Sales through US coffeehouses have increased by 77% since 1998 to reach US$6.9bn in 2003.


The number of coffeehouses now exceeds 17,000. Primary factors driving this growth include the increased perception that coffeehouses serve superior coffee, an interest in the wide variety of flavours, blends, and drinks provided by coffeehouses, and increases in demographic groups that favour coffeehouses, comments research association Mintel.


Chains with more than ten units, such as Starbucks , account for nearly 40% of all coffeehouses. Nevertheless, independents still have the majority of market share with 57.5%, although this is a decrease in share since 2001 when they accounted for 61.6%.


The share of chain stores continues to rise, largely as a result of the rapid expansion of industry giant Starbucks, which opened 1,800 new outlets in 2002 and 2003. The increase in the number of independents is due to an almost identical increase of 1,800 new single-site independents in 2002 and 2003.


Three groups of coffeehouse customers have been identified by the research association. “Lazy Lattes” include respondents who do not prepare coffee at home at all and so rely upon coffeehouses, “Java Snobs” are high-income/high-education to-go drinkers who purchase for the quality alone, and the “Caffeinated Cultured” are lower-income singles who drink their coffee in the coffeehouses to enjoy the ambience of the coffeehouse.


Among respondents to the research project, nearly 60% frequent the chain coffeehouse, compared to roughly a third of all respondents who favour the independent. Starbucks stores account for roughly one third of all coffeehouses, and roughly one half of all sales (approximately US$3.4bn), even when sales from licensed franchises are excluded. With 5,400 coffeehouses in the US, Starbucks is more than 20 times the size of its closest competitor, Caribou Coffee. If a competitor fails to emerge, Starbucks will continue growing in size until its shops begin to cannibalise their own markets, making further growth unprofitable.


In terms of why one coffeehouse is selected over another, the survey found that a third of respondents select their coffeehouse based simply on location. Just over half of all Americans see prices at coffeehouses as too expensive. Those who visit coffeehouses once a week or more show the greatest concern with price, with over two thirds agreeing that the price is too high. Yet it appears that price is not deterring visits as significantly as one may think, as only 25% of Americans are cutting down on their purchases at coffee shops. Among those visiting once a week or more, agreement rises to 38%, more than one third of the market’s best customers.


Since at least 1998, there has been a declining at-home coffee consumption market against a rising coffeehouse market. Further, consumption in 2002 was down by 14.2% from 1980s levels, when Americans consumed 4.59kg. per capita, while coffeehouse sales have increased by 1200% or more since the 1980s. Mintel predicts total US coffeehouse sales to increase 46% by 2008.