Sales of standard coffee may have been stagnant over the past year, but they are still significant. TNS data values the standard instant coffee market at £425m [52 w/e 18 June 2006], giving it a 32% share of the hot beverages category.
Nescafé Original is the number one brand, followed by Nescafé Gold Blend. Ruth Willis, strategic planning manager for Nestlé hot beverages, says: "Value growth in the market is coming from premium lines and from price increases. We have passed on some increases to consumers, but it's only a matter of a few pence on a jar.
"There is growth in ground, but it's not over-dramatic. It has to be put into perspective. Ground accounts for 10% of total cups of coffee consumed, growing at a rate of just 1% year-on-year.
"Clearly, for us regular coffee is still significant as it's a huge part of the total category. We can't deny it and we don't want to lose space dramatically in the aisles."
Willis claims that Nescafé has a 60% brand share of the instant coffee market and is number one by a long way. She views own label as the brand's key competitor and is keeping an eye on it accordingly.
However, she admits that manufacturers need to do more to drive in-store sales and add excitement to the standard category.
"For us that means promotions - added-value ones such as those featuring Trinny and Susannah - and deep-cut promotions, because consumers have come to expect this type of offer now."
There has been criticism that too much coffee is sold on promotion, but Grant Rosewarne, MD of Douwe Egberts, says that the industry is looking to move away from deals. "Usually, if a brand is struggling, manufacturers resort to price promotions and even we've been guilty of that," he says.
"However, I don't believe it's out of control, because there's more loyalty in coffee than in many other categories."
Rosewarne believes innovation is the answer to driving sales. "We're launching 22 new products this autumn - we've never had so much NPD. But as a branded manufacturer it's our responsibility to add value to the market. If we rely simply on the brand values without innovation, then we'll lose out to own label."
This NPD activity comes at just the right time as consumption figures reveal some worrying trends. TGI data, for instance, has found that the number of adults drinking instant coffee has dropped by 3% in the past three years, and there is an 11% drop among 15 to 34-year-olds, who are more likely to have discovered 'coffee shop' coffee.
Nestlé's Willis says that, despite some decline in consumption, she is confident that standard coffee won't lose its daily role in British life.
But Rosewarne is less convinced. He believes that coffee's future lies with pod machines as well as roast and ground, and predicts that the instant market is going to decline dramatically within the next decade as consumers finally move away from instant coffee .
"There will be no growth in the instant coffee category. Over the next ten or 20 years it is going to endure a slow death. Growth is coming instead from roast and ground as well as liquid coffees. Instant is not the future; it's the past."
With this in mind, he adds that retailers need to be more savvy about how they merchandise the fixture. "Retailers need to learn from the out-of-home market and stock more premium products," says Rosewarne.
"We have 22 new products, but there is no room on the shelves for them all. Should you be punished because you've got something ultra-innovative but there's no space on the shelves for it?"n