The RTD (ready to drink) coffee category first became a major soft drinks category in Japan, and well over half of global sales still occur there. However, category maturity, demographic issues and changing coffee consumption patterns are all weighing the Japanese category down. Growth is minimal and Japan’s importance to the global category is falling with each passing year.
North America is now the centre of global growth
North America will see more value growth than any other region over the forecast period. For a long time, Starbucks’ Frappuccino dominated the market, but it has been joined by a wide range of alternatives, including cold brews, health-positioned functional drinks, and several new brands from CocaCola. The Frappuccino is still important, but the North American RTD coffee market of the future will be much more segmented than it is today.
While in some East Asian countries Japanese-style canned coffee predominates, in most other countries where there is a sizeable market, American-style bottled coffee is the most important format. This is in no small part thanks to the increasing presence of Starbucks in the category globally. Latin America and Western Europe have both been recent targets of Starbucks’ expansion in the category.
Functionality and indulgence are the category’s two key attributes
Japanese-style products have tended to skew towards inexpensive functionality, and American-style ones towards indulgence, but the lines are getting blurred. Consumers across the world want products that are enjoyable but they also want a range of new functionalities from their coffee. Energy remains the core functional attribute of RTD coffee, but other nutritional benefits are being experimented with and will be a key feature of many new product launches in the category.
Bottles are the future of the RTD format
The faster growth of bottles shows that American-style bottled coffee is winning out over Japanese-style canned coffee at the global level. Metal cans are shrinking in unit sales, even with the boost provided by the emergence of energy drink-style products, like Java Monster, that usually appear in metal cans. Meanwhile, bottles, which encourage slower, more enjoyable consumption, are growing faster in all regions, and even in Japan itself.
Bottles are associated with indulgence because they are designed to be re-sealed and the contents consumed over a longer time interval, while cans are designed to be drunk in a single sitting and thus are usually used by brands aiming at functionality.