U.S. Coffee And Tea Market: Trendy Coffee Houses and Healthy Lifestyles to Promote Consumption Growth

Beverage Crops October 23, 2017
Author: Anna Sergeeva
Market Analyst

coffee and tea market

Driven by ongoing economic and income growth, the rising popularity of coffee houses and coffee-shops, and the increasing awareness of healthy beverages in the U.S., the coffee and tea sector as a whole is expected to continue a steady upward consumption trend over the next few years.

According to market research conducted by IndexBox, in the wholesale prices, the U.S. coffee and tea market was estimated at $14.6B in 2016. This figure reflects total revenue of producers and importers (excluding logistics costs, retail marketing costs, and retailers' margins, which will be included in the final consumer price). All these numbers and trends refer to only roasted and ready to drink tea and coffee, not green coffee beans, therefore from this point forward, tea and coffee mean processed tea and coffee. The market value of coffee and tea showed significant +7.0% annual growth from 2008 to 2016. The significant growth seen in 2010-2011 was followed by a modest reduction over the next three years and a sharp rise in 2015, levelling off in 2016.

Coffee and tea represent two of the most popular drinks, both on the U.S. beverages market, and worldwide. U.S. continued economic growth and strong employment have enabled Americans to increase their consumption of coffee outside the home; this trend is set to continue in the immediate term. In addition, a change in the demographic structure, namely, the increasing number of adults in the population, will also exert an impact on the growth of coffee consumption. The U.S. market is also subject to influence from gourmet offers and trendy coffee houses. Coffee shops are now recognized as venues for day-to-day socializing and work; high-quality coffee products and skilled baristas as a profession are helping to support this trend. Given all these positive market drivers, as projected, tea and coffee consumption will increase at an annual rate of +2.6%, taking the market to $18.4B in 2025.

The U.S. appears as a key consumer of coffee in the world, posting robust levels of demand in recent years. Coffee can be considered a household staple in the U.S. and its consumption bridges the conventional defining categories of income, age, gender and state. Once a drink consumed only at breakfast, coffee is now consumed throughout the day. Coffee is also now known for its energy-boosting properties, particularly amongst young adults.

Besides coffee, tea is now also an integral part of the American diet: consumers are now more health conscious and are now sourcing alternative products to sugar-rich carbonated beverages. New products being launched onto the market and the increased level of health awareness indicate that the demand for tea will continue to grow. Tea's rise in popularity is linked to the current healthy lifestyle trend, causing Americans to substitute their usual drinks, which are often high in sugar, with more healthy alternatives. An extensive selection of teas and the emergence of new brands onto the market are forging an interest not only for the traditional black and green tea varieties, but also for special types and varieties of tea, in particular. Ready-to-drink tea is proving to be stiff competition for the traditional tea varieties: it is growing in popularity due to the fact that it is easy to consume, it benefits from an extensive product range and it is widely advertised. Ready-to-drink teas are considered as a healthier alternative to sugary beverages; these teas, however, are more costly than bagged tea in retail terms.

In 2016, the value of shipments in the industry reached $13.6B, rising with a CAGR of +7.1% from 2008 to 2016. Overall, the production volume trend coincides with the market trend pattern. Near 85% of tea and coffee consumption in the U.S. is supplied with local manufacturing, which illustrated a positive dynamic over the last few years. This refers to the local manufacturing of processed (roasted) coffee and processed (packed) tea, the raw materials for which are obtained by imports from the countries specializing on coffee bean and tea production.

As for the raw materials (coffee beans and tea), the U.S. relies heavily on imports in terms of its coffee bean supply (a very small amount of coffee is grown in Hawaii). The U.S. mainly buys in green coffee beans from Brazil, Colombia, Mexico, and Guatemala. Most of these green coffee beans are purchased by roasting companies operating under long-term contracts; these large coffee roasting companies also buy and sell on the commodity markets. Arabica and Robusta are the two main types of coffee traded in the U.S. Arabica is preferable in terms of taste, but it is generally more expensive. Coffee in the form of an Arabica and Robusta blend is mostly sold in retail terms in the U.S.

Given a major share of domestically produced coffee and tea, another 15% of the U.S. consumption are buoyed by imports. Despite that the share of imports in tea and coffee consumption decreased slightly (-2 percentage points) against the 2008 figure, it still indicates that imported tea and coffee are widely presented on the U.S. market. Canada remains a key supplier of processed tea and coffee, accounting for 4% of U.S. tea and coffee consumption.

The U.S. imports totalled $2.2B in 2016. There was a decline from 2012, which then stabilized after 2014. In 2016, Canada (104K tonnes) was the main supplier of processed coffee and tea to the U.S., making up 24% of U.S. imports. Argentina took the second position in the ranking, with a share of 12%, followed by Germany (9%), Brazil (8%), Mexico (7%), Viet Nam (6%) and China (6%). From 2007 to 2016, imports into Canada grew with a CAGR of +4.9%, while the highest rates of growth with regard to imports was in Viet Nam (+15.9%).

On the other hand, exports from the U.S. accounted for 9% of total coffee and tea production, which amounted to $1.3B in 2016. The main destination of the U.S. exports was Canada (114K tonnes), comprising 65% of U.S. exports. Korea ranked second in terms of the main export destinations, with a share of 5% of total exports, followed by Japan (4%) and Mexico (4%).

Do you want to know more about global coffee and tea market? Get the latest trends and insight from our report. It includes a wide range of statistics on

  • coffee and tea market share
  • coffee and tea prices
  • coffee and tea industry
  • coffee and tea sales
  • coffee and tea market forecast
  • coffee and tea price forecast
  • key coffee and tea producers

Source: U.S.: Coffee And Tea – Market Report. Analysis and Forecast to 2025