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Gourmet segments perk up profits in $6.5 billion coffee, $1 billion tea markets.

Gourmet segments perk up profits in $6.5 billion coffee, $1 billion tea markets

Sales of gourmet coffees and teas are going strong, even as regular coffee evidence only moderate growth, and regular tea sales show no growth at all, according to a new study by business research firm FIND/SVP.

"There is a growing trend toward consuming less but of better quality. The main consumers of gourmet coffees and specialty teas--educated, affluent 25-45 year olds--reflect this. Often, they choose gourmet coffee and tea for prestige as well as fine taste. And high price is not a detriment," says Peter Allen, FIND/SVP's vice president, market research reports.

The report relates that, in 1989, sales of gourmet coffees reached approximately $1.2 billion at the retail level, or roughly 19% of all coffee sold, climbing from nearly 10% in 1983. The total retail value of general coffee sales in the U.S. in 1989 was $6.5 billion, down significantly from the 1986 all-time high of $7.4 billion, but up 1.6% over 1988.

The gourmet category includes "true" gourmet coffees which amounted to $676 million in sales, premium brands (upscale coffees mass marketed by the leading coffee companies) which accounted for sales of $277 million, and decaffeinated coffees which claimed a $283 million sales share. The fastest growing of these is the premium category, which benefits greatly from the marketing muscle of the leading coffee companies. FIND/SVP forecasts that, by 1994, gourmet coffee will account for 30% of all U.S. coffee sales. Of this, 16% will be true gourmet varieties, 10% will be premium coffees, and 5% will be decaffeinated.

In 1989, retails sales of gourmet teas, traditional specialties (blended or flavored teas), and decaffeinated teas, came to $233 million, up almost 6% over 1988. Overall, the retail value of tea sales in 1989 was approximately $1 billion. The dollar value of tea sales has been dropping since 1986, when the retail value of tea sold in stores topped out at $1,006 million.

"The definition of gourmet tea is a little vague, relying on price (about twice that of regular tea), packaging (fancy), its distribution channels (specialty food stores), and even the care with which the tea is served for its identity as mush as on the product's actual composition," notes Allen. "As with gourmet coffee, image is a key commodity."

Herbal tea sales made up the largest part of the overall gourmet market, with 1989 sales of $100 million. Decaffeinated tea sales totalled $80 million; sales of traditional specialty teas reached $52.8 million.

FIND/SVP forecasts that, by 1995, total tea sales in the U.S. will have declined to a little over $932.2 million annually, with herbal and gourmet products together accounting for nearly 21% of the market, up from 15% in 1989.

The top marketers of gourmet coffee in this country are reported to be: Kraft General Foods (the parent company of Maxwell House); Procter & Gamble (Folgers); Nestle (Hills Bros., MJB, Chase & Sanborn), and Chock full O'Nuts. Kraft General Foods is described as holding the industry lead, although Procter & Gamble is seen as gaining on it. The report puts Kraft General Foods' coffee business at about $1.5 billion in sales annually.

Bigelow, Lipton, and Celestial Seasonings, Inc. are each found to claim about 25% to 28% of the specialty tea market. Twinings of London is also identified as a major player.
COPYRIGHT 1991 Lockwood Trade Journal Co., Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1991 Gale, Cengage Learning. All rights reserved.

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Publication:Tea & Coffee Trade Journal
Date:Jan 1, 1991
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