starbucks nespresso coffee pods

Starbucks is gearing up to launch its first UK Nespresso-compatible capsules as sales of pods look set to pass roast and ground coffee within months.

Pods containing the coffee chain’s Signature Espresso and three single origin coffees - Guatemalan, Colombian and Kenyan - are currently rolling into Tesco with an rsp of £3 for a 10-pack. The launch comes as research for The Grocer reveals supermarket pod sales are on course to overtake standard roast and ground coffee after surging 29.5% to £137.5m [Kantar Worldpanel 52 w/e 22 May 2016]. Roast and ground is worth £167m, up 2.5%.

“This is a very interesting move and could signify a major push into the at-home category for Starbucks,” said an industry source. “It’s significant for two reasons: Tesco is the only big supermarket that doesn’t have an own-label Nespresso capsule; Starbucks has their own Verismo machine but it hasn’t been very successful.”

Pods carry a hefty premium over other types of coffee, and with only one in seven households currently buying, there remains considerable room for growth. “An average cup of regular instant coffee costs only 2p,” said Kantar analyst Ed John. “A café-style instant is 17p while the fastest growing sector - pods - costs an average of 31p per cup.”

Overall, sales of coffee through the supermarkets have climbed 3.2% to just over £1.1bn on volumes up 2.1% over the past year, with the growth in pods driving up average prices paid per cup.

“Single-serve coffee pods now account for 17.5% of coffee sales,” said Nigel Padfield, category & shopper controller at Jacobs Douwe Egberts, which produces a range of co-branded pods for the Tassimo system. “Single-serve represents a significant opportunity to expand sales.”