This burst of demand, it needs emphasizing, was unexpected. That makes looking at the current situation, where consumer demand for flour-based foods is vulnerable to attack on many fronts, a difficult place to forecast a repeat performance. Yet, taking a close look at what is happening in many parts of food service tempts this speculation about another unexpected episode becoming a powerful positive influence on consumption.
As was the case in the 1960s when the emergence of McDonald’s thriving hamburger chain drove the climb in demand for buns, it is the Starbucks chain and its arch rival, Dunkin’ Donuts, that are now seeking to build their coffee business by innovating with baked foods. McDonald’s also is once again involved with its own pursuit of coffee-drinkers. Starbucks has taken the added step of acquiring a leading West coast baking business, declaring that the purchase is aimed at improving the quality of the baked foods the chain has been offering. Besides its base donut business, Dunkin’ Donuts is expanding the range of offerings with the same goal in mind, even going so far as to claim that its breakfast and lunch sandwiches equal the best of McDonald’s. Considering the thousands of outlets these coffee-serving chains operate, their relatively new or renewed focus on what are flour-based foods ought favorably to affect overall demand.
Of some consequence in understanding this potential is gaining an insight into the coffee market itself. Without counting retail bakery shops that have recently decided to offer coffee to their customers as an added incentive to stay and shop for baked goods, the influence of this beverage on drinking and eating habits may hardly be overstated. The major push by McDonald’s for its coffee underscores this. The rising importance of breakfast to food service success is another consideration.
Relating coffee sales to demand for grain-based foods is definitely a bit of wishful thinking since current forecasts point to annual growth in packaged coffee sales, at 4 per cent, for at least the next five years, whereas the outlook for grain-based foods in the same period barely exceeds 1 per cent. Both of these annual gains are not just for America, but for the world at large.
If packaged coffee is posting an annual increase of 4 per cent, it seems almost certain that various aspects of food service are surpassing this already sizable growth. In emerging markets, coffee is establishing itself primarily via food service, and that is where a huge chunk of expansion is anticipated in both the Western Hemisphere and Europe. More than 40 per cent of packaged coffee is controlled by two companies, Nestle and Mondelez International, and while their promotions focus on package sales for home consumption, their campaigns are credited with food service gains. Food service breakfast growth is influenced in part by the innovations applied to new baked foods meant specifically for this meal. Grain-based foods has long recognized that reversing negative consumer attitudes requires product innovation of the sort that once occurred with hamburger buns and now may reflect food service efforts to attract coffee drinkers with new baked foods.