Peet's sees U.S. premium coffee demand soaring, driven by millennials

Wed Aug 26, 2015 7:44pm EDT
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By Luc Cohen

NEW YORK(Reuters) - Millennial consumers are driving a shift in coffee consumption away from traditional economy brands and toward pricier, higher-quality beans, the chief executive officer of Peet's Coffee said in an interview.

The growth in the premium coffee segment comes as the third major coffee category in the United States, single-serve, has exploded in recent years.

Taken together, the rise of single-serve and premium has boosted overall coffee consumption, and both are catching up with the economy coffee sector, dominated by the biggest U.S. roaster J.M. Smucker Co, maker of Folgers, and Kraft Heinz Co, maker of Maxwell House.

"We're seeing now a whole generation of millennials. They're coming into their own as coffee drinkers," Dave Burwick, Peet's chief executive officer, said in an interview last week. "They're the ones who are choosing better coffee right out of the gate."

Nielsen data provided by Peet's shows that 58 percent of American households purchased coffee in the second quarter of 2015, up from 57 percent in the same period in 2014.

This was driven by growth in household penetration of the premium segment, defined as coffee sold in bags, to 18 percent from 16 percent last year.

On the other hand, economy coffee, defined as coffee sold in canisters, reached 28 percent of American households, down from 29 percent.

The country's largest brands showed almost no growth in dollar sales in the 52 weeks ended July 4, the data showed, with Maxwell House growing by 1 percent and Folgers registering flat growth.   Continued...