The above quote is from Chris Costagli, vice president of food insights lead at Nielsen IQ (NIQ), during his recent National Coffee Association (NCA) webinar, “Mastering Omnichannel Sales in the Coffee Industry” in which he informed attendees that more than half of all food and beverage unit sales originate in the food channel, but in the past year, 3.6 billion units disappeared from the in-store food channel, 67% of which was due to lost sales. Furthermore, the in-store food channel lost 2.41 billion units that completely disappeared from the FMCG industry altogether.

The lost sales can be attributed to consumers:

• Scaling back to reduce spending
• Buying less due to GLP-1s (weight loss drugs)
• More away-from-home consumption

Rising food prices remain top of mind for shoppers so they are buying less. Costagli said the F&B sales in the food channel have trended negatively over the past few years, falling 1.8% in the last year. As such, consumers are taking action to manage spend, and most shoppers have made changes to how they shop to save money — 87% have changed how they shop to save money, and they are using an average 3.9 strategies to do so (such as switching to lower-priced options, buying their favourite brands only when on sale, buying the brand that is on sale, buying essential items only, etc.).

And while 67% of in-store food channel unit loss is due to discontinued purchases, 34% of in-store food channel lost units are unaccounted for. Costagli explained that the ‘lost units’ shifted to other channels, the majority of which were purchased online. “Those shifting trends plus online growth underscore the importance of an omni strategy,” he said, adding that online sales grew 17% over the past year, driven by growth in every department across the store.

Consumers are shopping online – 85% order from pure play online retailers for home delivery and 69% order delivery from hypermarket, supermarket, mass stores – and they are experimenting with emerging retailers like TikTok. “The power of social media is significant and is something that should be used in omnichannel marketing,” Costagli said, adding that consumers using TikTok Shop are being introduced to new brands they did not already know, creating opportunity for some manufacturers and more competition for others. He shared that 62% of TikTok users are familiar with the TikTok shop experience and another 62% of TikTok users are open to making a purchase through TikTok Shop.

In online outlets like TikTok, influencers can have a huge impact, so Costagli suggested brands/manufacturers should lean into social platforms to drive awareness and capitalize on viral opportunities. During the webinar, he highlighted several ‘coffee influencers’ such as Morgan, the 2022 U.S. Barista Championship winner who is teaching 6.2 million TikTokers how to create the best coffee, while Cosette, a TikTok creator who has grown her page to 781.7K followers by sharing how she makes barista-style lattes at home for a fraction of the price.

Social shopping is in its infancy but already its showing strong signs of growth. NIQ revealed that shopping on TikTok generated >$2 billion in CPG sales over the past year. Health and performance food products account for nearly a quarter of TikTok food sales, driven by influencers showcasing health and wellness products.

Gen Z shoppers are more likely to be using third party apps to shop online and they believe AI-enabled tools provide helpful benefits that support their shopping needs. Hence, the smartphone’s role in shopping is evolving and influencing decision making more than ever. “Shoppers are turning to AI for everything from meal planning to diet advice and party inspiration. AI has the potential to influence what consumers buy and where they shop. Within seconds ChatGPT can give consumers product recommendations, suggestions on where to shop and much more,” Costagli explained, adding, “that has real implications for retailers and manufacturers: is AI recommending your brand or your stores?”

Simplicity and trust are paramount when it comes to shopping online. And with only eight seconds to engage online shoppers, it is critical that product information is accurate with the most important callouts. “Above all else, the online shopping experience must be optimized for a ‘Mobile First’ consumer,” said Costagli. NIQ research found that when shopping online:

• 77% of shoppers expect the online product titles to be more specific and transparent,
• 76% of shoppers prefer to have enhanced product content available when purchasing online,
• 90% of online buyers say that primary image quality is the most important factor in an online sale.

Costagli advised brands/manufacturers to create the perfect online store by partnering closely with retail partners and to drive online performance through availability, visibility, and content attractiveness. “Getting the online experience right for shoppers translates into growth.”

Coffee benefitting from the omni space — in fact, a quarter of coffee is sold online. Costagli shared that retailers sold nearly $6 billion worth of coffee online over the past year, up approximately 13%.

“The limits are endless, there are so many options online,” he said. “An omni strategy for coffee can tap into subscription services and direct-to-consumer and can benefit from a strong social media presence. Social media platforms like TikTok Shop are exposing consumers to brands and varieties not found in traditional retailers. This means that the competition for manufacturers is even stronger, including competitors that might not be on your radar.”

Meeting consumers online is a valuable proposition for retailers and manufacturers alike. Consumers are spending more online for coffee than they do in-store and they are buying more. Furthermore, online coffee shoppers are buying more units per occasion which suggests more variety seeking. Costagli advises retailers and manufacturers to promote incremental unit purchasing with wider selection and with purchase incentives.

According to NIQ, non-traditional channels are showing 31% growth in units per shopping occasion. Like TikTok Shop, non-traditional online channels are giving shoppers variety. For coffee drinkers, this means new experiences and flavours. For manufacturers this underscores the importance of innovation, especially in traditional retail both online and off.

Online coffee buyers are more affluent than those who buy coffee in brick ‘n mortar stores. Gen X, millennial and Gen Z consumers all engage differently so it’s essential to know your customer base, said Costagli and asked, “are your brands optimized online to reach coffee buyers where they are?”

No matter the type of site, it’s a fact that consumers are buying coffee online. To find success online, Costagli stressed that manufacturers must prioritize optimizing their search engine visibility and strengthening their social media presence to stay competitive and drive sales. “Navigating today’s market requires a relentless focus on the consumer.”

Vanessa L Facenda, editor, Tea & Coffee Trade Journal.
Keep in touch via email: vanessa@bellpublishing.com Twitter: @TCTradeJournal or LinkedIn: Tea & Coffee Trade Journal

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TikTok’s 1.5 billion users make it a hugely influential tastemaker in the beverages space, particularly for Gen Z. And not just because of the volume of global users – but because TikTok is increasingly the platform Gen Z uses as a search engine over more traditional services like Google. In short, TikTok simply can’t be ignored. 

The at-home revolution 

With millions of creators sharing aspirational daily routine videos, how-to instructionals and recipes, we’re seeing tea and coffee beverages being prepared by consumers in highly innovative ways, which would previously only have been attempted in foodservice channels. From frothy matcha + vanilla oat milk lattes to rose milk tea with Lindt chocolate balls, these videos reference health trends, flavour innovation and moments of indulgence for consumers seeking to elevate their everyday consumption experiences.  

These videos are inspiring an at-home revolution, with consumers replicating the recipes, and developing new products of their own. What seems like light-hearted fun with beverages could indicate a major shift in consumer behaviour post pandemic and the resulting economic downturn.  

During Covid-19 we saw major growth in the trend for ‘in-speriences’, with consumers seeking new product experiences from the confines of their own home. This led to a surge in creativity, and at-home replication of typical out-of-home serves. As consumers look to tighten their belts, affordable indulgences such as coffee and tea drinks at home offer cost-effective ways to treat themselves.  

Here are some of the trends that are demonstrating this shift:  

TikTok Trend #1 – At-Home Coffee Station 

ASMR-esque videos of TikTok users creating their own ‘coffee stations’ have received millions of views on the app. In a bid to create an indulgent space, replicating the out-of-home experience, these videos show users organising their cups and coffee ingredients – pods, flavoured syrups, sugar, honey etc, in an aesthetically-pleasing way, ready for their next coffee break. 

Many users link the need for a coffee station with the shift at working from home post-pandemic, demonstrating the continued need for products that create a treat and indulgent moment at-home. It’s also highlighting the importance of coffee products that are visually appealing. 

TikTok Trend #2 – Tea Bombs 

Tea Bombs – a blend of tea and botanicals contained within a dissolvable sugar shell – have proved a huge hit on TikTok with users falling in love with the cutes-y aesthetic. And it’s easy to see why – tea bombs bring a sense of theatre to the process of drinking tea, with the glittering orb melting away to reveal the tea and botanicals within.  

This is perhaps one of the most challenging at-home serves we saw users of the platform create but does demonstrate the lengths to which consumers are going to create the sense of fun and indulgence at home, while seeking a creative outlet. 

TikTok Trend #3 – Replicating Foodservice Recipes 

TikTok users are not immune to the financial concerns facing consumers around the world, many of whom are looking for ways to reduce their spending, while maintaining affordable indulgences, to make themselves feel good. This cost consciousness is driving the trend for videos replicating foodservice recipes at-home, using store-bought ingredients, and showing a comparison of the cost equivalent per recipe.  

Rather than see this as stealing share, foodservice operators and beverage brand owners can facilitate consumers looking to shift consumption by developing branded products designed for the retail space. Starbucks even has a whole section of their UK website dedicated to ‘make it at home’ recipes for many consumer favourites. starbucksathome.com/gb/recipes  

TikTok Trend #4 – Tea Lattes 

For many years, coffee has been the focus of out-of-home innovation, with foodservice outlets offering an exciting range of seasonal coffee flavours, different serve-styles and milks driving consumer intrigue. However, tea is having a moment driven, in part, by the phenomenal growth of bubble tea premiumising and modernising the tea-drinking experience out-of-home. 

These innovative serves have inspired creators to develop a wide range of tea recipes on TikTok ranging from tea lattes to homemade boba tea, which we expect to drive greater innovation and engagement in tea consumption out-of-home too. 

TikTok Trend #5 – TikTok as a trend monitor 

Picking just a few product trends from TikTok wasn’t easy and there is a staggering range of content being developed by innovative creators. It’s a rich source of ideas, and if these videos are anything to go by, our industry is heading in so many exciting new directions. But TikTok isn’t just a place for NPD inspiration, it’s also a place where attitudes are forged. Creators, often with a huge and dedicated following, can shape the worldview of their followers, and bring significant issues to the fore.  

One such topic is sustainability. Views of environmental content on TikTok have increased six-fold over the past year, and the top 40 climate-related hashtags have received 85 billion views in the last year alone (TikTok, 2022). Content creators are driving awareness, sharing ways to live more sustainably, and encouraging their viewers to become more involved in environmental issues.  

For the beverages industry, this could manifest in several ways – including an expectation that companies look to reduce waste, source products sustainably, and live up to ethical values. Brands and suppliers would be well-advised not to underestimate the importance of this trend for young consumers, and the power of capturing their admiration for delivering ethical, sustainable products.  

Whichever direction these trends take you in, there’s no denying that TikTok is an increasingly important place to understand how Gen Z is thinking about beverages.  

If you’d like to find out more about the trends and dynamics that are shaping our industry, why not download our Global Beverage Trends Report 2023? 

• Siân Edwards is Finlays’ group insights manager, responsible for understanding the trends and dynamics that drive the global market for tea, coffee and botanical ingredients.

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Flight Fuel’s name is inspired by Chris’s celebrated “Flying for Coffee” series. What first began with a video of Chris flying across the country to bring coffee to a friend quickly grew into a viral phenomenon with over 140+ million views of the series on TikTok alone. Chris has since delivered coffee to the likes of Vice President Kamala Harris, Austin Butler, Drew Barrymore, Meghan Trainor, Sabrina Carpenter, Noah Centineo, Ashley Tisdale and many more.

Speaking about the launch, Chris said “Coffee has been a passion of mine for years, so launching Flight Fuel is a dream come true. This brand is over a year in the making, from taste testing to developing the brand identity, and I’m so excited to finally deliver this first-class coffee to the world!”

Sustainability is at the forefront of the brand’s mission. All of Flight Fuel’s shipping partners are 100% carbon neutral across the entire supply chain, with an offset carbon footprint across its fulfilment network. The brand has also partnered with Ecologi, who will plant a tree with every sale made through the website. Flight Fuel also offers stainless steel travel mugs and a reusable cup to encourage consumers to reduce their use of single-use paper and plastic cups.

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Another new trend is making Dalgona coffee or whipped coffee. Actually, the trend is not only making the coffee concoction at home, which calls for only four ingredients, but then posting “your creation” via video or picture on Instagram or TikTok because of its aesthetically pleasing appearance. Hence, its “’Gram-worthy look” and easy recipe led the coffee beverage to go viral. I had never heard of Dalgona coffee until it started popping up on several of my news feeds (even People Magazine and the TodayShow.com have reported on it and explained how to make it).

According to Elite Daily, TikTok creator @iamhannahcho appeared to kick off the trend in March by sharing a recipe for whipped coffee.

Apparently, the coffee originated in South Korea and is called Dalgona coffee because of its similarity to a popular candy there, toffee dalgona (I have no idea if “Dalgona” should be capitalized or lowercase because I’ve seen it both ways). As previously mentioned, the coffee requires only four ingredients: instant coffee, sugar, water and milk (any kind will suffice: whole, skim, oat, almond, etc.). First combine equal parts of instant coffee, sugar and boiling water, then whip with a hand blender or whisk until frothy — the consistency of whipped cream or meringue. Then simply spoon atop a glass or mug of milk — hot or cold. You may drink as is or blend it.

Given the craze, the simplicity and since I had all the ingredients (I’m not an instant coffee drinker but I keep a couple of sticks/pouches on hand for baking purposes), I decided to try it. For a single serving, I mixed two tablespoons of instant coffee with less than two tablespoons of sugar (I do not typically use any sweetener in my coffee) and two tablespoons of boiling water and then whisked the mixture by hand for about three or four minutes until soft (yet slightly stiff) peaks formed. I placed the whipped topping atop cold skim milk and then blended gently with a reusable straw.

I recommend blending the topping into the milk, otherwise it will be just a glass of milk followed by the topping, which I found to be not as desirable on its own. As someone who does not drink instant coffee, I was taken aback by how strong and bitter the coffee was, even blended – and the instant coffee taste lingered for quite a long time. In retrospect, I should have used more sugar to cut the bitterness. Additionally, a higher quality instant coffee would likely improve the taste.

While it’s not “my cuppa joe,” I understand the appeal of Dalgona coffee. It’s easy, fun to make and visually appealing. And after stay-at-home directives are lifted and people are entertaining again, homemade Dalgona coffee would be something unique to offer guests (who are not coffee aficionados).

Since first learning about Dalgona coffee, I have come across other articles (but not with the popularity or visual appeal of Dalgona coffee), with suggestions of other drinks to make with instant coffee once “you’ve mastered Dalgona coffee.” Will these new at-home coffee trends boost sales of instant coffee?

Coffee has not been one of the hard-to-find items during the Covid-19 pandemic. And here in the US, instant coffee is not a popular format. However, according to its new report, The Impact of Coronavirus on Hot Drinks, Euromonitor International reveals that the availability of instant coffee might be affected during this period (globally). “Fresh coffee is generally not seeing high rates of panic buying given its natural expiration. Instant coffee, as it is more shelf stable, has been more affected and will probably see bigger declines in sales later, given how well stocked many consumers are now,” noted Matthew Barry, senior beverages analyst, in the report.

However, depending on how long people are quarantined and the visual and potential viral appeal of coffee drinks, it will be interesting to see what may happen in the instant coffee sector.

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