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By Emma Williams
Special to the Financial Independence Hub
Are you currently working from home? If so, have you noticed changes in your daily coffee consumption after your usual work schedule was placed on hold?
COVID-19 has changed many aspects of working individuals’ daily lives, including their coffee routines. Players in the coffee industry have been in survival mode as their creativity is needed more than ever to stay successful in today’s business landscape. Unfortunately, for those in the office coffee service industry, the pandemic is taking a significant toll, making it increasingly important to understand changes in consumer behavior.
The office coffee service industry is experiencing a 40 per cent revenue loss, which is the greatest setback in the industry’s history. The Freedonia Group, a market research organization, does not expect a recovery in the coffee service industry any time soon with the recent ongoing changes.
One example of a critical change is when the Centers for Disease Control and Prevention urged employers to close off shared spaces and invest in single-serve items for their workers as opposed to communal items, such as coffee pots.
Closing offices and pushing workers to instead be productive from home furthers the shift in coffee consumption in the face of COVID-19. More than 90 per cent of people who are working remotely end up drinking homemade brewed coffee. Instead of drinking coffee at the office, consumers are now ordering coffee subscriptions and purchasing online more than ever. By selecting different blends and customizing their coffee subscriptions, they are attempting to achieve the “away from home” quality of the coffee.
U.S. office workers’ coffee usage during the lockdown
These direct-to-consumer sales completed through coffee subscription, mail-order sales, and delivery is the best way for companies to tap into new areas of growth in the office coffee service industry. Regular instant coffee will no longer satisfy coffee drinkers as they work from home. Compared to the February to March period, subscription sales were up by 109 per cent during the March to April period. Also, in comparison to March 2019, packaged coffee sales in the U.S. in March 2020 were up by 70 per cent. With a focus on at-home consumption, the negative impact will not be as detrimental because of the limited elasticity of coffee demand.
During the pandemic, subscriptions have become increasingly popular. Many companies are seeing five times more daily subscription sign-ups now versus pre-COVID-19. They are also noticing increases in subscribers who log back on to repurchase bags of coffee that they enjoyed. Subscription growth is on the rise and continues to deliver above-market growth. These increases can be explained by the convenience subscriptions bring to coffee drinkers. By investing in options that can be delivered directly to consumers’ homes, busy workers can continue their coffee drinking routine.
The quality and convenience of direct-to-consumer sales are not the only reasons subscriptions are appealing during the lockdown: safety precautions play a major role too. Going out in public spaces during a pandemic feels risky and uncomfortable for many people. When people do go out, they prefer to spend as little time out as possible.
Being able to research brands before purchasing coffee as well as having contactless deliveries are some of the reasons people choose coffee subscriptions during this time.
People are also looking for ways to reduce stress alongside health and financial concerns amidst the pandemic. By sticking to their normal routine of drinking coffee during workdays, they stay productive and reduce the financial burden of paying for an overpriced coffee on their way to work.
During this time, consumers are beginning to realize that brewing coffee at home is a significantly less expensive alternative than visiting coffee shops each day (spending an average of $1/day versus $5/day, the equivalent of $20/month versus $100/month). Office coffee service operators have a fighting chance to rebuild their business once they understand this change in consumer needs and start to focus on providing more at-home coffee options.
Emma Williams is a content manager at a tokenized assets platform, Cocoricos. She enjoys diving into new aspects of life, learning as much as possible. Emma believes that technology innovations are the future of business and spends a lot of time monitoring the latest news of a tech world and researching the technology impact on investing and financial markets.”
