The North American Coffee Partnership, a joint venture set up by Starbucks and PepsiCo, continues to hold a commanding lead in terms of sales in the United States RTD coffee market, with a 72% off-trade value share in 2012. The company did see its off-trade value share decline from 77% in 2011, as it faced competition from Monster Beverage and new entrant WhiteWave Foods Co. The company?s Frappuccino was the first mover in RTD coffee, with a flavour approximating to the popular Starbucks blended drink of the same name. The brand also has a large advantage in terms of distribution from its first mover status, and new entrants often struggle to gain entry into national chained stores. However, Starbucks Corp has been challenged by a sharp decline in its signature iced Frappuccino franchise in recent years. To combat the issue, it has taken several measures, including introducing more RTD coffee varieties.
Distribution of RTD coffees has expanded into mainstream channels like supermarkets, Wal-Mart and drugstores. RTD coffees often have their own section away from energy drinks, or are positioned on the shelf next to ground coffee in these outlets. Leading brands, like Java Monster and Frappuccino, are also available in 4-bottle multipacks in these outlets, encouraging higher volume purchasing for home use, rather than the impulse purchasing that is more common in convenience stores. This move towards larger volume sizes has helped offset the entry of higher priced premium brands.
Despite an increase in health and wellness awareness, RTD coffee sales are expected to continue growing strongly. Off-trade value sales of RTD coffee are expected to grow by 27% between 2012 and 2017, to reach US$1.9 billion. Total volume is expected to grow by 22% over the forecast period to reach 358 million litres, compared to growth of 41% over the review period. The slowdown in sales is typical of a maturing category. Sales are expected to continue growing, as manufacturers are expected to launch more products that emphasise the healthy aspects of the beverages.
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