Americans’ Love for Pumpkin Spice has Made it a $600 Million Industry
Pumpkin Spice Lattes have almost become synonymous with fall. The blend of ginger, nutmeg, cinnamon and allspice was created by McCormick & Company in 1934 as an alternative for all four spices to make pumpkin pie. But now, many argue that the spice’s rise to fame is due to Starbucks introducing a beverage in 2003.
Every year during autumn pumpkin spice products are introduced in market, range from coffee to cereal, cookies, and even dog food. The consumption is increasing every year. As per the data from Nielsen and Forbes' the pumpkin spice industrial complex became a $600 million market in 2018.
The beverage sales of pumpkin spice account for about $120 million, out of which only $10 million is from chains like Dunkin, Peet's and Tim Hortons, and a whopping $110 million is from just Starbucks. Other than beverage, pumpkin spice ice cream accounts for yearly sales worth $10 million, pumpkin pie filling makes it to $130 million in sales, and pumpkin-flavored dog food for Fido is at $109,5 million and sees an increase of 123% year over year.
The Neilson analysis states that total sales of pumpkin-infused personal and household goods as well as food and beverages increased by 80% from 2011 to 2015 in super-markets and convenience stores across the U.S.
The love for this spice mix has been put down in numbers by a special interest enthusiast network PASHpost. The company conducted a poll based on a ‘Love It or Hate It’ responses and 79% of respondent's "love" Pumpkin Spice Latte, while 21% of those surveyed "hate" the seasonal beverage.
Many psychologists suggest that the reason for this is in the neurons that respond positively to some smells according to seasons. Another neurological study published by Dr. Jordan Lewis, a neuroscientist at Penn State College of Medicine, applied the reactance theory to behavior associated with seasonally offered products as it relates to memory association. He also adds that humans also are motivated to respond to ‘offers’ when they feel that the choices and alternatives are limited. Pumpkin spice marketers are very well aware of this and leave no chance to make people increase its consumption.
The reason for the high popularity of the spice mix is also the availability. According to stats from United States Department of Agriculture [USDA] in 2017, about 40% of pumpkin acres were grown in Illinois, Indiana, Pennsylvania, Texas, and California. As per the data from Agricultural Marketing Resource Center [AMRC], processed pumpkin products are made from 15% of the pumpkin acreage. Out of all the processed food, Libby's Brand Holding holds approximately 90% market share in North America's canned pumpkin products.
Since the drink’s inception in 2003, Starbucks has sold over 350 million Pumpkin Spice Lattes [PSL]. Motivated by the increased sales this year, Starbucks introduced its PSL for the season in the last week of August, the earliest date since 2003. From 2011 to 2016, McCormick also saw sales of their Pumpkin Pie Spice increase by 80%. Many companies are introducing their pumpkin spice products earlier and earlier each year, to get their piece of the pie. The flavor, that used to be meant for fall, has found market in summer too.
The rise in sales of the spice mix is now being looked as a growing industry, but the sudden rise also holds the potential of fatigue from consumers. However, the payoff is worth for the brands right now.
A study conducted by MagnifyMoney of 200 products, shows that the prices of pumpkin spice-flavored items at grocery stores and coffee shops are higher and customers often pay a premium for the perennial autumn flavor. This ‘pumpkin spice tax’ can even be up to 133 % higher on a per-unit basis. This study also found that the highest tax on PSL was charged by Starbucks. The coffee chain charges one dollar more on a PSL of 16-oz. compared to their regular Caffe Latte.
Between all the love and evil, pumpkin spice is here to stay and has become a taste of fall. Companies are betting on the flavor and the market size can increase or completely dip.
By then, Pumpkin spice is enjoying its own fame and social media love with over 500,000 posts on Instagram tagged with #pumpkinspicelatte, and 1.2 million posts across social media with the hashtag #PSL.
Meeta develops credible content about various markets based on deep research, opinions from experts and inputs from industry leaders. As the managing editor at Smart Market News, she assures that every piece of news and article adds to the knowledge of decision makers. An avid bike rider, Meeta, is a postgraduate from Indian Institute of Journalism and New Media (IIJNM) Bangalore, where her specialization was Business Journalism. She carries experience from mainstream print media including The Times Group and Sakal Media Group.