Canadian Vending

Features Coffee Service
A Matter Of Consumption

2005 Canadian Coffee Drinking Study


June 13, 2008
By Stacy Bradshaw


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Sandy McAlpine, president of the Coffee Association of Canada,
presented results from the 2005 Canadian Coffee Drinking Study at the
annual OCVSA conference in September.

Sandy McAlpine, president of the Coffee Association of Canada, presented results from the 2005 Canadian Coffee Drinking Study at the annual OCVSA conference in September.

  matterofsuccess
 Association president Ed Loveys, left, and show chairman Peter Wilson officially open the 2005 OCVSA Conference and Trade Show held in Niagara-on-the-Lake last month.

Using data collected every two years, the study reflects consumption patterns of 2,500 consumers and is an extremely valued overview, reported by nine leading coffee roasters and retailers in Canada.

McAlpine shared his own thoughts on current trends affecting the coffee service industry and outlined relevant statistics from the study, including one statistic he was more than happy to share – the 2005 study supports the continuation of the trend that coffee is the number one beverage choice of adult Canadians.

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The study concluded that 65 per cent, or virtually two out of every three Canadians 18 or older, drink coffee everyday. This number is up from 63 per cent two years ago, added McAlpine, and makes for a very healthy coffee market.

Canadian consumption is significantly different than that of the United States, where soft drinks are the number one beverage choice. Soft drink consumption in Canada is dropping, while bottled water has seen phenomenal growth from 21 per cent to 30 per cent daily consumption, reported McAlpine.

One of the big challenges for coffee service operators will be trying to get younger people into the category, said McAlpine. Consumption goes up significantly with age, with the 60-plus category reporting the highest rates at 77 per cent.

Regionally, the percentage of the total population drinking coffee is weakest in Atlantic Canada, but is steadily rising as they experience a long-term shift from tea to coffee. Quebec is still the highest with 70 per cent drinking coffee on a regular basis and the rest of Canada lies somewhere in the middle, around the national average of 63 per cent.

In terms of where people are drinking, whether at home (70 per cent) or away from home (36 per cent), McAlpine warned the study significantly under-reports away from home consumption. People do not recall the number of cups consumed away from home.
 
“I can tell you from a market model we’ve put together, it’s more like 55 to 56 per cent of cups are drank at home and the balance, a much bigger percentage than the study reflects, away from home.”

The amount of coffee consumed away from home is still the minority at around 45 per cent, but it is growing consistently nonetheless, reminded McAlpine.

“It is startling how much coffee is being bought by food service operators and taken home. It has been going on for years that coffee was going to the office (drive-thru), but about six-to-seven per cent is going home to be consumed.”

With over half of Canadians reported as occasional consumers of specialty beverages, McAlpline suggested this is a very compelling opportunity for OCS operators.

Cup sizes also continue to grow; small sizes contribute to 38 per cent of all purchases; 12 oz. to 47 per cent; and the 16 oz. size is seeing steady growth at 19 per cent, but is more pronounced for the male consumers.
And there it is, as McAlpine put it, “a blinding pile of statistics.” He considers how these stats will effect the coffee business, and in particular the coffee service business, by reflecting on them in terms of the following, more general market trends:

Relatively stable coffee prices
“I think, although the industry never talks about this collectively, there is a sense of relief that coffee prices have gone up. It will reduce criticism of the industry; it will allow for reasonable returns for the producers; it will protect the quality at origin … If your coffee prices have gone up, I’d say that should be more of an opportunity than a problem – it’s a chance to go to the marketplace and get more money for your product.”
McAlpine suggested that no matter how cheap it gets, people are not going to drink that much more coffee. Prices won’t drive consumption down unless they get to the $2.25 or $2.50 mark.

Number one in Canada and growing
Because we’re seeing carbonated soft drinks erode, coffee is the right business to be in, said McAlpine. We are drinking more coffee as a nation, with a net increase of three to four per cent, making it one of the healthiest coffee markets, in terms of net use, in the world.

Foodservice, the big winner
McAlpine said there are more coffee focused businesses in Canada, proportionately, than in the U.S., making it a much more competitive market. There are about 7,000 businesses in Canada to whom coffee is key part of their revenue, their marketing and their connection to consumers.

Drive-thru is growing
“A harsh reality for you guys,” he noted: about 1/3 to 1/2 of coffee customers in foodservice drive-thru are office workers who are on the way to or have come from the office.

New formats have dramatic impact
“Pods is a huge opportunity in several marketplaces at the same time … and it’s best suited for your industry; we’re seeing more platforms becoming available and I think it will happen.”

A true opportunity
McAlpine warned ignoring tea would be foolish and suggested OCS operators pay as much attention to it as foodservice currently is. “And it’s the same consumer – there’s a huge degree of overlap.” He said that because 70 per cent of coffee is consumed before noon, tea should be a big part of a total program for an office.

Health issues
Always watch with great caution, the proliferation of things like Red Bull, warned McApline. This new category, “wonderfully” titled natural health products because of its “functionality” as a food, has seen roaring success.
Not going to get any easierUnfortunately, said McAlpine, the service level demands on OCS operators are high now and will only increase.

“And the other thing is, if you don’t have an electronic presence now, get one.” People barely purchase anything anymore without first consulting the Internet and that is how people are going to find you, he said.
“It’s not going to get any easier; it’s going to continue to be a battle.” 
McAlpine hopes advancements like pods will allow OCS operators to offer more choice and help arm them for the battle ahead.