The global coffee market is projected to grow at a CAGR of 4.28% during the forecast period (2022-2027).
The COVID-19 pandemic has placed additional pressure on the coffee sector which is vulnerable to fluctuations in international coffee prices, low productivity levels, and climate change effects and damages caused by pests and diseases across the globe. Furthermore, governments have imposed measures, like social distancing and lockdowns, in place, which has had a huge impact on cafés, micro-roasters, restaurants, and other out-of-home outlets which had a dynamic impact on the market. However, the current trend toward online shopping for at-home consumption is forcing retailers, roasters, and consumers to adapt to this new reality. Therefore, this factor is expected to increase the consumption of coffee around the world. For instance, companies such as Nestlé SA had reported strong retail demand for food and beverage products globally, achieving 4.4% organic group sales growth in the first quarter of 2020. Coffee sales were particularly robust as consumers stockpiled essential items during the pandemic.
The convenient forms of coffee, like coffee pods and capsules and instant coffee, are becoming popular among the masses (especially in North America and Western Europe) to prepare good coffee in the comfort of home, in less time. For instance: as per the survey conducted by the National Coffee Association in the United States, more than 70% of the consumers prefer at-home coffee preparation.
The market is driven by multiple factors, a few being increasing demand for certified coffee products, acceptance of single-serve coffee brew systems by the consumers, and constant innovation lead by top players in the coffee market. In developed economies, some consumers are expected to switch from instant coffee to more premium options for reasons of quality and flavor. Instant coffee was once considered a high-end product but began to lose its base of younger consumers, which is changing the market dynamics.
Key Market Trends
Surge in Demand for Certified Coffee Products
Since the past few years, it has been noticed that consumers are getting more aware regarding the manufacturing of products that they are buying and from where their purchases are coming from. This is applicable, especially in the case of the supply chain of food and beverages products, including coffee. Therefore, consumers are keenly looking for certified coffee products to ensure the credibility of their coffee purchases.
Consumers’ concerns about poverty, social injustice, and environmental destruction have driven a growing market for ‘certified’ and ‘sustainability’ brands and labels in the food and beverage market. Coffee types that adhere to various combinations of social, environmental, and economic standards and that are independently certified by an accredited third party have been collectively termed as ‘sustainable coffee’.
Certified coffee is also an assurance to the consumer about the reliability of the product, as coffee is becoming an increasingly common target for food counterfeiters. A number of coffee certification organizations are engaged in keeping a check on the production procedures and the supply chain of coffee. Some of them include UTZ Certification, Fair Trade Certification, Rainforest Alliance Certification, USDA Organic Certification, and many more.
Europe Holds a Major Share in the Coffee Market
According to a survey conducted by the Institute for Scientific Information on Coffee (ISIC), 68% of the respondents stated that they often consumed coffee, while working. This trend is leading to a huge demand for coffee in European countries, like Germany, Italy, Spain, the United Kingdom, and others as consumers are becoming increasingly conscious about the quality of their coffee.
Moreover, advancements in technology (like table-top machines and traceability tools) are creating the pathway for bean-to-cup solutions. The German coffee pods and capsules market is highly dominated by Nestle's Nespresso, with its wide product reach across the country. Keurig green mountain merged with JAB holding with an aim to expand its presence. This is expected to hinder the growth of Nestle SA in Germany. As per a report published by Nestle Nespresso SA, in Germany, a growing sense of coffee connoisseurship was most noticeable among younger generations. About 24.1% of 18-29-year-olds want to try different types of coffee, coffee recipes and want diversity in the coffee industry
The global coffee market is a highly competitive market, which is dominated by players, like Nestle, JM Smucker Company, The Kraft Heinz Company, and Starbucks Coffee Company. Nonetheless, the private-label brands, such as Massimo Zanetti Beverage Group and Tchibo GmbH, are also focused on increasing their market share in the coffee market, both on the global and domestic sales.
Leading players in the coffee market recorded a significant scope for rising in the market share with innovations in product, as well as packaging. For instance, players like El Marino announced to enter into a 50/50 joint venture agreement with NuZee, Inc. (in January 2020) under which the companies will collaborate to integrate NuZee's single-serve pour-over coffee pouches into El Marino's brand portfolio and introduce the delivery system to El Marino's customer base. The agreement is for a period of one year and renews automatically unless terminated by either party.
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1.2 Scope of the Study
4.2 Market Restraints
4.3 Porters Five Forces Analysis
4.3.1 Threat of New Entrants
4.3.2 Bargaining Power of Buyers/Consumers
4.3.3 Bargaining Power of Suppliers
4.3.4 Threat of Substitute Products
4.3.5 Intensity of Competitive Rivalry
5.1.2 Ground Coffee
5.1.3 Instant Coffee
5.1.4 Coffee Pods and Capsules
5.2 By Distribution Channel
18.104.22.168 Convenience Stores
22.214.171.124 Specialist Retailers
126.96.36.199 Other Distribution Channels
5.3.1 North America
188.8.131.52 United States
184.108.40.206 Rest of North America
220.127.116.11 United Kingdom
18.104.22.168 Rest of Europe
22.214.171.124 Rest of Asia-Pacific
5.3.4 South America
126.96.36.199 Rest of South America
5.3.5 Middle East & Africa
188.8.131.52 United Arab Emirates
184.108.40.206 South Africa
220.127.116.11 Rest of Middle East & Africa
6.2 Most Active Companies
6.3 Market Share Analysis
6.4 Company Profiles
6.4.1 The Kraft Heinz Company
6.4.2 Starbucks Coffee Company
6.4.3 The J.M Smucker Company
6.4.4 Luigi Lavazza SPA
6.4.5 Nestle SA
6.4.6 The Coca-Cola Company
6.4.7 JAB Holding Company
6.4.8 Tata Global Beverages
6.4.9 Tchibo GmbH
6.4.10 Strauss Group Ltd
A selection of companies mentioned in this report includes:
- The Kraft Heinz Company
- Starbucks Coffee Company
- The J.M Smucker Company
- Luigi Lavazza SPA
- Nestle SA
- The Coca-Cola Company
- JAB Holding Company
- Tata Global Beverages
- Tchibo GmbH
- Strauss Group Ltd