Image above: Target's private label coffee.
Coffee brands will have a lot to navigate in 2025, including the potential impact of economic fallout related to new tariffs which could be introduced under the Trump administration. Even without any potential new tariffs, “competition between coffee brands is going to heat up in 2025,” Rick Miller, partner at consumer data/research consultancy Big Chalk, told Marketing Daily.
The company recently published a report on the coffee category, based on surveys of a census-balanced representative of Americans about six month apart. While the number of consumers buying coffee remained relatively steady from Q2 to Q4 of 2024 at around 77% of respondents, the report also found some continued challenges for coffee brands in 2025.
Among the more surprising findings was a 2.3% increase in consumers saying they most frequently purchase generic store coffee brands, according to Miller. The increase was enough to make the “store brand” selection the top response, at 18.9%, eclipsing previous category leader Starbucks (which fell 2.6 percentage points to 16.8%).
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“Historically, coffee has had a degree of brand loyalty,” Miller said.
The trend coincides with consumers’ increased cost consciousness overall. While coffee prices remained relatively stable last year, the category is seeing the impact from consumers’ spending more across other areas and looking for places to cut back, Miller explained. “This is consumers finally coming up to the wall.”
That budget consciousness showed up in other ways in the report. Thirteen percent said they’d simply reduced how much coffee they buy, and 8.8% said they only bought coffee when it’s on sale.
According to Miller, that trend has less to do with the category than forces outside it -- and outside of consumers’ control.
“By 2023 into 2024, the inflationary effects on pricing for coffee had mostly stabilized. It wasn't another big jump in coffee pricing that caused this shift in brand loyalty from June to November 2024,” he said. “Rather, the typical consumer was being pressured by price increases in other places (home insurance, interest rates on credit cards, etc.) beyond their control, and were thus being forced to make spending tradeoffs in places like coffee.”
According to the report, recent increases in commodity prices for some coffee varieties could further fuel the issue in 2025, as the “10-30% wholesale price increases” during Q4 have likely not yet been passed on to consumers.
“The reason 2024 stabilized is, wages were increasing and inflation finally came down,” Miller said. “If inflation takes off again, that's going to be a big problem because we don't see wages going up again.”
What's the takeaway for brands? They should “keep an eagle eye on their pricing strategy [to] really be right on the price they’re bringing to the shelf and how they promote products,” he said. ”Especially for premium brands, they’re going to have to revisit marketing [messaging] to educate consumers on why it’s worth the extra money.”