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Coffee and tea continue to gain market share in the beverage category, as consumers move away from carbonated soft drinks and look toward the health-haloed beverages for functionality, flavor and convenience.

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COLD COFFEE IS HOT

COLD COFFEE IS HOT
COLD COFFEE IS HOT

Overall coffee consumption has increased with Gen Z drinking different types of cold/iced coffee in both AH and AFH occasions. Among Gen Z, RTD cold brew coffee is driving that growth. Millennials were the first to adopt cold brew coffee but now Gen Z is taking the trend to another level: Technomic has reported a 36% increase in cold brew mentions on menus in the last 12 months. Gen Z coffee consumers also tend to be the most interested in new flavor options, indicating an opportunity for more flavored RTD cold brew coffees.

EXPECT MORE PLANT-BASED OPTIONS

EXPECT MORE PLANT-BASED OPTIONS
EXPECT MORE PLANT-BASED OPTIONS

The number of consumers who are incorporating plant-based proteins into their diets continues to rise and the main contributors to that strong consumer interest are concerns about personal and the planet’s health. As a result, plant-based options are now widely available across all food and drink categories, but innovation is felt to be lacking. 49% of US consumers agree that plant-based products need a greater variety of flavors, presenting an opportunity for brands to innovate around new and exciting flavors, and dairy-free options such as almond, coconut and other nut milks to breathe new life into RTD coffee and creamers.

CONSIDER FUNCTIONALITY

CONSIDER FUNCTIONALITY
CONSIDER FUNCTIONALITY

Consumers are increasingly more concerned about what they eat and drink, focusing more on labels, ingredient lists and production methods than ever before. This trend has encouraged coffee brands to innovate around better-for-you varieties with innovations focused around reducing additives, sugar and fat along with adding ingredients that provide functional health benefits. Coffee brands are looking into “super ingredients” such as MCT fats, taurine and spices that are associated with delivering psychological and physiological benefits. Functionality could also drive growth in creamers and RTD formats: according to Mintel, US non-dairy consumers show interest in milks that provide healthful benefits such as high in protein and vitamins/minerals.

HARD COFFEE INNOVATION

HARD COFFEE INNOVATION
HARD COFFEE INNOVATION

Beverage blurring is not a new trend, but it continues to define the beverage industry as brands look to stay ahead of shifting consumer preferences. Targeting a younger demographic of 21-plus consumer, coffee and alcoholic-beverage brands are stirring the pot with new products blurring category lines and introducing the hard coffees to the market. Offering low ABV and a bit of caffeine, hard coffee began to grow last year following the trend of brands bringing non-alcoholic beverages (seltzers, lemonade) into the alcoholic beverage category. As consumers look for more approachable ways to find their caffeine and for healthier alcoholic beverage options, many brands will continue to innovate around coffee and alcohol.

Coffee & Tea - Tea blurb

While coffee has been in the spotlight for some time, with the RTD coffee market expecting a trajectory growth upward of $18 billion by 2023 according to Packaged Facts, the RTD tea market is gaining its fair share of consumer spending, with the market expecting to hit $9 billion in the same period.

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Coffee & Tea - Tea 01
RTD TEA: A GROWING HEALTH HALO

As health concerns have steadily grown in recent years, ready-to-drink teas have begun to get a health-upgrade with a move toward all-natural ingredients and sugar reduction at the forefront of category innovation. According to Synergy Primary Research, 64% of consumers report their ideal RTD tea contains no artificial flavors; 60% seek no artificial colors; 54% seek no artificial sweeteners, and 51% seek low/no sugar. Health-centered reformulation also correlates well with the 51% of consumers reporting an increase in tea consumption as a result of looking for a natural alternative that is more flavorful than plain water.

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Coffee & Tea - Tea 02
CRAFT BREWING TECHNIQUES

As GenZ consumers come of age and increase purchasing power, formulators should look to different craft brewing techniques to appeal to this generation who has never lived without craft beer and customizable menu options. Cold brewed, flash brewed, and single-origin tea appeal to this group, especially if brands can highlight sustainability efforts and align with consumer health concerns at the same time. GenZ will continue to be an important group to consider when creating new products, as they lead the demographic currently purchasing iced tea products away from home (Mintel).

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Coffee & Tea - Tea 03
TEA REFORMATTED

In addition to health and processing upgrades and its duo-function as a clean energy source in sports nutrition products, tea is lending itself to other beverage categories, much to consumer enjoyment. Synergy Primary Research reports 58% of respondents would like to see more tea-juice hybrids, 37% would like to see more sparkling tea, and 34% would like to see greater variety spirit/cocktail options that include tea. Recent innovation also tea expanding outside of beverage categories as well, with more edible tea and snack options hitting grocery store shelves in 2020 (Mintel).

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NEW FLAVOR HORIZONS

Consumer desire for exploration in both their day-to-day and individual taste experiences has created a norm out of flavor exploration. As a result, we have seen an influx of new flavor profiles and blends hitting grocery store shelves. Mintel reports botanicals as a hot trend to watch within the RTD tea market, with ginger listed as one of the fastest growing flavors in retail products since 2018 (Mintel GNPD). Floral, herb, and spice profiles also further highlight tea’s natural connotation and offer the potential for added functional benefits and natural coloring.

Coffee & Tea - End Blurb

As consumers continue to take health and wellness into their own hands, coffee and tea provide an alternative, health-haloed route to exploration within the beverage space. From added functionality, to category blurring, to flavor revolution, two of the world’s oldest beverages continue to provide innovation in an ever-changing, consumer-centric market space.

[Coffee & Tea at Synergy]

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Crafted from the bean itself, Synergy Pure coffee essences and extracts provide the fresh-brewed taste consumers have grown to love.

Capture from the brewed leaf, Synergy Pure tea essences and extracts can build the perfect RTD tea, suitable for every consumer’s taste preference.

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