| Coffee Retail |
For most American adults, a hot cup of coffee is a morning ritual. In fact, the average American consumes over 26 gallons of coffee annually, or roughly 400 standard-sized cups.
But coffee is clearly much more than an American phenomenon. Most European nations are even more voracious consumers than Americans on a per capita basis. The average Swede, for example, consumes over 26 pounds of coffee annually -- roughly three times the 9 pounds consumed per capita in the U.S and more than twice the 10 pounds consumed per capita in Italy, a nation long considered the coffee capital of the world.
And, Asia too is a growing market -- Chinese consumption of coffee, for example, has risen over +100% in the past 5 years. Tea is still the dominant source of caffeine in China, much as it was over 200 years ago in the U.S.; the average Chinese adult still consumes a faction of the amount coffee of the average American. But that's rapidly changing. Estimates call for about +16% annualized growth for the Chinese coffee market over the next decade or more.
With a global annual market of roughly 400 billion cups, coffee is far and away the world's most popular beverage. And consumers aren't just drinking more coffee than they have in years past, but they're also demanding more variety in their coffee diet. Whether it's lattes, espressos or a caramel mocha, the versatile bean can be used to make an almost endless array of hot and cold beverages.
With that in mind, it should come as little surprise that coffee retailing is an enormous, multi-billion dollar business. Popular chains like Starbucks and Dunkin' Donuts have spread to virtually every corner of the U.S. and have expanded rapidly overseas in recent years. And most sell far more than coffee alone -- Starbucks, for example, sells pastries, whole coffee beans, and related filters and brewing equipment.
| Major Players in the Industry |
| Starbucks (SBUX) |
| Green Mountain (GMCR) |
| Krispy Kreme (KKD) |
| Dunkin' Donuts (AED) |
| Peet's Coffee and Tea (PEET) |
However, just because coffee shops are already extremely prevalent throughout many American cities, that doesn't mean there isn't room for expansion. Even the largest player in the group, Starbucks, still has plenty of room to expand both in the U.S. and overseas. For example, although the firm already boasts over 12,000 worldwide locations, management's stated goal is to open up over 40,000 Starbucks stores by the time all is said and done. With this in mind, growing markets like Asia will increasingly become key growth drivers for Starbucks and other firms.
