Younger coffee drinkers want to recreate the customized coffeehouse experience at home, according to new research from Packaged Facts.

The U.S. market for packaged and ready-to-drink coffee sold at retail was estimated at $13.5 billion in 2015, up almost 10% from the year before. By 2020, sales of packaged and ready-to-drink coffee in the U.S. are expected to close in on $18 billion.

Retail dollar sales continue to grow largely because of continued reinvention across the coffee industry, from k-cups to cold brew.

According to Packaged Facts, growth in the coffee industry can largely be attributed to three segments:

• Single cup coffee
• Cappuccino/iced coffee
• Refrigerated ready-to-drink coffee

At the same time, traditional coffee products (such as ground and instant coffee) have seen declines, which is consistent with data from the NCA’s National Coffee Drinking Trends Report (NCDT). While ground coffee remains the largest contributing segment to the category, single-cup has been quickly closing the gap.

The Generation Gap

“The coffeehouse revolution created a new generation of consumers who appreciate premium and specialty coffee,” says David Sprinkle, research director, Packaged Facts. “Retailers see the generational shift in the coffee category playing out on supermarket shelves.”

Even as younger coffee drinkers skew towards specialty coffee beverages, older consumers tend to prefer more traditional products (think pre-ground coffee in cans). As a result, today’s consumer base is increasingly polarized.

Packaged Facts suggests that retailers capitalize on the segment’s growth opportunities and adapt to the changing market landscape by aiming for a “total coffee” section, relevant to multiple generations of consumers. Read more.

To learn more about coffee consumption trends, check out the latest NCA market research.