Coffee Industry NEWS
The specialty coffee industry has experienced explosive growth during the past 20 years and is on a solid growth track for the future. The gourmet coffee segment is clearly on a growth track and has grown by more than 30 percent in each of the last three years by the late 1990's, specialty coffee sales will capture nearly 30% of the overall coffee market, up from 17 % in 1988 the specialty coffee industry, made up of home consumption sales and retail foodservice sales, will approach $5 billion in combined retail business by the turn of the century.
Sales of specialty coffee for home consumption are projected to double to an estimated $3 billion by 1999. At that time, retail foodservice sales of specialty coffee beverages will reach $1.5 billion in 15 years. 75% of all coffee consumption will be specialty coffee - up from just 18% today.
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Specialty coffee represents the only expanding market segment of the overall current $6.5 billion coffee industry. The gourmet coffee industry is growing at a rate of 15% per year, with the grocery store segment advancing 10% per year, and the retail segment 40% per year. The number of espresso bars and cafes will grow to more than 10,000 retail outlets by 1999, up from 4,500 in 1994, 1,000 in 1989, 500 in 1982, and just 250 in 1979. The specialty coffee industry grew to an annual retail sales volume of just under $45 million by 1969, more than $750 million by 1979, $1.2 billion by 1989, $1.6 billion by 1992, and $2.0 billion in total sales in 1994, which represented a 19% share of all coffee sold, up from 10% in 1983.
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30% of all coffee drinkers consume specialty coffees, which represents a customer base of approximately 35 million people. Espresso and cappuccino feature lower caffeine than regular coffee. Selling specialty coffee by the cup offers high gross profit margins.
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To give you a better idea of how big the specialty coffee market is today, the following information provides specific details about the leaders in this industry.
Starbucks Coffee: The leading player in the the specialty coffee industry is Starbucks. Based in Seattle, Washington. Since it was founded in 1971, it has grown to a company approximately 780 cafes and kiosks across the country today. Its sales for 1995 were approximately $450 million through its retail, specialty sales division and national direct mail business. Its goal is to have sales of $1 billion and 1500 units in operation by the end of the decade, adding approximately 215 units per year. Average unit sales volume is $805,000 per store.
The majority of Starbucks stores are in the metropolitan areas surrounding Seattle, Chicago, Vancouver, BC, Portland, Denver,
Los Angeles, San Diego, and San Francisco. Starbucks has entered the East Coast market by establishing a major presence in the Washington, DC and Boston areas. In 1994, Starbucks purchased The Coffee Connection, a Boston-based specialty coffee retailer with 25 stores and now has established a strong presence in the metropolitan Boston area. Starbucks coffee can also be found in Barnes and Noble, Saks, and Au Bon Pain. Earlier this year, Starbucks entered the Rhode Island market with a cafe on Providence's East Side and another in Newport with plans for more stores in the state.
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Gloria Jean's Coffee Bean Corp.: Gloria Jean's is a leading franchisor of cafes which are primarily located in shopping malls. Founded in 1979, the company has 249 retail stores and about $125 million in annual sales. Gloria Jean's is now owned by The Second Cup, Canada's largest specialty coffee retailer. In 1986, the company started expanding through the sale of franchises and now has stores in 33 states of which 80% are franchised units.
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The Coffee Beanery Ltd.: Another major specialty coffee franchisor is The Coffee Beanery, which has 173 units in operation, with sales of about $110 million. Its stores, too, are located primarily in shopping malls and in downtown office buildings.
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Quick'ava: Quick'ava offers drive-thru. Currently, it operates 12 double-sided drive-thru units in New England, mostly in Massachusetts. Last year, it opened its first Rhode Island operation on Mineral Spring Avenue in North Providence and is currently constructing another unit on Route 2 in Warwick. Average unit sales volume is $520,000 per store. Started in 1990 in Hingham, Massachusetts, the company claims to have 54 contractually-
committed units in New England. In 1994, Quick'ava was purchased by Chock full o' Nuts when it had just 4 units. Its expansion plans consist of operating 300 units in the Northeast and the mid-Atlantic states by the year 2000.
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Java Centrale: Another player in the specialty coffee cafe market is Java Centrale, which was founded in 1992. The company operates 11 cafes which are franchised. Based in Texas, primarily on the East and West coasts.
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