

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