September 6, 2022
(press release)
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Despite consumers battling against the rising cost of living, coffee and tea shops are currently the least at risk from emerging frugality trends owing to their low-value position and established habit in many consumers’ daily routines, found GlobalData. The leading data and analytics company notes that the businesses most at risk include leisure venues, pubs, clubs, bars, mobile operators, and takeaways. GlobalData’s 2022 consumer surveys also revealed that the number of US consumers who claimed to spend a ‘high amount’ in coffee and tea shops only decreased by 1% in Q3 compared to the first three months of the year. This is compared to spending habits on food and drink in other outlets, such as leisure venues where people who spend a high amount on food and drink has decreased by 7% in the same period. This is further backed by GlobalData’s market forecasts. By the end of 2022, GlobalData predicts that the value of hot coffee served in foodservice outlets will increase by 10.5% in the US, compared to its value in 2021.This applies especially to foodservice outlets in travel (11.7%) and restaurants (10.6%).** Jenny Questier, Senior Analyst at GlobalData, comments: “This is perhaps owing to the ‘lipstick-effect’ of a retained inexpensive luxury. With consumers returning to the workplace, these purchases are a relatively low-value indulgence that makes up part of a classic office ritual—the coffee break—that gives people a chance to socialize, get some steps in and break up the working day. As an already established behavior, many people may be reluctant to give up this ‘justified treat’. “On the other end of the scale, spending on food and drink in typical leisure venues or restaurants must be counted, in consumers’ minds, alongside additional entertainment or activity costs. When a family trip to the cinema likely includes visiting a restaurant afterwards, many may opt for cooking at home and Netflix, cutting out these types of activities altogether.” According to GlobalData’s Q3 2022 consumer survey, the number of US consumers who said they visited coffee or tea shops once a week or more was 34%, compared to leisure venues at 25%. Ramsey Baghdadi, Foodservice Analyst, comments: “As well as the workplace, tourism is a key driver for hot coffee, as it is a favorable beverage to keep tourist energy levels high. However, coffee and tea shops will need to go the extra mile to stand out from the competition, especially in pressing times of inflation. Price promotion opportunities through apps and loyalty schemes will be vital for these companies’ survival, as price and quality remain at the forefront of many American consumers’ minds.” * Data from GlobalData’s 2022 Q1 and Q3 global consumer survey **Data from GlobalData’s Market Analyser: Product by Channel, last updated 28th June 2022.
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