The escalating prices prevent more active growth of the industry and lead to the change in preferences of many local consumers with more of them beginning looking for cheaper products. Euromonitor International analysts confirm this, noting that current negative economic factors may lead to stagnation of both tea and coffee sectors of Germany in the middle term.

Lina Sidorenke, a senior analyst with Euromonitor International, said, “[According to our data,] inflation, a prevailing concern in Germany, is exerting a considerable influence over consumer behaviour. The prices of daily essentials, including coffee, have witnessed upward spirals, prompting consumers to be more judicious in their purchasing decisions.”

She said that the impact of inflation is visible in coffee, where consumers are increasingly opting for cheaper brands and exploring discounters to address rising costs. “Rising prices have encouraged many brands and retailers to offer promotions and discounts to drive up volumes. Still, despite the increasing prices of food and beverages, German consumers remain loyal coffee drinkers, as coffee is part of their everyday routines, thereby supporting positive retail demand at present.” Euromonitor reports that sustainability in coffee remains a dominant theme both for consumers and brands. For example, single serve coffee capsules have come under scrutiny for their contribution to environmental waste. According to the global market research firm, several players have introduced compostable packaging solutions to address these concerns. Effectively communicating these sustainability features has become paramount, as consumers increasingly seek eco-friendly coffee products.

Sidorenke explained that “the demand for fresh coffee beans is on the rise in Germany and continues to pose a threat to coffee pods and/or capsule machines. There is increasing availability of fully automated coffee machines that can actually compete with single-serve solutions, both in terms of price and taste.” She said in the long term, an increasing number of consumers are expected to switch to fresh coffee beans, especially as they are perceived as offering a richer coffee experience.

Mintel, shares the same view, noting that due to cost issues more and more German customers prefer to consume coffee at home instead of visiting cafés. A recent report from the global market research firm states that given the current economic backdrop, the reintroduction of 19 percent VAT and the overall strained financial situation in Germany, many consumers are trying to bring the café feeling home.

According to Mintel, most local customers are turning to inexpensive products and blends that are based on barista-made coffee. Instant coffee and coffee blends are the perfect solution for coffee lovers who are careful with their money. Mintel analysts believe that in the short term, this ongoing financial pressure on households holds further potential for more cost-effective formats. Companies can take advantage of changing consumer behaviour. Younger target groups in particular respond to barista-made coffee drinks at home. Both analysts and local coffee companies said this may all be good news for coffee brands, but the situation is highly problematic for cafés.

Cafés had a tough time during the pandemic due to constant closures. And now they are once again feeling the pressure of rising living costs, which are being exacerbated by the reintroduction of 19 percent VAT in the hospitality industry of Germany.

At the same time, they are threatened by outlets that do not specialise in coffee. For example, percent of consumers actually buy their coffee from a bakery or retailer, not in a café. Due to ongoing income pressures, more local consumers have become disloyal to their coffee brands, which created serious problems even for some major local players. Furthermore, the market is highly competitive and highly fragmented.

Premium brands in particular have been hit hard. And even the market leader Nescafé, which continues to lead the instant coffee segment, has been faced with downward trend. Some leading representatives of the German coffee sector shared that the ever tightening regulations along with climate change may lead to the decline of production of some coffee varieties.

Thomas Eckel, coffee sommelier and owner of the Murnau Coffee Roastery, one of the largest roasteries in Bavaria, in an interview with German Meininger business paper, said the EU Deforestation Regulation (EUDR), which aims to keep products linked to deforestation off the European market will  oblige companies to prove that their supply chains do not contribute to deforestation and that environmental, labour and human rights are respected. That may create some problems for the industry, as all of the companies will require support from farmers.

Eckel has also expressed some serious concerns about the effects of climate change on the entire industry and German coffee producers. “Coffee is one of the agricultural products most affected by climate change. We should take this very seriously. In general, we will definitely not drink coffee the way we do today in 2050. Many cell-based coffee products are also coming onto the market. These will help to close the gap in coffee supply.”

The current market challenges are putting additional pressure on leading German coffee manufacturers and could be associated with serious losses for them already in the short-term. In contrast to previous years, they will be unable to increase prices for their products to compensate their losses due to recent
accusations in price fixing.

For example, at the beginning of the current year, the local trading company Bartels-Langness accused Melitta of having formed a Germany-wide coffee roasting cartel with competitors Dallmayr, Kraft Foods (now Mondelez) and Tchibo between 2002 and 2008, which agreed on coffee prices. During this period, Melitta is said to have charged prices that were around 11 percent too high. Most of the companies declined to comment, however all of them believe the pressure from regulators on the market will continue to grow in Q4 of this year and in 2025.

Tea Struggles but Shows Resilience

Euromonitor’s Sidorenke added that similar to coffee, inflation is impacting Germany’s tea sector. “As inflation drives up the cost of everyday essentials, including tea, local consumers are making thoughtful choices in an attempt to manage their expenses. One prominent shift is towards private label and
discounters, where cost savings become paramount. Established tea brands are
responding by offering competitive promotions and discounts to retain their share.”

She said that at the same time, it would appear that the medium-priced segment is struggling the most, as consumers either turn towards cheaper options or they can still afford their favourite premium brands. “Although the cost-of-living crisis is forcing many consumers to reduce their expenses, tea remains popular, especially as it is considered a natural remedy to strengthen one’s immune system or simply for staying hydrated throughout the flu season.”

Germany-based tea manufacturers also said the existing problems seriously complicate their further development. Dirk Wollenhaupt, managing director o, which imports and blends teas, said the current situation remains complex, however the company sees potential for its further growth that will be achieved by the rise of efficiency of

Due to escalating costs, more German consumers are drinking coffee at home rather than in cafés.  “The German tea market is currently restrained and challenging. However, we expect a positive development in the medium term. The market has changed and the challenges have increased. In order to meet these challenges, we have adapted our processes and implemented many measures to increase efficiency,” he said, adding that being a producer of tea blends, Wollenhaupt has pursued a strategy of operational excellence over the past few months and orientated all processes towards being able to optimally serve its customers.

“The aspect of rapid availability and reliable, punctual delivery is extremely important in the tea market. We have invested intensively in the training and development of our staff and optimised production processes. In addition to
these measures, we have strengthened our sales activities with a sales office in the USA for the North American tea market,” Wollenhaupt explained.

Despite the existing problems, in its latest report Tee Report 2024, the German Tea & Herbal Infusions Association (GTHIA) revealed that most of local players have been able to adapt to the current realities of complex economics. Per the report, most medium-sized and family-run German tea companies were able to
consolidate and some even expanded their economic success in 2023-2024. The GTHIA said this was mainly due to their high-quality and innovative range, which enjoys big demand both in the domestic market and abroad.

The report finds that even though per capita consumption fell slightly in 2023 versus 2022, tea manufacturers have been able to record increasing sales. The GTHIA believes that is a sign of the strength of the German tea industry, noting that new, innovative products such as cold brew teas or functional teas, manufacturers are arousing the desire, especially among younger target groups.

Optimism for Future Growth

Even with the tough economics, most local producers and analysts expect that both coffee and especially tea sectors of Germany will resume its growth in the mid-term. On the product side, Dirk Wollenhaupt said there is the ever increasing demand for functional teas, ie, teas with additives such as melatonin, minerals and vitamins, and have greatly expanded our range in this area. “Other trends that we are observing in the German tea market and can serve with our products are wellness teas, iced teas, milk teas and mocktails with tea. The demand for high-quality green teas is also increasing. Sales of matcha in particular continue to grow in Germany due to its wide range of applications. With our partner in Japan and an extensive, high-quality range, we are very well positioned and are now one of the largest suppliers in Germany.”

He added that even though tea consumption in Germany fell slightly in 2023 compared to 2022, it remains at a high level. “Due to numerous new applications as an ingredient, as a beverage base or as a cocktail, we firmly believe that tea consumption will continue to rise in the medium term.”

As for coffee, most of local analysts expect the segment of caffeine-free coffee will provide a serious impetus for growth for the entire German coffee sector already during the period of 2024-2025. Mintel analysts report that more than half of 16 to 24-year-olds would welcome a larger range of caffeine-free products and would also be willing to pay more for such alternatives. This offers companies and brands opportunities for innovation in the area of low-caffeine and caffeine-free alternatives, for example in thecdrinking chocolate and tea segment.

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A survey of 2,000 adults found that these stress headaches break down to three times a week and that respondents recalled having brain fog just as often. Reviewing their current stress levels, the survey found that 41% said they’re at their peak stress for the year so far. [Although the survey was among Americans, the symptoms and causes of stress are similar across many countries. For example, according to Euromonitor International’s Voice of the Consumer: Health and Nutrition Survey 2021, globally, stress and anxiety now rank as the second most common health concern. Many of the other top reported issues, including sleeping problems and headaches, tend to be closely linked to high stress levels.]

Results of the new online survey – conducted by Talker Research for Traditional Medicinals between July and August 2024 – showed that while 30% are hopeful that their stress level will go down by the end of the year, a quarter of respondents think there’s a chance it’ll go up (26%). Yet, 45% have never taken a mental health day or sick day from work solely because of stress.

Comparing their stress levels to previous years, 38% of those surveyed said that 2024 has been more stressful than 2023, but less so than 2022 and the preceding years.

What is it about this year that is exacerbating their stress levels? Respondents are worried about their finances (35%), the economy (28%) and their physical health (25%). Others are troubled by the news landscape — particularly the 2024 presidential election (20%) and other world issues (19%), both of which I’m surprised are not higher percentages. In terms of how respondents are combatting these high-intensity moments, results showed that a majority feel overwhelmed during these times (58%).

What’s Stressing Americans Out?

1. Personal finances — 35%
2. The economy — 28%
3. Physical health — 25%
4. Family — 25%
5. Mental health — 24%
6. The 2024 presidential election — 20%
7. The news/world issues — 19%
8. Work — 16%
9. An unexpected life event — 15%
10. Romantic relationship — 13%

In an exclusive article for T&CTJ, “The caffeine paradox: sleep, anxiety and the endless rise in caffeine consumption,” Matthew Barry, insight manager, food & beverage, Euromonitor International, wrote, “Although consumers’ stress and anxiety levels remain high, their desire for caffeine has not waned. In fact, the demand for higher caffeine products is actually rising.”

How can these two clear trends coexist? Why are consumers eager to increase their caffeine consumption while also being concerned with their stress levels and sleep quality? Barry posited that the explanation is found in the caffeine paradox — higher levels of stress and sleep troubles lead, paradoxically, to higher demands for caffeine. “At the core of consumer stress is the desire to accomplish more. And this desire creates more stress, which leads to more caffeine consumption for sufficient energy.”

In the Traditional Medicinals survey, respondents shared that they know they’re stressed when they have trouble sleeping (42%), feel irritable (37%), fatigued (34%), have headaches (33%) or feel worried or paranoid (31%). Other respondents said their stress manifests through an inability to focus (30%), restlessness (29%), racing thoughts (27%), brain fog/mental unclarity (23%), or panic attacks (23%).

“With cold and flu season approaching, self-care and stress management are more important than ever,” said Kristel Corson, chief marketing officer at Traditional Medicinals. “Half of those surveyed believe that stress is often the main cause of them getting sick, and when asked what season is most stressful, the highest percentage of respondents (26%) said winter given seasonal changes and the holidays.”

To combat stress, 47% of respondents turn on some music, while another 39% look for comfort in their favourite TV shows and movies.

Food has its own calming effect, with nearly a fifth of respondents sharing that they have a snack (17%) or drink a cup of tea (14%) when they need to bring their stress down.

Seven in 10 agree that their overall mental health would be better if they were able to reduce their stress (71%), highlighting a need for self-care routines to be an important part of the stress solution.

However, incorporating self-care strategies into their daily life is a hurdle for one in seven Americans, leaving nearly half wishing for simple options that fit into their busy schedule (47%) as opposed to elaborate routines. When thinking about a “de-stressing regimen,” an equal percentage of respondents want long-term overall wellness and the ability to alleviate stress quickly (23% each).

“We believe in integrating ancient herbal wisdom with modern scientific advancements for a holistic approach to wellness,” said Corson. “Just 37% of survey respondents think that trendy stress relief options are successful, while nearly half felt confident in more traditional methods like yoga, meditation, or a calming tea.”

Given the conflict in the Middle East, the Russian/Ukraine war, inflation, high costs of goods, and in the US, back-to-back devasting hurricanes along with a contentious presidential election,

consumers’ stress will not likely abate anytime soon. Furthermore, high-caffeine product launches have not tempered while decaf sales remain sluggish, suggesting that the caffeine paradox, Barry highlighted in the April 2022 article will hold true for the foreseeable future.

Barry concluded the article, noting, “That leaves coffee and tea where they have always been — powerful tools in coping with the larger challenges of life. The underlying stressors of the modern world are beyond the power of the industry to solve. But manufacturers can offer a range of products to help alleviate possible burdens, from those who want as much caffeine as they can consume to those prioritising mindfulness and looking to cut back.”

Tea and coffee manufacturers have done just that. So go ahead and grab that 300+ caffeine RTD coffee, that iced ginseng wild apple mint tea, that lavender coffee latte, or chamomile lavender tea — whatever you fancy, as there’s really no choice.

• Vanessa L Facenda, editor, Tea & Coffee Trade Journal.
  Keep in touch via email: vanessa@bellpublishing.com Twitter: @TCTradeJournal or LinkedIn: Tea & Coffee Trade Journal

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Decaf coffee is gaining popularity in global markets as more and more customers follow the current wellbeing trend, considering it as a healthy alternative to common coffee.

In contrast to Western markets that already have large numbers of decaf coffee consumers, the popularity of coffee without caffeine (or with a small content of it) is just gaining momentum in several emerging nations, many of which can provide significant growth opportunities for players operating in this market segment.

The existing big potential of the decaf coffee market is confirmed by research data. According to predictions of international research agency, Skyquest Technology, over the next seven years, the decaf coffee market will grow by six to seven percent annually, reaching USD $28.86 billion by 2030. By comparison, in 2022, this figure was $19.5 billion. The growth will be observed both in developed nations and emerging countries, where such growth rates are expected to be higher.

As for developed nations, it is expected the United States will be a major driver of growth for decaf coffee in years to come as the demand for coffee with less caffeine among local consumers remains high.

The National Coffee Association (NCA) of the USA reports that more consumers across the country are adopting healthier lifestyles, which may also be associated with increased coffee consumption, since scientific evidence continues to strengthen and shows that both decaffeinated and regular coffee are associated with decreased risk of multiple cancers and chronic diseases.

Speaking with T&CTJ, William “Bill” Murray, president and CEO of the NCA, said decaf coffee has already become an integral part of life for many Americans. “Like regular coffee, decaf is a mainstay in Americans’ lives, and we expect that to continue. Signs point to growth for decaf with Americans over the age of 40, and opportunities for decaf to adjust to consumers’ tastes and interests are abundant.”

Murray further noted that consumers are more interested in health and wellness than ever before and that “there is growing awareness that decaffeinated coffee is associated with decreased risk of multiple cancers and chronic diseases.”

In accordance with NCA’s Spring 2024 National Coffee Data Trends (NCDT) Report, seven percent of Americans had decaf coffee in the past day, and past-day decaf consumption is increasing among Americans ages 40-plus.

Per the NCDT report, past-day decaf consumption is highest for Americans in the 60-plus age group, ten percent of whom had decaf in the past day – up by 11 percent since July 2023. At the same time, past-day decaf consumption has also increased for Americans ages 40-59, with six percent drinking a decaf in the past day – up by 20 percent since July 2023.

Consumption grows in Scandinavia

In the European Union, the biggest growth in demand and consumption of decaf coffee has been observed in certain Nordic states – the countries which are known for their record coffee consumption in general.

One such country is Finland, where sales of decaf coffee have been rapidly growing since the beginning of the 2020s.

Löfbergs instant decaf coffee. Image: Löfbergs

Marleena Tanhuanpää, director of the Finnish Food and Drink Industries´ Federation, said that in recent years there has been a positive trend and continuous sales increase for decaffeinated coffee in Finland. “It is definitely trending at the moment as [there has been an increase in the number] of new locally roasted products, [along with] increased visibility and assortment availability, which is raising consumer interest [in decaf coffee].” Tanhuanpää further noted that decaf coffee innovations coming from local roasteries such as filter coffee with good taste profiles that meet the local needs and preferences are helping drive growth.

“The absolute user amount is still limited in the market but the potential for further growth is there,” Tanhuanpää explained, adding, “especially with the younger (under 35 years old) urban demographic, and women, in particular, are interested in decaffeinated coffee – they want to enjoy the taste of coffee, but regular coffee is not always the most suitable option.”

In neighbouring Denmark, the demand for decaf coffee also remains high, although the share of the segment in the overall Danish coffee market is small.

Henrik Frellsen, the chairman of the Danish Coffee Association and CEO of Frellsen Kaffe, one of the biggest local coffee producers, said decaf coffee currently makes up a small share of the coffee market in Nordic countries. “In Denmark, it accounts for less than one percent of the volume, [which is] constant and has historically remained at this level.”

He does not expect a sharp growth of the segment in years to come despite believing in its huge future potential. “We foresee no significant development at this level. In recent years, coffee has transitioned from a product perceived as less healthy to one that naturally fits into a healthy lifestyle. Therefore, caffeine no longer appears to be harmful,” Frellsen explained. “However, increased awareness of the importance of sleep for health pulls in the opposite direction. In Nordic food culture, there is a loyalty to pure raw materials. Hence, [those] with this concern would choose an alternative beverage later in the day rather than a decaf coffee.”

Some analysts report that the estimated potential of decaf coffee is too exaggerated and does not correspond to some current realities. Referencing the most recent edition of Euromonitor International’s Voice of the Consumer: Health and Nutrition Survey, Matthew Barry, insight manager, Food and Beverage at Euromonitor International, said that self-reported interest in drinking less caffeine or none at all reached a new record high, at 46 percent of respondents. “You could interpret that to mean we were at the verge of an explosion in decaf. After all, that is nearly half of adults in the world saying they want to drink less caffeine. But I don’t see things that way. The reality is that caffeine is just too important for people to get through their days so this represents an aspiration more than anything else. I think this signals that people recognise that they need to take actions to mitigate some of the negative side effects of excess caffeine consumption.”

Barry noted that the data absolutely shows there has been a real explosion of products with calming, relaxing, or sleep-promoting claims across food and beverage in recent years. “Essentially, rather than switch their morning coffee to decaf, consumers are sticking with the regular coffee and looking for something in the evening to calm them down and help them sleep. People want to have it all,” he said.

The decaf coffee market is also of great interest to the global majors, many of which have significantly strengthened their positions in it in recent years. For example, illycaffè, the Italian coffee producer, considers the decaf coffee segment a priority.

Francesco Bosso, chief commercial officer of illycaffè, said the company offers decaffeinated coffee in its range with all preparations to satisfy the taste of all consumers. In recent years, he said, the

illy’s low caffeine coffee, Idillyum. Image: illycaffè

demand for such coffee has significantly increased, noting that “usually, decaffeinated coffee is preferred by one out of four consumers and mainly as an alternative to coffee in the evening.” Bosso said that illy coffee is a blend composed of 100 percent Arabica beans of the best quality, which by its nature contains a lower amount of caffeine than Robusta coffee. “In addition, for consumers who are looking for a preparation with a very low caffeine content, we also propose Idillyum, a coffee composed only of the fine Arabica variety called Laurina, grown specifically for our company in El Salvador. This product naturally has a very low caffeine content, less than one percent (a third less than the classic Arabica varieties and less than half of Robusta).”

Bosso expects the demand for decaf coffee will continue to grow, while the growth of the segment will be comparable to the dynamics of the entire coffee market.

Regarding further market prospects, most of the interviewed analysts and producers believe the demand for decaf coffee will continue to grow in years to come, as more and more customers will position it as a heathy alternative to traditional coffee. That will be primarily observed in such countries as Russia, which has low decaf coffee consumption.

Tanhuanpää believes that decaffeinated coffee will continue to increase its share driven by the wellbeing trend that has for many years already been present in many food and drink categories, for example, driving growth of non-alcoholic beer. “The need for relaxation without compromising the enjoyment of coffee is one driver for decaffeinated coffee consumption,” she said. “And according to our research, the usage situations for decaf coffee can be varied, not only limited to evening use. One motivation can be the stomach friendliness of decaf coffee.”

• Eugene Gerden is an international freelance writer who specialises in covering the global coffee, tea and agricultural industries. He works for several industry titles and may be reached at gerden.eug@gmail.com.

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While Scandinavia is a term commonly used to describe the region in Northern Europe, it is surprising that it has no clear definition. Most people imagine three countries: Norway, Sweden, and Denmark, though geographically, it is an area of the Scandinavian Peninsula dominated by the Scandinavian Mountains. This leaves Denmark out but includes the northern part of Finland.

The status of Iceland is also vague. The country has close linguistic and historical ties with Scandinavia and is considered a part of Scandinavia by many, though the island sits nearly 1,000 kilometres away from the Norwegian coast.

All mentioned countries share exceptionally strong coffee traditions and similar consumer preferences, though some differences exist. “[For example], in Finland, the volume [of coffee] consumed is much higher. In Norway, Sweden and Denmark, consumption is less, but consumers have a higher preference for high quality – specialty – coffee,” said Tjalling Jorrit de Boer, senior market analyst with Molgo, a Groningen, Netherlands-based research firm.

Kafferisteriet Merkur – a prominent coffee roastery established in 1993. Image: Wikipedia

A recent study conducted by Molgo showed that Norway, Sweden, and Denmark have coffee consumption levels that are well above the European average. Sweden, the largest coffee market in the region with a population of 10.5 million, ranks third in terms of per capita coffee consumption in Europe, following only Finland and Luxembourg.

Other Scandinavian countries are just a little behind. Norway, with a population of 5.4 million people, has a per capita consumption of 8.6 kg, the fifth highest in Europe. Denmark’s consumption of 6.6 kg makes it eighth. The high consumption makes the market relatively static with little room for volume growth, Salla Korpivaara, consultant at Euromonitor International, assumed.

Moreover, a number of factors in Europe have taken a toll on the Scandinavian coffee market in recent years. The Covid-19 pandemic definitely had an impact on the region, but to varying extent, Korpivaara indicated. For example, she said Sweden imposed a few restrictions on the HoReCa sector, and their lockdown was not as strict as Norway and Denmark. Hence, while in Norway, the coffee segment in HoReCa declined in 2020 by 27 percent and in Denmark by 19 percent. In Sweden, the decline was more moderate, around 14 percent. The HoReCa segment swiftly recovered starting the following year, 2021, for all three countries.

“At the same time, in 2020, all three countries saw a steep increase in the retail volume sales as Scandinavians, [like] the rest of the world, moved their offices to their homes,” Korpivaara noted.
De Boer said that it is hard to say how the cost-of-living crisis in Europe, which unravelled in 2023 and has yet to loosen its grip on the economy, has affected coffee consumption in Scandinavia. He assumed that it hadn’t had a significant influence on the volume, though it could trigger a small shift from the out-of-home to the at-home market and further small growth of the specialty segment.

Focus on innovation

Among the Scandinavian countries, the Danish coffee sector stands out for its innovative specialty segment. This segment is characterised by small-scale specialty coffee roasters who work closely together with each other and with their suppliers to create unique and high-quality coffee products. These roasters often experiment with different roasting techniques, sourcing methods, and flavour profiles, leading to a diverse and dynamic coffee market.

Scandinavian roasteries are willing to experiment. Image: Claus Sal

Local publication, Fodevare Watch, also recently reported a major shift towards innovation in the Danish coffee sector, with new companies, concepts, and ideas “springing up all over the country.”

The trend has become so massive that company managers are even starting to wonder whether there is room for so many new players in the market, especially in the retail segment, where the competition is particularly fierce. “I doubt there is room for so many competitors in retail because the shelf space is getting smaller. So, there will be a bigger battle for space in the future,” Tom Faurschou, managing director of Lavazza’s Danish division, told Fodevare Watch.

Henrik Aagaard, CEO of BKI Foods, on the other hand, argued that the Danish coffee market offers plenty of development opportunities, and those ready for bold experiments have good chances of being rewarded with strong consumer interest.

Competition in a market where sales volumes have already reached all possible heights and a further rise in volumes seems unlikely drives coffee companies to be more creative. “We are looking into a relatively stable market, but the requirements to develop and launch new concepts will only become more important in the future,” Aagaard said.

Market players indicate that Scandinavian coffee lovers are increasingly becoming more discerning, searching for new tastes and flavours, as well as new places and rituals associated with drinking coffee. However, the existing traditions are here to stay. “[Scandinavian] coffee culture is unique. In many gatherings and meetings, coffee has a key role. In Sweden, there is a tradition called ‘fika’. This social event is where people gather to enjoy coffee, often with sweet pastries or cakes,” Korpivaara said.

Analysts agree that innovation is the key for market players in Denmark and other Scandinavian countries’ markets to stay successful. This is particularly true, as some forecasts envisage that generation change can drag down coffee consumption in some segments. “Younger consumers are likely to consume fewer cups of coffee than their older counterparts but are likely to spend slightly more on each cup,” Korpivaara said.

According to Molgo’s research, innovative Scandinavian roasters have a significant influence on the global specialty coffee scene. In this context, the analysts pointed out that the Specialty Coffee Association originated in Norway. Furthermore, despite the projected limited growth options, the number of roasters in Scandinavian countries is increasing, particularly the number of micro-roasters. Many of these roasters distribute their coffee to local cafés but also have their own coffee shops. For instance, Sweden alone is home to around 80-100 micro-roasters.

Scandinavian countries have some of the highest coffee consumption rates in Europe. Image: Christian Caffe

Surprisingly enough, the innovation trend goes hand in hand with consolidation. Multinationals are taking over promising brands in the Nordic specialty segment, de Boer indicated. This is largely in line with the general trend of increasing consolidation in the mainstream coffee segment in Europe in the last few years.

Ethical consumption dominates

Observers also pointed out that demand in the Scandinavian market is increasingly being reframed by principles of ethical consumption. “Products with organic and ethical certificates, as well as products underlining the product’s origin, are seeing good growth in fresh coffee. This is in line with both the health and wellness trend and the increasing interest in ethical consumption, with many younger consumers prioritising quality and compatibility with these consumption trends over quantity,” Korpivaara noted.

In this background, she added, coffee pods registered a decline in volume sales last year in all three markets despite the convenience that these products offer. In an increasingly environmentally conscious market, pods are not seen as a sustainable solution. Many consumers would now rather look for coffee bean machines to have convenient, high-quality coffee. Competition in this area is intense and there has been some discounting on pricing.

Molgo analysts stated that Rainforest Alliance/UTZ, Fairtrade, and organic-certified coffees are particularly interesting to consumers in Scandinavia, where about 90 percent of all coffee sold in retail is certified. As a part of the same trend, Scandinavian coffee lovers have shown increasing interest in organic coffee. However, the European economic crisis has weighed on this segment in the past few years.

“We do not have exact figures for organic coffee, but we know that the high inflation and weakening of purchasing power in Scandinavia have led to a decline in the overall organic market,” Korpivaara said.

Promising niches

Sustainable, specialty coffees and premium quality coffees continue to be promising segments of the Scandinavian coffee market, Euromonitor International analysts claimed.

Scandinavia sees a growth consumption of specialty coffee. Image: Mork

“Fresh coffee beans are expected to continue to grow. Consumers are showing increased interest in fresh coffee beans as they look for products that they see as healthier, higher in quality and more ethical. An increasing number of Scandinavians will have a coffee maker [with a bean grinder] at home, and they will use it more on a daily basis rather than only on special occasions as was previously the case,” Korpivaara explained.

Foodservice coffee volumes are expected to see healthy growth in the forecast period as Scandinavian consumers will be spending more time out of their homes and retail outlets are looking out for new coffee formats to offer, she noted.

The coffee shop culture and takeaway coffees are also becoming more popular in the region, providing a further boost to sales. Retail e-commerce is expected to continue to see positive growth over the forecast period as online grocery shopping becomes a normal part of life for more and more consumers. “In addition to ordering supplies of conventional coffee via online grocery retailers, consumers will increasingly order more exotic coffee blends, beans and pods online from specialist coffee sites,” Korpivaara said.

• Vladislav Vorotnikov is a Batumi, Georgia-based multimedia B2B freelance journalist writing about the tea and coffee industries since 2012.

The post Despite perceptions, Scandinavia offers opportunities for growth in coffee appeared first on Tea & Coffee Trade Journal.

Coffee is so loved in South Korea that the slogan “Korea is a Coffee Republic” has become viral on social media networks over the past few years. Per capita consumption stands at 405 cups, more than twice above the global average of 152 cups, Euromonitor International calculated.

The Korean Economic Institute of America put the consumption at as high as 512 cups per year. One way or another, in terms of coffee consumption per adult, South Korea is ranked the world’s second, following only France.

Coffee accounts for 30.8 percent of the total South Korean beverage market, which is even higher than the share of carbonated drinks of 25.5 percent, the Korean Food and Drug Safety Ministry estimated.
The key factor behind the soaring popularity of coffee in South Korea is a busy corporate and lifestyle culture, Taeyoung Lee, a local analyst, noted. In recent years, it has also been complemented by the high accessibility of coffee, as coffee shops in the country can be found virtually on every corner.
A study conducted by the Ministry showed that in 2022, coffee sales in South Korea were valued at KRW 5.7 trillion (USD $4.3 billion), making it the world’s third-largest coffee market.

Starbucks is the undisputed market leader and a symbol of the country’s coffee culture. After entering the country in 1999, the company swiftly conquered the hearts and minds of local coffee lovers. Starbucks sales are consistently trending upward, reaching a staggering KRW 2.59 trillion ($1.9bn) in 2022, against KRW 1.93 trillion ($1.47bn) in 2020 and KRW 2.38 trillion ($1.82bn) in 2021. With 1,750 stores all over the country, South Korea is Starbucks’ fourth largest market after exceeding Starbucks Japan in 2022, just behind the United States, China, and Canada.

A battleground of franchises

International coffee chains flock to South Korea to capitalise on the exceptional demand for coffee. The official figures indicated that the number of coffee brands present in the country jumped from only 390 in 2020 to 852 in 2022, and the trend is yet to wind down. Against this background, the total number of coffee shops, coffee-to-go points, and cafés reached the historic record of 99,000 outlets at the end of 2022.

Local press reported that South Korean market newcomers dream of “becoming the second Starbucks.” Although matching Starbucks’ store presence is hardly within grasp, new chains can still get their piece of the ‘coffee pie’.

Canadian coffee brand Tim Hortons, which launched in South Korea in December 2023, announced that it sold 300,000 doughnuts and over 100,000 cups of coffee within a month of opening. The company has swiftly launched three more outlets and, at the time of writing, was on the fast track to putting the fifth into operation.

Peet’s Coffee, one of the top three coffee brands in the western part of the United States, registered its trademark in South Korea in May 2023 and is preparing to open its first outlets. Intelligentsia, one of the top three specialty coffee brands in the United States, is also preparing to enter South Korea. When Intelligentsia opens a store there, it will be the brand’s first store outside the United States.
Growth comes at its own price. Local publication, Chosun, citing its own sources in the industry, reported that while the upward trend in the coffeehouse market continues, the number of coffee shops that closed in 2023 appeared to be the highest ever, as not everyone is ready to withstand competition.

ome brands that have entered the South Korean market in the previous few years have found it challenging to scale up their businesses. Chosun, for example, said that Japan’s Percent Coffee, Vietnam’s Kong Café, and Denmark’s April Coffee are among the brands that have entered the market in the previous years and still have a relatively small presence in the market.

On the other hand, ultra-low-cost coffee brands such as Mega Coffee and Compose have been expanding their operations in the market.

Despite being geographically small, specialist coffee and tea shop chains in South Korea have shown a remarkable 11.92 percent compound annual growth rate for the outlet growth from 2018 to 2023, Kevin Han, research analyst with Euromonitor International, commented. “This growth is heavily influenced by the emergence of low-priced coffee brands and their aggressive outlet expansion strategies.”

As expected, the fight for customers eventually undermines revenues across the board. “As these brands have competed for the same market share by entering the same location, there has been a noticeable decrease in sales per outlet for each low-priced coffee brand in the second half of 2023, indicating a decrease of consumer visits per outlet due to the fierce competition,” Han said.
To address this challenge, low-priced coffee brands have diversified their menus by adding bakery and dessert items. This strategic move aims to avoid a decline in sales per outlet by encouraging higher average customer spending, and this trend is expected to continue, he said.

In the last couple of years, the South Korean coffee market has also witnessed a surge in the popularity of specialty coffee. This is evidenced by the sales dynamics of Paul Bassett, the leader in this segment.
Paul Bassett’s sales have reached KRW 145.6 billion ($111m) in 2022 from KRW 107.5 billion ($82m) in 2021, which increased from KRW 81.3 billion ($62m) in 2020. The figures are on the rise as a growing number of Korean customers seek better taste features.

A spokesperson for the company said, “Our greatest competitiveness is the high level of quality shown in all our stores. In the future, we plan to operate specialised stores or expand our product range to better suit customer tastes.”

There are other signs that the market players believe the growth opportunities in the premium segment of the South Korean coffee market are far from being exhausted.

Lotte Department Store recently announced that it had exclusively secured the domestic franchise and distribution rights for Bacha Coffee, a brand that originated in Marrakech, Morocco, and currently operates a total of 18 stores in nine countries, including Singapore, France, Hong Kong, and the United Arab Emirates.

Local press reported that Lotte Department Store CEO, Jeong Jun-ho, spent about 18 months personally persuading executives at Basha Coffee’s headquarters in Singapore to import its coffee. The exclusive domestic franchise and distribution rights contract was signed in September 2023, and the first store in the country is scheduled to open in July 2024.

Transition stage

While interest in specialty coffee remains high, within the overall coffee shop segment, the
main emphasis is no longer on further improving taste.

“The Korean coffee market is undergoing a transition, shifting its focus from the taste of specific beans and individual coffee products to considerations such as convenience, pricing, new offerings, and ambience,” Han said. “Consequently, there is a notable expansion in the market towards offering a variety of beverages and bakery items, accompanied by a strong emphasis on interior design and distinctive outlet concepts,” he noted.

This diversification leads to the continuous development of Korean specialist coffee and tea shops and the café market, which, according to Han, is predicted to grow at a 3.75 percent compound annual growth rate in retail value between 2023 and 2028.

Another powerful trend, said Taeyoung Lee, is that Korean coffee lovers are increasingly becoming more health-conscious.

As a result, pre-brewed coffee was the only segment where sales have dropped in the past few years, as customers were wary of sugar and flavouring content. Since 2018, pre-brewed coffee sales have dropped by roughly 16 percent.

“The growth of coffee franchise brands with a low-price strategy and the tendency to prefer coffee shops such as cafés have had an impact on the decline in the size of the pre-brewed coffee market,” explained Lee.

Losing identity

Based on the current trends and dynamics observed in the Korean coffee market, the outlook remains optimistic yet competitive, Han said. However, serving coffee is no longer enough to succeed in this business in Korea.

In 2023, Euromonitor International observed that independent cafés, with a focus on food, bakery and dessert offerings, exhibited a higher year-on-year growth rate in terms of value and transactions compared to independent specialist coffee and tea shops that mainly focused on coffee and beverage products.

“This trend highlights an increasing significance of bakery and desserts and suggesting a new transition in the Korean coffee market. Therefore, in the forecasted period, not only are specialist coffee and tea shops continually introducing bakery products, but independent cafés would also improve the quality of bakery and dessert offerings as a core differentiation,” Han explained.

Additionally, most specialist coffee and tea shops are transitioning from using baristas to brew coffee to using high-priced coffee machines, primarily to manage labour costs, he added. To a degree, this trend is causing coffee shops to lose their identity.

Han shared that, despite the benefits of operational standardisation, he “firmly believes this shift has led to a loss of differentiation among specialist coffee and tea shops, intensifying competition by making entry into the Korean coffee market relatively easier for both domestic and international brands.”
In the long run, this trend may offer additional business development opportunities for those players that are contemplating entering the Korean coffee market.

“There may be an increase in the entry of international chained specialist coffee and tea brands in upcoming years, while domestic brands focus on improving product offerings and atmosphere to emphasise their unique selling points and to deliver more personalised and new experiences to enhance consumer engagement,” said Han.

• Vladislav Vorotnikov is a Batumi, Georgia-based multimedia B2B freelance journalist writing about the tea and coffee industries since 2012.

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Mexico eyes becoming one of the leading players in the global coffee market, which will take place by increasing both domestic consumption and exports.

Despite a tough economic environment, the demand for coffee and its consumption in Mexico remains strong, which is also leading to the growth of its local production.

According to the Mexican Ministry of Agriculture and Development (SADER), coffee is a strategic crop in Mexico — its production currently employs more than 500,000 producers from 15 states and 480 municipalities. In total, 94.1 percent of its coffee production is located in five provinces: Chiapas, Veracruz, Puebla, Oaxaca and Guerrero. More than 92 percent of the coffee supply comes from small producers, who grow coffee on less than two hectares.

SADER figures indicate that Chiapas is the main producing state, contributing 41.3 percent followed by Veracruz with 24.4 percent, and Oaxaca with 8.2 percent. Coffee currently represents 0.66 percent of Mexico’s national agricultural GDP (gross domestic product) and 1.34 percent of the overall production of agro-industrial goods in the country. Still, this is just the beginning, as state plans include creating conditions to increase both coffee production and consumption within the next several years.

In accordance with Mexico’s National Agricultural Planning, it is estimated that in 2030, national consumption will increase from 0.80 to 0.94 million tonnes, and that national production will expand from 0.82 to 4.7 million tonnes. Exports should also grow, which will allow Mexico to re-enter the ranks of the world’s top-ten largest coffee producers and exporters. It currently stands in eleventh place.

As for coffee retail sector, according to data presented during Expo Café 2023, the coffee industry’s main event in Mexico, the coffee sector grew by 5 percent in 2023. That was mainly due to local consumption jumping from 230,000 tonnes in 2020 to 311,000 tonnes in 2022, an increase of 37 percent. In 2023 the consumption exceeded 320,000 tonnes.

In addition to more than 500,000 producers, Mexico’s coffee sector consists of more than 75,500 coffee shops, the number of which is constantly growing.

According to analysts’ predictions, there could more than 80,000 cafeterias by the end Q1 2024, with annual growth between 5 percent and 7 percent in terms of new units, capable of employing more than 377,000 Mexicans (averaging five people per cafeteria).

In general, coffee shops are presently one of the most profitable businesses in Mexico, which attracts many domestic and foreign entrepreneurs.

Most coffee shops are concentrated in the country’s four largest cities – Mexico City (the capital), Jalisco, Guanajuato and Puebla – which all together make up about 45 percent of those establishments throughout Mexico.

Producers under pressure

Mexico is currently ranked as the ninth biggest coffee-producing country in the world (in terms of land) with the harvested area of 646,00 hectares (ha) and with a production of about 987,000 tonnes.

However, experts of the Mexican Institute of Ecology, Inecol, have recently warned that despite its coffee sector maintaining generally good results the past few years, the current tough economic situation in Mexico has put a serious pressure on Mexico’s coffee farmers, some of which may declare bankruptcy in the short-term, which is mainly due to low incomes (earning 75 percent below the national minimum wage), the lack of state support, and climate change.

Coffee shops such as Cafe Negro in the city of Coyoacan, continue to open around Mexico. Image: Mexplora

Analysts report that coffee yields in Mexico are among the lowest in Latin America (five to seven quintals per ha), which led to the country dropping from once being the fourth largest coffee producer in the world to the eleventh.

Multinationals show interest

Most independent analysts believe that despite the existing challenges, Mexico’s coffee and tea sectors recorded generally good results last year and have prospects for further growth in 2024.

According to Alberto Trueba, research & data analyst at Euromonitor International, in the case of coffee, in 2023 there was a 2 percent volume growth in the retail category on a year-on-year basis. “In general, [locals] are becoming more cautious in their spending habits. However, the desire for a delightful cup of coffee persists. Currently, more and more local people prefer to consume more coffee at home, while seeking new flavours or experiences with each cup.”

Historically, the Mexican coffee sector has been within the sphere of interests of global players. In recent years, many of them have significantly strengthened their positions in the local market, planning further expansion.

One such company is Nestlé, which remains one of the leading players in the Mexican coffee sector, providing active support to local farmers through the various local programmes, such as Nescafé Plan 2030. There are 80,000 Mexican producers who are part of the Nescafé supply chain. Through its Nescafé Plan 2030, Nestlé has been cooperating with academic and research institutions to establish better coffee plants, training for producers, and technical assistance.

Nestlé opened a new Nescafé factory in Veracruz Mexico in 2022, making Mexico Nestlé’s main coffee producer globally. Image: Nestlé

Nestlé is the number one buyer of coffee in Mexico, buying 30 percent of the national production from more than 80,000 producers. In addition, the company recently launched a number of new products across different categories such as Dolce Gusto coffee capsules with Starbucks Vanilla Madagascar and White Mocha flavours. Nescafé also introduced Nescafé Ice, a variant of its flagship product, which is the first instant coffee in Mexico designed for cold preparation.

However, Nestlé is not the only global player that is actively expanding in the Mexican market. Another is The Coca-Cola Company’s Costa Coffee, which recently introduced its new coffee machine to the market. This machine offers a level of beverage personalisation akin to what a barista would provide.

Tea: small but growing

In case of tea, in Mexico and Latin America, tea consumption has increased continuously over the last ten years, but even so, there are few people who consume this drink regularly, so the opportunities for growth and development in the industry are enormous. A significant part of local needs in tea is met by imports.

According to data from Mexico’s food title, TheFoodTech, Mexico’s annual tea imports vary from 1,200 to 1,400 tonnes, making it the second largest tea importer in Latin America, behind only Chile. The Mexican tea market is estimated at USD $79.3 million, with the possibility of reaching $98 million by 2026. The leading brands are those that are sold by large retailers. The main players are La Pastora, with 20.1 percent of the market; McCormick, with 19.4 percent; and Therbal, with 18.2 percent.

While tea consumption in Mexico is growing, it is still small as there is no tea culture in the country. Mexicans consume 12 grams of tea a year, the equivalent of six cups. By comparison, in Turkey, the country that drinks the most tea, consumption per person per year is around 3 kilograms, per Euromonitor International.

Trueba noted that there was a 0.3 percent volume growth in retail in 2023, exceeding the figures from 2022. “In terms of value, there was a 1.3 percent growth, also higher than in 2022. The slight growth of the tea category can be attributed to various factors, including health trends observed since the Covid-19 pandemic.”

Euromonitor International’s Voice of the Industry: Food and Nutrition Survey in 2023 found that 65 percent of the food and beverage companies in Mexico consider the use of natural ingredients, less processed ingredients, and additives with additional functionalities to be very or extremely influential in the coming years. This trend has significantly impacted the entire category, with particular emphasis on green tea, which experienced the highest growth in both value and volume in 2023.

Similar to the coffee category, people are increasingly consuming tea at home. Despite many individuals returning to their pre-pandemic routines of full-time work and school, they also seek to spend more time at home with family or alone,” said Trueba. “According to our Voice of the Consumer: Lifestyles Survey in 2023, 28 percent of Mexican consumers seek to spend more time taking care of themselves, often aligning with the consumption of indulgent products. This has driven the consumption of tea at home, replicating drinks from the foodservice channel.”

The importance of e-commerce

Euromonitor and other interviewed experts also anticipate e-commerce playing a supporting role in coffee and tea growth due to its inherent advantages and convenience.

Success will also depend on effective brand positioning, given the inclination of coffee and tea consumers to remain loyal to their preferred brand and their minimal tendency to switch to more affordable alternatives, driven by the paramount importance placed on taste. Consequently, social media will continue to play a pivotal role in brand-positioning campaigns.

Coffee grown in Mexico’s Oaxaca region. Image: Primera Coffee

Euromonitor also expects social media to be instrumental in promoting premium products, such as Dolce Gusto’s coffee capsules designed for cappuccino with lactose-free milk. The upward trajectory of this trend is expected to endure in the coming years, driven by the growing influence of social media in the Mexican market and its facilitation of enhancing the positioning of new or existing products.

Most analysts believe Mexico’s coffee market will continue growing in 2024, driven mainly by new product launches that focus on indulgence and convenience. The introduction of Nescafé ICE, the first instant coffee for cold preparation, and Dolce Gusto Frappé coffee capsules for homemade frappés, are part of this trend.

Regarding the tea sector, Euromonitor reports that growth will also be observed both in value and volume terms, with a 2.2 percent increase in both cases, surpassing the figures seen in 2023. These growth projections are supported by the relaunch of existing products or the introduction of new ones, where functional ingredients will play a significant role.

Health trends will continue to drive growth in the category, as tea is perceived as a healthy beverage. Brands such as Lagg’s emphasise the benefits of their wellness line on packaging, highlighting infusions like Sleeping Time and Gastro Plus.

Moreover, the growth of the category is expected to be supported by several brands promoting tea consumption in various social scenarios, emphasising an experiential aspect beyond the act of drinking tea. For instance, Twinings underscores in its advertising campaigns that its products can be consumed hot, cold, or as mocktails.

• Eugene Gerden is an international freelance writer, who specialises in covering the global coffee, tea and agricultural industries. He works for several industry titles and may be reached at gerden.eug@gmail.com.

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But the rising cost of goods is not stopping Americans from drinking their daily cup of coffee—whether they prepare it at home or purchase it a coffee shop. US coffee sales at retail alone in 2023 hit US $18.9 billion – 18% of the global total – making the US the world’s largest coffee market (US #1 in coffee spend while is Brazil #1 in consumption), said Matthew Barry, insight manager food & beverage, Euromonitor International, during the National Coffee Association’s (NCA) recent ‘US Coffee Outlook 2024’ webinar.

However, the US is very tilted to foodservice coffee with Americans spending more than twice in that channel than they do at retail. The coffee shop segment continues to grow amid the turmoil, explained Barry. “A major shift is taking place towards a more tech-driven, to-go model de-emphasising the human aspect while ‘permissible indulgence’ spending cushions the sector against economic trouble.”

At retail, ready-to-drink (RTD) coffee remains the top performer in terms of growth, which has slowed but still leads. Pods is the next largest category, which Barry noted is doing well in the US but struggling in Europe, followed by standard ground and whole beans (the smallest category but a solid performer). Despite the availability of higher quality instant and pioneers of specialty coffee entering the category, soluble coffee’s performance is still subpar and sales are expected to decline in the US in 2024.

E-commerce has been a particular bright spot for the coffee industry category, with Barry saying that “a slowing segment overall has not damaged coffee. Sales were up 24% for the first three quarters of 2023 over the same period in 2022.”

Although consumers may not be able to live without their daily small indulgence, coffee is not immune to the effects of higher prices. According to Barry, steep prices are narrowing the window for premiumisation. “Americans are showing less interest in paying for virtually any sort of value-added attribute.” This is affecting areas like organic, environmentally friendly and sustainably produced products.

While American consumers may not be willing to pay for just any ‘value-added attribute’, they will for those will health claims so the most advantageous way to premiumisation is through functionality. “Health remains a spending priority even with consumer pullback,” shared Barry, adding, “functional coffees should be able to benefit from this. Energy, digestive health, and weight management should see especially interesting [growth] in 2024.”

Another growth area is digestive health as the microbiome is better understood. “Particularly important will be emerging understanding of the microbiome’s [probiotics] effect on wider health such as the ‘gut-brain axis’,” he commented.

Experts have warned that 2024 will be hottest year in history, surpassing 2023 which was the hottest to date, so climate will be top of mind with consumers. However, “consumer willingness to spend on sustainability is not increasing,” Barry explained, adding, “the pressures from years of inflation have led fewer consumers to be willing to spend on more sustainable products.”

He said that sustainability is becoming about adaptation rather than consumer appeal, that is, more of a supply chain interest area rather than a way to appeal to consumers (a focus on decreasing supply chains, water availability, etc.).

So, to sum up the coffee outlook for this year [per the NCA/Euromonitor International — I am curious if others agree or have a different opinion]: although high prices will keep consumers pessimistic thereby rendering premiumisation more difficult, the US coffee market is set to have a good 2024 particularly from growth in coffee shops spending, RTD coffee and functional coffees.

• Vanessa L Facenda, editor, Tea & Coffee Trade Journal.
  Keep in touch via email: vanessa@bellpublishing.com Twitter: @TCTradeJournal or LinkedIn: Tea & Coffee Trade Journal

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“We don’t talk about any other agricultural products in this framework of superior and inferior. We don’t say red wine is inferior, white wine is superior,” said Sahra Nguyen, founder and CEO of Nguyen Coffee Supply, advocates of Robusta since its founding. “A really easy way to completely deconstruct this false framework of the Arabica-Robusta dichotomy is to apply all the ways that we evaluate and appreciate the differentiated qualities of the wine industry to the framework of coffee. We’d be in a completely different space.”

Robusta is the common name for the species Coffea canephora, and, in the history of coffee, Arabica predates Robusta, with the latter not being introduced to the coffee market until 1900, according to the Special Coffee Association’s (SCA) chief research officer, Peter Giuliano. “Robusta was positioned as a way to produce coffee cheaply in places where Arabica couldn’t thrive – and became associated in the coffee market with cheapness,” explained Giuliano.

In short, Robusta is easier than Arabica to grow, as, informed Spencer Turer, vice president of Coffee Enterprises, it requires lower altitudes (0-600m compared to Arabica’s 600-1,200m), and, in part due to its higher caffeine content (2.2-2.7 percent to Arabica’s 1.2-1.5 percent), it is more resistant to pests and diseases; it grows ‘robustly.’ What’s more, when it comes to harvesting, the Robusta coffee cherries ripen all at the same time, compared with Arabica which ripen at different times on different branches. This means that Robusta requires less labour to harvest as it can be done all at once, rather than the often-repeated visits required for Arabica. This, combined with its generally higher yields, has positioned the Robusta species as an efficient and cheap to produce coffee crop.

“Beginning in the 1950s and 1960s, some companies began blending large amounts of cheaply produced, low quality Robusta to make their coffees cheaper. In some ways, the specialty coffee revolution was a reaction to this ‘race to the bottom’, and the canephora species was easy to blame,” added Giuliano.

An overdue uplift

When the specialty coffee industry evolved, therefore, in the late 1980s and 1990s, since Robusta had only been produced cheaply to meet volume and nothing else, the quality of it was not comparable to that of Arabica and it has been considered antithetical to specialty ever since. As a result, as Gloria Pedroza, head of quality, NKG Quality Services Switzerland, explained, “The industry is more familiar with this species [Arabica], it has invested in research and has experimented with processing methods, meaning that Arabica is a few decades ahead in terms of development and marketing compared to other species.”

Image: ICO Production Statistics

Consequently, there has been a chronic lack of investment and research into optimising Robusta production. There were no systems or infrastructure in place to allow producers to differentiate their Robusta, and there was no incentive for them to try. Nguyen noted, “I know a lot of very passionate Robusta producers; they want to improve their crop, they want to improve their land, they want to improve their wages. But the market is so fixated on this stigma, that it won’t pay a higher rate because they don’t believe Robusta can be quality.” She noted that “there’s been an entire community in the coffee world that that has been told you don’t deserve investment. You don’t deserve care. You don’t deserve to improve or advance your livelihoods, and that’s what we are ultimately trying to lift when we talk about Robusta.”

There are markets, meanwhile, Hanna Neuschwander, communications & strategy director at World Coffee Research (WCR) argued, where Robusta has always been highly accepted by consumers, such as in Italy where it has been used in espresso blends for decades, and in certain African markets it is prized for its flavour over Arabica. Further, with Robusta now making up 40 percent of global coffee production, a rise from 25 percent since the early 1990s, it is not an unfamiliar flavour profile for consumers, with it pervading across the coffee industry and its numerous brands and products for many decades.

Yet it wasn’t until 2010 that the Coffee Quality Institute (CQI) launched its Robusta Q programme, to complement its existing Arabica Q programme, followed by the debut of the CQI Fine Robusta Standards and Protocols in 2015. This gave the coffee industry the framework it needed to differentiate Robusta in terms of quality and offer it something to build on and parameters to innovate within.

Nguyen Coffee Supply, founded by Sahra Nguyen in 2018, championed Robusta from the offset, and has been “extremely loud and proud” about it ever since. Its 100 percent Robusta products have been clearly labelled as such from the start, vehemently dismissing the industry norm to hide a coffee product’s Robusta content. Nguyen explained that, despite her company being both an importer and a roaster, it largely operates in the consumer space; “In the B2B space, the stigma [against Robusta] was just too strong, where I couldn’t really break through.” Whereas in the consumer market, the stigma against Robusta is minimal to non-existent.

Nguyen continued, “Consumers are generally unaware of this negative perception, and they really don’t care. […] They just want what they want right?” Nguyen Coffee Supply has invested a lot of its resources in the marketing, education, and storytelling side of its brand, to “shift consumer perceptions that would then create a ripple effect into the industry,” she said, and they have since seen the movement grow, with more and more brands beginning to champion Robusta.

Sahra Nguyen, Nguyen Coffee Supply founder, holding limited edition anaerobic Robusta beans. Image: Nguyen Coffee Supply

Nguyen Coffee Supply has built on this ethos with its Robusta Pledge, which encourages other producers, importers, roasters, cafés, businesses, and coffee enthusiasts to sign a commitment to advance opportunities for Robusta farming communities and for a transparent and fair Robusta market.

Sustaining the future of coffee

While Nguyen Coffee Supply recognises the importance of the Robusta bean and the immense value it holds for the coffee industry, gradually this mentality is spreading. In March 2023, WCR launched its Robusta Variety Catalogue, alongside other Robusta resources such as a Grafting Manual and Nursery Videos. It is becoming increasingly evident that the future of coffee production as we know it is at considerable risk, largely in part due to climate change and the impact this is having on the temperatures and conditions in coffee growing regions. WCR operates a breeding programme for coffee varieties to not just optimise taste, but to encourage climate resistance and better adaptability or suitability to particular conditions. This year, WCR is planning to launch a global Robusta specific breeding network, which will produce hundreds of new Robusta crosses. It is thought that Robusta will be a crucial tool in safeguarding coffee production for future generations.

As already discussed, Robusta has proven to be more pest and disease resistant to Arabica, this, as Pedroza explained, combined with the higher planting density and leafier shrubs creating shade under the plants, helping the soil to maintain moisture, discourages the growth of weeds around the plant which means that less herbicides and pesticides are necessary. These more organic practices encourage long term soil health, further contributing to yield, and protecting the local and wider ecosystem of the area.

With 50 percent of land for Arabica production projected to be no longer suitable by 2050, as forecast by WCR, among others, preparations must be made. “It is difficult to see how the industry can avoid using a greater proportion of Robusta beans in the future given the realities of climate change,” noted Matthew Barry, insight manager of food & beverages at Euromonitor International. Arabica is already struggling to keep up with global demand. Neuschwander emphasised that “Robusta has already saved the coffee sector. If Robusta had not arisen over the last few decades to its current position (40 percent of total production), many – perhaps millions – of coffee farmers would be out of work and entire segments of the coffee market would not exist. Without Robusta, we would not have been able to keep pace with growing global demand over the last three decades.”

However, Robusta is not immune to the climate emergency; WCR predicts that with consumption and climate trends as they are, the world could be facing a Robusta shortage of up to 35 million bags by 2040. As the years progress, Neuschwander concluded, “We need every tool we can get to respond to climate change – farmers will have to ‘run faster just to stand still’.”

Opportunities for innovation

Robusta has quite quickly and assuredly established itself on the specialty coffee scene, with Nguyen affirming that roasters are now frequently asking the company for fine Robusta, or single origin Robusta. Giuliano concurred that the request for Robusta has been the SCA’s most asked question of 2023, and Turer that Robusta is offering roasters a unique selling proposition for them to differentiate themselves.

Image: Nguyen Coffee Supply

“Increasing interest in Robusta signifies a coffee market that is creative, innovative, and open to new ideas. The success of Robusta is part of an increasingly diverse coffee market which is more likely to thrive in the long term,” enthused Giuliano.

And we are only just starting to scratch the surface of Robusta processing methods, believes Nguyen, with Nguyen Coffee Supply recently having released an anaerobic Robusta. Pedroza added that if Robusta is treated [during processing] the same way as Arabica, excellent results are possible. She explained that for decades the washed processing method was considered the best for high quality coffee, yet now, “New processing techniques like extended fermentation periods, anaerobic fermentation, just to mention some, have also had a great impact on the cup, proving that Robusta has a huge quality potential and the industry is in the process of discovering it.”

The opportunities the evolution of Robusta presents for the industry for both innovation and sustainability justify its dizzying rise to the realm of specialty coffee. “Coffee is economically important – and beloved – around the world, yet it faces a [USD] $452 million/year investment gap. Filling that innovation gap is how we ensure a future with quality coffee from climate resilient trees, whether that coffee is Arabica, Robusta, or any other species,” explained Dr Jennifer “Vern” Long, CEO, WCR.

Nguyen also noted that, as a result, she thinks we are headed towards more global collaboration as a coffee industry, “for uplifting Robusta, and also just expanding the coffee experience to make it better for everyone.”

So, although, as Neuschwander articulated, “Robusta is not a silver bullet for climate change or sustainability efforts in coffee,” it is an exciting time for the coffee industry, as it begins what many believe to be a long overdue embrace of “the underdog bean.”

• Kathryn Brand is an associate editor on T&CTJ, while still writing for several of Bell’s other magazines. She joined Bell Publishing at the beginning of 2022 after graduating from the University of East Anglia with a degree in English Literature and Creative Writing. She may be reached at: kathryn@bellpublishing.com.

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The past few years have seen a steady rise in global demand in the functional and wellness tea market, and as consumers’ quest for health and vitality continues, market players expect this trend to kick into full gear.

The Covid-19 pandemic has become the biggest game-changer in the global market of functional drinks, according to analysts. “Following the Covid-19 pandemic, consumers face increased burnout due to a lack of separation between work and personal lives, leading to increased stress,” said Nathanael Lim, insights manager at Euromonitor International, a global market research firm. “At the same time, the pandemic has caused consumers to be more health conscious, looking after their own physical and mental wellbeing. This provides tea players an opportunity to launch functional ingredients in their tea products, appealing to consumer needs.”

According to the Whole Foods 2022 Trends predictions, functional drinks sales will continue to soar, doubling in the next decade. The analysts explained that consumers, especially those from Gen Z, are looking for healthier options than the traditional sodas their parents grew up on, and many are also interested in sober living.

Functional beverages include ingredients such as herbs, mushrooms, electrolytes, vitamins, minerals and probiotics. Some elements, like vitamins, consistently enjoy strong popularity, while others only start unravelling their potential.

In 2022, the retail value sales of immune support tea globally account for USD $2.7 billion globally. This is set to grow by 4 percent year on year, reaching USD $3.2 billion in 2027, Lim said. In Europe, retail value sales of immune support tea account for $77 million and are set to grow by 4 percent year on year, reaching $93 million by 2027, he added.

According to Market Research Future, another global market research firm, the functional and wellness tea industry has achieved a valuation of $7.2 billion as of 2022. Their projections indicate that by 2032, the industry is expected to reach a value of $12 billion.

“The demand for natural and organic production is rising, driven by concerns over synthetic additives and chemicals. The focus on preventive healthcare is increasing, with consumers taking proactive measures to maintain their health,” Market Research Future stated.

Science as a beacon

The list of functional ingredients available on the market today is long and diverse, but as an average customer grows more knowledgeable, businesses need to keep an eye on the science to make sure their products are appreciated by customers.

“Consumers are being more careful with how they spend their money, leading them to actively seek high-value ingredients – for 60 percent, this means those ingredients that are science-backed,” said John Kelly, strategy director for beverages with Kerry, an Irish food ingredients firm. He shared that “where immune health is concerned, this rises to 78 percent, while ‘clinically proven’ is the most sought-after claim for more than 80 percent of consumers. This echoes Kerry’s own research, which has found that 79 percent of consumers research ingredients for themselves.”

It is increasingly important to be able to provide high-quality research supporting the efficacy of the ingredients in your products, Kelly continued. Consumers are becoming much more discerning about which ‘healthy’ ingredients are actually supported by science. “Our own research last year showed that 79 percent of consumers say they conduct their own research into ingredients. Formulators need to ensure functional ingredients match expectations because, in the digital era, information travels fast,” he said.

Functional tea manufacturers agree that the science behind the offered functional ingredients remains the key to winning customers’ hearts.

Image: Smith Tea

“People are looking to improve their own health and well-being through the ever-increasing choices available in an expanding market,” commented Anish R Patel, a spokesperson for the UK-based functional tea manufacturer NutraTea Ltd. “Our NutraTea blends are created using only ingredients that have known health benefits, and nothing else.

The 8.8 percent increase in herbal tea consumption up to last year demonstrates that the market is on the rise, showing how the public is becoming more health conscious. This is especially true of the relaxation and pregnancy sectors where we have seen an evidential increase in demand for our products, Patel said.

“What sets apart the ingredients in our ProActive Health portfolio is the quality and quantity of the science supporting them. For example, BC30 TM, our patented probiotic ingredient, is backed by over 25 published papers, with research showing that it can help support digestive health, immune health, and may support protein absorption. Similarly, Wellmune® is the only ingredient of its kind supported by over a dozen published, peer-reviewed clinical studies,” Kelly said.

Stress-relief & immune-boosting teas are top performers

Different market players focus on their own niches, but the general consensus is that functional tea helps mitigate stress and fortify the immune system.

Stress relief, sleep aid and immune boosting features are key trends in the functional tea market for the future, Lim pointed out.

“With the stresses of everyday life, consumers want an easy way to support their wellness goals, and the demand for wellness teas will continue to increase,” commented Niya Vatel, founder and CEO of Tea and I, who also underpins the importance of the science behind the offered products.

“Social media and technological integrations have played a pivotal role in propelling the industry forward, attracting a fresh wave of functional tea enthusiasts from a younger demographic. As a result, the market has experienced a significant boost. Influencer marketing has amplified the popularity of wellness teas beyond the detox and weight loss niche,” explained Vatel.

Covid-19 undoubtedly was the main factor driving the consumer demand in the functional beverage market. Although the pandemic is officially over, its aftermath is still present.

“The big ‘mega-trend’ is increasing consumer proactivity when it comes to health and an active interest in everyday beverages as the vehicle for benefits. This has undoubtedly been accelerated by Covid-19,” Kelly said.

One of the findings of Kerry’s most recent global consumer survey was the increased scale of the impact of the pandemic on the demand for everyday beverages with functional benefits. Teas benefit from this demand as teas have a traditional positioning as wellness beverages.

“Their benefits in areas like stress relief have been enjoyed by people for thousands of years and are supported by a wealth of science. This inherent ‘health halo’ makes tea a great fit for functional products because consumers are most likely to expect benefits in categories that are traditionally associated with health,” Kelly said.

The list of reasons why customers opt for functional drinks is long. One study by Kerry, for instance, discovered both men and women attribute beauty support as the top reason they consume beverages with high nutritional value and are willing to pay a premium even amid global inflation. Men and women are both drawn to gaining beauty support from fortified beverages.

Image: Kerry

Skin is the top concern, with 51 percent when it comes to purchasing beverages fortified with nutrients. Skin support was essential to 58 percent of women versus 44 percent of men globally, revealing a small gender gap regarding the interest in beauty support.

Immune support, adaptogenic teas, and functional herbal blends are currently the main segments in the functional tea market, according to tea and herbal supplier, Hälssen & Lyon. The German-based company stated that “consumers are seeking beverages that offer health benefits beyond hydration, making functional and wellness teas an appealing choice. As consumers look for ways to proactively manage their health, functional teas, which are attributed to various health benefits, such as immune system support or stress reduction, are in high demand. The ageing population also contributes to this but is more focused on maintaining health and vitality.”

Emerging segments

The functional tea market is also expected to evolve fast, especially as the science behind more ingredients becomes increasingly convincing.

Hälssen & Lyon, for instance, expects nootropic teas to be among the fastest-growing segments in the following years. Nootropics are substances believed to improve cognitive function and may be included in tea blends. Ingredients like ginkgo biloba, lion’s mane mushroom, and adaptogens may enhance mental clarity, focus, and memory.

In addition, the company anticipates strong demand for plant-based functional ingredients, and sustainability and regenerative agriculture will stay at the centre of public attention.

“Immune-boosting tea continues to remain relevant for consumers, especially with many unknown diseases expected in the future. With features such as vitamins and botanicals like ginger, this serves to strengthen consumer’s immune system and protect them from infections,” Lim said.

New technologies also let tea manufacturers explore new niches. Probiotics are a particularly exciting area, partly because of the growing awareness of their benefits but also because the emergence of spore-forming strains has created opportunities for tea manufacturers to create innovative new functional products, Kelly said.

Market Research Future reported that a collaboration between functional tea manufacturers, ingredient suppliers and retailers foster innovation and market expansion, noting these collaborations enable knowledge sharing, distribution network enhancement and the development of new product lines, ultimately benefiting both industry participants and consumers.

• Vladislav Vorotnikov is a Batumi, Georgia-based multimedia B2B freelance journalist writing about the tea and coffee industry since 2012.

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The private label tea and coffee market in Eastern European and Nordic states is steadily growing this year, thanks to a stable demand and the ongoing expansion of portfolios by leading local players. 

In contrast to Western Europe, where the tea and coffee private label segment has been actively developing since the 1980s, most Eastern European states have registered significant market growth and massive launches of new, private label products in recent years. The same, however, cannot be said for the Nordic states, where the popularity of private label tea and coffee brands, produced by leading local retail chains has always been high. 

One such brand is Norwegian chain, REMA, which is implementing its REMA 1000 private label strategy that involves actively developing its private label brands in both the Nordic states and other Eastern European states. REMA has significantly expanded its portfolio of private label tea and coffee brands over the past few years, and most of analysts expect the company will continue to develop this segment. 

REMA’s current list of tea and coffee brands is wide and includes some iconic brands in the Nordic market. An example of this Kolonihagen, a well-known Norwegian coffee and tea private label supplier within REMA, which in recent years has strengthened its positions both in the domestic market and overseas.  

Arnt Ove Dalebø Englund, co-founder and director of innovation at Kolonihagen, said that Kolonihagen recently entered the premium tea category with a range of four variants. “This is part of the REMA 1000 private label strategy, having alternatives — [opening price point] (Prima), mid-range (R) and now finally also covering the premium through the organic Kolonihagen brand.” He said that this series of teas is nationally distributed and is present in all 650 REMA 1000 stores in Norway. According to the size of the category [in each store] (both shelf space, rotation and turnover), there are four premium products at the moment. 

“We do not have plans to expand the [number of products, [instead] bringing in new flavours [as a] one in-one out. Additional value propositions are also highly relevant and part of a continuous strive to do things better. That is the core of our brand,” said Dalebø Englund. “One example of this is to put regenerative principles (and certifications) on top of the organic standards. Seasonal products are [also always being considered].” 

Dalebø Englund expects Norway’s private label market and that of other regional countries as well as Eastern Europe will show stable growth rates in years to come. “It’s hard to answer this on behalf of competitors in FMCG market in Norway, but in general, the private label category share is lower than that of other Nordic and European countries. [I predict] that moving from 20 percent to between 40 and 50 percent is likely in a two to three-year period, and this will probably be even higher for the tea and coffee category. 

Other major players are also considering accelerating their expansion both in the market of Nordic states and Eastern Europe. 

Bethany Physick, marketing manager at Finlays Europe Extracts, shared that across Europe, Finlays is continuing to help European brand owners tap into the health and wellbeing trend with its Just Add Water solution, a range of sachets containing tea and botanical powder blends that are designed to meet consumers’ desire to drink functional water on the go. “Later this year, Finlays’ new cold brew coffee extraction facility will open in the United Kingdom bringing an exciting range of cold brew coffee extracts to the fast-growing European market,” she said. “The coffee extraction facility will produce for branded and [private]-label suppliers in the UK and European and Eastern European retail and hospitality sectors.” Physick noted that Finlays is already a global leader in cold brew in the United States, and it expects growth in the category in the European market. 

Regarding future market prospects, Sian Edwards, insights manager, Finlays Group, explained that tea in all formats offers major potential in Eastern Europe, in terms of the market scale and growth prospects. “There are big markets, many of which are fast premiumising, as consumers seek a wide range of healthy, functional and indulgent beverages. The ready-to-drink (RTD)/iced tea market was valued at USD $2 billion in 2022, and has yet to reach maturity, with a forecast of 18 percent CAGR between 2022 and 2027, to reach an estimated market size of $5 billion in 2027.” Furthermore, he noted that RTD/iced tea is being bolstered by consumers seeking healthy and innovative alternatives to traditional soft beverage categories. 

“Hot tea and infusions are a more mature category for consumers in Eastern Europe. The category was valued at USD $9 billion in 2022 and is expected to exceed $10 billion by 2027 – with a 2 percent CAGR,” said Edwards. “Per capita consumption in the region is particularly high, with tea established as a habitual, daily necessity in many Eastern European markets. There is continued consumer demand for both RTD/iced tea and hot tea and infusions, and we see private label continuing the play a valuable role in this market growth.” 

PL still strong in Western Europe 

The private label market is traditionally within the interests of some major Western European players. 

Jens Schneider, managing director of Kloth & Köhnken Teehandel GmbH, one of leading tea suppliers in Europe, said the company has big plans for the further expansion this year. “There is an ongoing demand for organic and the wish for a sustainable supply chain throughout the world. The Nordic states, and Eastern Europe are markets we have good contacts in for many years, and we [see] steady, growing consumption [in both]. 

Still, according to Schneider, after three years of continuous challenges with consequential influences in sales channels, filled stocks and market movements, “it is currently difficult for the company to predict what trend or demand it really has in the market. [However], the focus on and trends toward organic, transparency and sustainable sourcing will be ongoing and rising.” 

PL optimism fades in the Nordics 

Representatives of some leading Nordic and Northern European retailers are less optimistic, regarding further prospects of the private label market, particularly in the coffee segment. Juhani Haara, a senior sales manager, S Group, a Finnish retailing cooperative organisation, said that private label, the coffee segment in particular, has decreased. “According to our sales data, there is a clear decline in private label coffee sales volume – a nearly 19 percent drop – this year. The reason for this is the increased campaigning with branded products both in S-Group and in the market. On the other hand, private label tea sales volume has increased significantly, by about 25 percent, during this year,” she said, adding, “this is certainly influenced by the economic situation. We expect this trend to continue towards the end of the year.” 

Haara said that new private label products have been added to the tea selection this year: two Kotimaista herbal teas and four different X-tra products. “There hasn’t been any promotion in tea products, but our own PL products are remarkably affordable compared to brands. This year there have been no private label novelties in coffee yet, but we are developing our selection.” 

Most independent analysts also do not expect sharp market growth rates in years to come. Julija Poliscuk, a senior consultant at global market research firm, Euromonitor International, believes that private label tea and coffee items are not growing as quickly as in other food and drinks categories. “The slow dynamics in current value and flat or declining volume share can be attributed to these products’ association with rituals and thus, the demand for high-quality offerings, reflecting the cultural and image significance they hold.” 

She said that in 2022, the current value share of private label in Nordic countries for coffee and tea increased slightly, reaching 9.3 percent. “This cooling trend aligns with stabilised consumer financial confidence and desire to spend after the challenging years of Covid-19. Notably, the volume share of retailers’ own brands in coffee rose by 0.7 percentage points, reaching 11.8 percent in 2022, signaling better performance compared to the overall coffee market in Norway, Sweden, Finland, and Denmark combined,” Poliscuk explained. “In Eastern Europe, historically known for brand-oriented preferences in tea and coffee, the current value share declined by 0.2 percentage points in 2022, reaching 5 percent. Coffee’s volume share was 7.2 percent (versus 7 percent in 2021), which pales in comparison to the strong growth of discounters and retailers’ own brands’ performance in other categories.” 

She added that many Eastern European markets offer big promotions for national tea and coffee brands, which reduces price gap between those products and private label ones. This market situation, according to Poliscuk, favours branded products. “When the price difference is marginal, consumers opt for familiar brands, purchasing them on discount. This hampers the development of private labels in tea and coffee in the region.” 

Poliscuk said that the hyperinflation in Eastern Europe, did not boost private label in 2022, as consumers inertially continued their ‘revenge’ spending after the Covid-19 period. “However, 2023 might bring a different outcome as consumers already started downtrading, potentially making private label a more attractive option. The level of sophistication and price segmentation within private label is more prominent in countries with well-developed modern grocery retail.” Additionally, recent launches of private label coffee and tea products in the Nordics target audiences seeking added value, which leads to the appearance of more specialty coffee (eg, specific bean origins). “Retailers are also expanding their assortment to align with sustainability strategies, offering more organic teas and coffee in modern, environmentally friendly packaging.” 

Per Poliscuk, private Labels primarily are considered ‘anti-crisis products’, allowing consumers to save or maintain their preferences without compromising on quality. The hyperinflation in Eastern Europe during 2022 and continuing into 2023 will impact consumer behaviour and drive the surge in private label adoption. As people seek cost-cutting measures, price increases in coffee and tea will push them to revise their previous preferences. “While Private Label won’t dominate the hot drinks market due to the nature of these products, its expansion alongside aggressive discounters will positively influence retailer’s offerings.” 

In Nordic countries, Poliscuk said the volume of private label hot drinks is expected to stagnate, even decline, but the value share will increase alongside the price. More premium coffee and tea aimed at quality seekers eager for better prices will emerge. “More caffeine-free and health-improving teas are expected, while coffee offerings will focus on specific beans and roasting variations. Retailers in these Western countries have the expertise to develop premium store brands based on specific needs like sustainability or fair trade.” 

Despite the impact of war on logistics chains and prices, with a small private label market and a decreased national brands presence, Eastern Europe expects a stronger demand than ever before for retailers’ own brands. 

• Eugene Gerden is an international freelance writer, who specialises in covering the global coffee, tea and agricultural industries. He worked for several industry titles and may be reached at gerden.eug@gmail.com. 

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The tea and coffee markets in Greece are steadily developing this year despite traditional economic problems of the country caused by high debts and soaring energy costs. In general, drinking coffee is a strong modern Greek tradition, with 95 percent of Greek consumers buying coffee. 

The lifting of pandemic restrictions has provided an impetus for growth for many segments of the Greek national economy and industrial sectors, including tea and coffee, however, a number of serious problems, along with the ongoing hostilities in Ukraine, continues to put a serious pressure on the industry, preventing its more active growth. 

According to global market research firm Euromonitor International, price hikes are currently the main factor that impacted hot drinks sales in Greece. 

Ilaria Abagnale, a senior consultant at Euromonitor, said that coffee manufacturers being unable to absorb costs (and therefore passing on via higher retailing prices to consumers) combined with disposable incomes decreasing has created a significant demand challenge. She said this has negatively affected consumption, since decreasing disposable incomes and higher prices are forcing consumers to cut back on their purchases. 

“Discounting activities have been increasingly being used by retailers as companies seek ways to prevent losses. For example, more companies are introducing economy ranges to appeal to cash-strapped customers,” said Abagnale. “Thanks to these activities, volume sales recorded a mitigate decline for overall hot drinks, as consumers are choosing to migrate to cheaper products rather than avoiding them altogether. However, coffee and tea registered a 0.2 percent and 0.7 percent growth respectively.” 

Greece is attractive to coffee chains 

In the meantime, major global players have been interested in the Greek coffee and tea markets. One of them is Coca-Cola HBC, which in recent years has significantly strenghthened its position in Greece’s coffee market. 

Athina Popof, coffee, premium spirits and snacks director, Coca-Cola HBC Greece & Cyprus, told T&CTJ that the company has distributed the Costa Coffee at-home range, which includes five different propositions of roasted and ground espresso and seven different varieties of espresso capsules. 

“Through our distribution network, we are serving Costa Coffee in independent cafés all over Greece. We are also addressing new channel opportunities with our own close system and capsule solutions,” Popof said. “In 2022, we strengthened our proposition with the launch of Caffè Vergnano, which offers authentic Italian espresso, in Greece, following an exclusive distribution agreement with the family-owned Italian coffee company.” Headquartered in Santena, Italy, Caffè Vergnano is one of the oldest coffee roasters in Italy with roots dating back to 1882. 

Popof noted that it is a super-premium and high-quality coffee that represents Italian heritage and authenticity at its best. “Caffè Vergnano’s products focus exclusively on the HoReCa (hotel, restaurant and café) channel, targeting premium customers. It matches perfectly with our strategic priority to create value and support our customers in this sector.” 

Furthermore, Popof shared that the two brands are highly complementary, which enables Coca-Cola HBC to address an even wider range of consumer tastes and segments. “Caffè Vergnano allow us to recruit consumers loyal to the Italian coffee taste, while Costa continues to be our mass premium global coffee proposition with broad consumer appeal across multiple platforms.” 

“Our focus in 2023 and beyond is to continue building distribution and appeal in these two great coffee propositions. Together with our partners, it is our passion to respond to all our customer and consumer needs with top quality coffee propositions for all occasions,” she explained. 

According to Popof, in general, in Greece, coffee is not just a product, it is part of the culture, and part of daily lives. She added this is also evident by the category growth both in HoReCa and in supermarkets in Greece. On a year-to-date basis, espresso coffee is growing by almost 10 percent, and this trend is expected to continue. 

Popof believes that modern coffee consumers are typically very well informed and have high standards. They are also diverse in their preferences. “This is why we have evolved our portfolio to offer two different brands, each with a unique proposition within the category.” 

Local player Kafea Terra is expanding its interests in Greece, with investments of EUR €6 million over the next two years and a 28 percent stake in the HoReCa market. Owned by local businessman, Yiannis Iosifidis, Kafea Terra, which produces Greek espresso under the Dimello brand and exclusively distributes illy coffee in Greece, is nearing €100 million in sales. 

Although it is estimated that coffee will show a decline in the Greek market in the next five years, Nikos Kougioumtzis, the commercial director of Kafea Terra, said in a press conference that the company plans to continue its expansion, particularly with its flagship Greek Dimello ground espresso, which now accounts for 20 percent in the Greek retail. 

Still, according to some Greek media reports, the ever-rising prices force Greeks to drink less coffee as well as tea. 

In general, the Greek coffee market is characterised by intense competition and saturation, especially in HoReCa segment (with, per Greek business paper, Capital, more than 70,000 bakeries, cafés, restaurants, and hotels throughout the country), which has forced some leading local players to expand in abroad. 

According to Greek Total Business magazine, in recent years many leading Greek coffee chains such as Coffee Lab, Mikel Coffee Company, Coffee Island, Grigoris and Coffee Berry have begun active foreign expansion. 

Economy options

In terms of coffee consumption, annually, at-home consumption is estimated at €300 million, while the out-of-home market reaches €3 billion in consumer prices. In volume terms, consumption hits 40,000 tonnes per year, 40 percent of which is consumed in restaurants and 60 percent at home and in workplaces. Per the Capital, the annual per capita consumption of coffee in Greece is estimated at 500 cups per year. 

According to the Hellenic Coffee Union, ground coffee in Greece accounts for 78 percent of sales, while 18 percent is capsule sales, which have shown growth in recent years. 

Euromonitor noted that given the strong price increases in the coffee category, more expensive segments (such as fresh ground coffee pods) slowed their growth. Since there aren’t many economy options, consumers switched to less expensive coffee categories such as standard fresh ground coffee. Likewise, the value growth in tea (which has been driven by premiumisation) slowed as fewer consumers can afford to purchase premium products on a regular basis. 

In response, retailers have undertaken major discounting activities and allocated more space to economy ranges. For instance, AB Vassilopoulos introduced a new private label coffee in 2022 under the name of Perla. The Perla range is comprised of fresh ground coffee pods (compatible with both Nespresso and Dolce Gusto machines) as well as filter coffee and espresso products. Domestic company, NutCo, introduced the Buon Gusto economy brand; compatible with Dolce Gusto coffee machines. 

Tea, a small market with potential 

Thanks to the healthy living trend and the strong marketing of the wellness and immunity-strengthening benefits of certain types of tea, these categories have attracted a lot of investment from both domestic and international players, leading to greater product variety, and grocery retailers are allocating more shelf space to such products. As such, visibility of herbal and green teas is growing and encouraging more people to purchase it. 

Caffeine-free infusion teas are particularly well-positioned to gain share in Greece as they do not compete with coffee – the most popular hot drink in the country. Instead, infusion teas are positioned to meet different consumption occasions, such as the evening time. The relaxation and sleep aid qualities of infusion teas make them more appealing to consumers and is stealing share from black tea. 

Over the forecast period, the consumption of tea is set to grow due to the expected persistence of the healthy living trend and the increase in product variety and availability. This has resulted in an increase in consumer awareness and attracted new consumers to the category, many of whom will continue to purchase tea in the coming years. Nevertheless, once dynamic, tea’s market penetration is low given the cost of living crisis and because there is not a strong tea drinking culture in Greece, consumers have reduced spending on non-essentials. 

Dimitris Siandris, COO of Lux, a Greek beverage company based in the city of Patras, speaking to Greek media, confirmed consumers’ shift to healthy tea options, including iced tea. “The past year was a pivotal year for businesses in the sector. We have witnessed a shift in the purchasing public to products with high nutritional value that harmonise with a balanced diet. The long-term confinement due to the pandemic and dealing with health issues created a completely different situation, to which we were called to respond in the best possible way”. 

Positive outlook ahead 

Euromonitor analysts believe Greece is set to remain a coffee dominant market when it comes to hot drinks and per capita consumption of this category will remain high. Coffee will remain the largest category in both the off-trade and on-trade channels. 

The share of fresh ground coffee is set to grow further at the expense of instant coffee. Most notably, Greek-style fresh ground coffee is anticipated to retain a loyal audience, with this already the largest category in terms of volume sales. Meanwhile, coffee pods appear to not yet have reached maturity and thus have plenty of space to grow. This category will continue to benefit from the strong increase in investment by leading players as well as the entry of new companies capitalising on this trend. 

Within the off-trade channel, value will perform better than volume across all hot drinks categories thanks to the continuing rise in average unit prices and the ongoing premiumisation trend. Although people in Greece will experience a decline in disposable incomes, this is set to affect volume sales more than value because it is higher-income consumers who purchase premium products, and they tend to be less affected by economic turbulence than lower-income consumers. Furthermore, consumers have become more demanding and are more likely to consume fewer items than to trade down to cheaper products. 

The ‘home barista’ trend (which gathered pace during the lockdown period of the pandemic) is set to remain relevant over the forecast period, with consumers expected to continue investing in premium coffee experiences at home. Whilst such experiences are more expensive than buying and preparing instant coffee, they remain less expensive than purchasing coffee through on-trade channels. As such, the decline in disposable incomes will drive some consumers towards premium at-home experiences whilst reducing the amount they spend out-of-home on foodservice. 

In case of tea, given that the consumer base of tea in Greece is largely comprised of higher income people, many of whom are health conscious, the decline in disposable incomes is not set to have a strong impact on tea-purchasing behaviour. Instead, such consumers are likely to prioritise quality over quantity, allowing premium brands to continue to gain share and add value to the category. 

Unfortunately, consumers must deal with escalating coffee prices because of a Special Consumption Tax on coffee in Greece.  

The president of the Hellenic Coffee Union, Yannos Benopoulos recently said in an interview with Greek media, that “not only does there exist a Special Consumption Tax on coffee, but it has been a constant request of the Hellenic Coffee Union in recent years to abolish it.” He added that “this specific tax measure burdens the operating costs of businesses as well as the price of the coffee that the consumer buys.” 

• Eugene Gerden is an international freelance writer, who specializes in covering global coffee, tea and agricultural industry. He worked for several industry titles and can be reached at gerden.eug@gmail.com. 

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The European decaf coffee market is steadily developing thanks to the ever-growing demand for it in the region and high level of consumption, especially in Eastern part of the continent.

Amid the ever growing desire of the young European population to limit their caffeine consumption, the demand for decaf coffee in the region remains strong. The increase of decaf coffee consumption in Europe is currently part of the global trend of the rising consumer health awareness and a higher demand for products, which are free from preservatives, caffeine and other various hazardous substances.

In the meantime, global coffee producers are aware of the current market trends, planning the acceleration of expansion in decaf coffee segment. For many of them, the Western European region remains still a priority for expansion.

Francesco Bosso, chief commercial officer of Trieste, Italy-based illycaffè, told T&CTJ that its brand has strong presence in the European decaf coffee market, with the markets of Italy, France, the United Kingdom and Germany being the highest priorities for its growth. As part of this, the company has recently completed the launch of some new products in this category.

“In Italy in 2020, we strengthened our presence in the decaf segment by launching the NCC Decaf, which are performing very well — at the top of the category,” said Bosso.

Still, he remains generally pessimistic and does not expect a significant growth of decaf coffee market in Europe in years to come. “We don’t expect any particularly positive trends in Western Europe and especially in Eastern Europe, where the segment represents between 1 – 2 percent and hasn’t grow in the last years,” Bosso explained.

In the meantime, representatives of Swiss Water Decaffeinated Coffee Company USA Inc believe the European decaf coffee market still has big growth potential in years to come. Erin Reed, director of marketing for the company, said that decaf coffee has long had strong consumption and a high market share in Europe, so Swiss Water considers this market segment important for its growth.

“We’ve had business in the UK through an import partner for more than two decades, but with specialty coffee becoming increasingly prevalent throughout the region, in 2018 we established an office in France dedicated to supporting the European decaf market,” said Reed. “According to data from StudyLogic, a global market research firm, total decaf cups consumed has increased annually since 2016 – except for the 2020 pandemic year – and reached a six-year peak at the end of 2021. Within our own business, we continue to see strong growth from this region.”

She said, generally speaking, the larger coffee-consuming countries are also the large decaf markets, but Spain is a country in particular that over-indexes in decaf consumption per capita. “Related, we’ve seen a growing preference for chemical free decaffeination methods globally and have been on a path to increase our capacity by 40 percent to meet increasing demand. This has been a multi-year effort that is expected to come to full realisation in Q3 of this year. European demand will be key to that growth,” said Reed.

In contrast to illys’ Bosso, Reed believes that the demand for decaf coffee and its consumption in Europe will be growing in years to come. “Based on the trends we have seen over the past several years; we expect European demand and consumption will continue to grow. Furthermore, we anticipate a continued transition to chemical free decaffeination methods, as consumers are becoming more discerning regarding the products they purchase,” she said, adding, “use of chemicals in production and processing due to environmental and worker concerns, as well as risk of even minor residuals being consumed, is decreasing in favour.”

Most independent analysts also believe the European decaf coffee market will continue to grow, with the growth expected to be observed both the Western and Eastern parts of the continent.

Nandini Roy Choudhury, client partner, Food & Beverages at global market research firm, Future Market Insights Inc, said that the Eastern Europe decaf coffee market, currently valued at USD $1,032.1 million, and growing at a CAGR of 8.3 percent, is expected to reach a market value of USD $2,266.2 million in 2033.

“The decaf coffee in Western Europe is growing at CAGR of 6.3 percent, but Eastern Europe has a highest CAGR comparing to Western Europe due to the increase in the number of coffee shops in this region. The absolute dollar opportunity of decaf coffee in the Europe is $1,234.1 million between 2023 and 2033,” said Choudhury. “The decaf coffee sales in Europe are being boosted by the region’s high popularity of coffee and a growing public awareness of the negative effects of caffeine. For instance: Caffe Nero, a UK-based coffee chain, has at least 58 stores and plans to open at least 12 more stores per year, while Starbucks [plans to] open 40 shops in six different eastern European countries.”

Where is consumption the strongest?

In terms of consumption, FMI data shows that in Eastern Europe decaf coffee consumption is around 68,407 tonnes and growing at a CAGR of 7.7 percent to reach a market consumption of 150,424 tonnes while Western Europe decaf coffee consumption is growing at a CAGR of 5.3 percent.

Choudhury said that Eastern Europe has the highest CAGR as the consumption of coffee is increasing rapidly in this region. “In Eastern Europe coffee consumption exceeded tea consumption in 2019 for the first time. Coffee consumption in this region has been steadily growing since the late 1990s, while the tea market is in a sort of stagnation.” She explained that as coffee consumption increases, consumers are looking for less caffeinated coffee products, which boosts the decaf coffee market. “Rising incomes and the growing interest in high-quality coffees also bring interesting opportunities to the Eastern European decaf coffee market. Top coffee chains in Eastern Europe are including decaf coffee [on their menus] and advertising health benefits of decaf coffee helps the market in upcoming years,” said Choudhury.

Finally, analysts at global think tank Euromonitor International said that although decaf coffee has been around for decades, in recent years customers have been demanding it, and enjoying it, more than ever before. An official spokesman for Euromonitor said that we are facing a caffeine paradox. “Caffeinated products continue to show a very dynamic growth in beverages, as consumers need effective energy and to remain focused as result of stress, anxiety and insomnia, which have been exacerbated by the Covid pandemic; at the same time, as caffeine consumption grows, consumers are giving increasing attention to mitigate caffeine’s negative side effects, substituting a few occasions of consumptions with decaf products.” He noted that stress relief is an important component of wellbeing, and promoting sleep is also a thriving area of product development within the drinks industry, thereby playing a major role in decaf sales. “Additionally, a growing percentage of the younger generation is choosing to limit their caffeine intake, further boosting the growth of the global decaf coffee market.”

According to Euromonitor analysts, in 2022, there was a strong recovery of on-trade sales, which slightly affected retail volume sales of coffee as result of channel shifts. As in the overall coffee segment, there is an increasing premiumisation trend also occurring in decaf coffee.

The Euromonitor spokesperson said decaf drinkers are actively seeking out and are willing to pay higher prices for better quality decaf coffee, favouring fresh coffee versus instant variants, such as fresh coffee beans. “Demand for high-quality decaf coffee is also rising in foodservice, where coffee shops are beginning to experience a higher demand for tasty decaf drinks.”

According to Euromonitor’s Product Claim and Prime Positioning System, the number of decaf coffee SKUs available online is significant increased between 2019 and 2021 in Western Europe, with an increase of 471 SKUs, mainly driven by Italy, UK, Spain and Germany. But as more consumers are paying better attention to health and wellbeing, demand for a wider variety of decaf coffee will continue to grow in both Western and Eastern Europe.

• Eugene Gerden is an international freelance writer, who specializes on covering of global coffee, tea and agricultural industry. He worked for several industry titles and can be reached at gerden.eug@gmail.com.

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What is Driving Today’s Consumers?

In September 2022, London-based global consultancy Euromonitor International led a virtual coffee chat titled The New Era of Consumerism, which shed light on consumer patterns and their key drivers. The discussion emphasised that political, societal and environmental influences have shifted consumers’ buying habits, resulting in them gravitating toward products that reflect their values. Health and wellness continued to be a key motivator for consumers responding to the need of both an aging population and those individuals simply opting for healthier living.

“Despite the fact that we are living longer, the healthy life expectancy has remained stagnant at around 62 years, globally for the past decade,” said An Hodgson, head of consumer research, Euromonitor International. “This means that we are living longer but are not necessarily enjoying our old age years.

Jana Rude, population and household manager, Euromonitor International, shared that the rising
incidence of chronic diseases and the lingering effects from the pandemic have encouraged individuals to stop and consider the actions that will preserve health and longer life. This continued motivator provides an opportunity for tea and coffee brands to deepen a connection with consumers by sharing the health benefits and the research that supports those claims. The shift towards smaller households, including more single-person households and childless couples, has changed both the size and type of products that consumers are seeking. Single serve products and solo experiences, including introducing consumers to pour overs and loose leaf teas, could respond to these consumers’ needs.

Consumers expect quality, convenience,
experience, and
authenticity

Value-Driven Purchases

Value is no longer just about price; consumers want intangibles, including quality, convenience, experience and authenticity. Each of these areas provides an opportunity for tea and coffee companies to communicate their mission statements and, in turn, build and strengthen these connections. “Cutting back on spending is not just lower income houses; consumers are much more selective about their spending,” said Hodgson. “So yes, there is the lipstick effect (where consumers are indulging in smaller products), but there is also the trading down and hunkering down for a long inflation and an economic recession.”

Today’s consumers are increasingly critical and will not hesitate to abandon brands that aren’t aligned with their values. Hodgson said that companies need to stay in touch and communicate with consumers every step of the way, “this includes both listening to their needs and providing them with guidance on how to make better decisions.”

Over the past decade, there have been significant initiatives towards developing both a sustainable
and regenerative infrastructure. Communicating these initiatives, and the reasons behind them, can help strengthen connections with consumers who hold similar values. “Peet’s commitment to responsible sourcing is central to the Peet’s story and the trust our customers place in the brand, said Mary O’Connell, communications director, Peet’s Coffee, Emeryville, California. “This year, Peet’s became the first coffee company to be verified for achieving 100 percent responsibly sourced coffee, according to the standards set by sustainability non-profit, third party Enveritas.” By sharing its initiatives with its consumer base, Peet’s Coffee demonstrates how it is putting its values into action.

Brewpoint Coffee, Elmhurst, Indiana, prides itself in being a value-oriented company, taking every opportunity to share its story and the values that drive it. This includes not being afraid to promote the company in a way that showcases who they are. “I think that connection to a person and a mission really resonates with people,” said Melissa Villaneuva, founder and CEO, Brewpoint Coffee. “Loyalty is built on trust, and trust is built from connection to connection.”

Making Strategic Investments

The coffee and tea markets are saturated, making it increasingly challenging for brands to stand apart from the crowd. “It’s such a crowded space out there, it’s hard to create a brand that sticks in someone’s head,” said Mark Plumlee, senior content manager, Must Have Menus. “The key is to differentiate yourself from the other brands in your space, and then build your marketing around that.”

Innovative strategies, including social media and promotions, may drive consumers into your space, but the critical element is finding ways to build that connection (and in turn loyalty) once they are there. Plumlee shared that marketing is often the first thing that companies abandon in times of stress and financial strain. However, there are simple techniques that brands can implement to continue to foster those connections with their consumer base. Loyalty cards, specifically the paper version of them, are an inexpensive way that brands can facilitate these connections. He stressed that the cards provide an opportunity for employees to connect with their consumers, helping further develop that loyalty.

“Coffee shops have this massive opportunity to convert their consumers from one-time visitors to loyal consumers; the key is finding the way to make your space a part of their routine,” said Plumlee. “Any amount of marketing capital that you put up front to both develop and strengthen those connections, will pay off.”

Coffee shops have huge opportunities to convert one-time visitors to repeat and loyal customers.

Revisiting the Lost Art of Conversation

Fostering consumer connection, whether it’s remembering the customer’s name or beverage, helps ensure that customers feel acknowledged. “We are known for our expertise and our craft, from our coffee roasters to our store teams,” said O’Connell. “Everyone at Peet’s is passionate about coffee and coffee lovers and it shows. Walk into your favourite Peet’s and it’s likely your barista will know and recognise you and start prepping your order. “This included developing a loyalty program, with mobile order ahead, exclusive member-only items and special offers, all elements that help affirm that the customer’s loyalty is valued. Peet’s Coffee has also expanded its at-home offerings in both grocery and retail locations in the United States, providing consumers with multiple touchpoints of their brand.

Embrew Tea was developed to fill a gap, providing consumers with a convenient option while retaining elements of the specialty experience. “I wanted to create something that emulated a loose-leaf experience but with the ease of a tea bag and having something lightly sweetened because that was my preference,” said Ashley Haywood, founder and CEO, Embrew Tea, Asheville, North Carolina. “I came to realise that there were thousands of individuals who also had that same need.”

However, she quickly recognised that it was not just about the product. Her customers resonated with her experiences, and through sharing these experiences she was able to strengthen the connections with her customers. “Nothing replaces relationships,” said Haywood. “Having those conversations with people is critical, and if you can’t have them face to face, then find other ways to do that.”

One strategy that has been particularly effective for Haywood was personalising her email communication, which included providing insight into her personal experiences. By making this shift,
the emails became more conversational instead of product focused, increasing both engagement and
open rates. “I will take something that happened during the day or week and use it for both entertainment and to foster connections, but I will always bring it back to tea,” said Haywood. “It’s about creating that relatable story.”

The Power of Story Telling

Nurturing those human connections is the glue that adheres the customer to the brand and often
brings them into the space. “What ultimately creates a more solid loyalty is sharing stories; because story is not just about what we are making up, but instead making sure that we are messaging who we are and what we want to become,” said Villaneuva. “This alignment with our values will end up attracting people with similar values, and the loyalty will become much stronger than those individuals that simply like your product.”

Conversations, whether in person or online, are a great way to share not only your company’s story, but also learn the stories of your customers. Each transaction that customers choose to make (or not make) provides insights into their needs and wants. “Numbers and data are storytellers; it’s not always about the money. It’s about what did people get really excited about, and sometimes numbers can tell you that,” said Villaneuva. The key is committing the time to explore the data and feedback and adjusting your offerings accordingly.

However, storytelling, shared Villaneuva, on its own is not enough. Customers need to also have a
positive café experience, including being served quality products and having a smooth transactional
experience. “When it comes to loyalty programs, how easy is online ordering in, how easy is it to
order in shop, how long are your wait times,” said Villaneuva. “That whole operational experience,
is a key piece of the puzzle and if you can do all three – product, storytelling and transactions –
really well, then that is where you gain customer loyalty.”

• Anne-Marie Hardie is a freelance writer, professor and speaker based in Barrie, Ontario. She may be reached at: annemariehardie1@gmail.com.

The post The New Age of Consumer Loyalty appeared first on Tea & Coffee Trade Journal.

Changing consumer habits and the development of grocery retailers are shaping up the private label segment of the tea and coffee market across Europe. The growth potential in this segment is yet to be exhausted, especially in the eastern part of the continent, where market players are now catching up with Western trends.

Over the past few years, private label coffee has been increasing its presence in the European market. Numerous European supermarket chains put their own brands on the shelves, such as Perla from Dutch supermarket Albert Heijn, E.Leclerc’s L’origine du goût in France, and Tesco Finest and Marks & Spencer in the United Kingdom.

Private label tea at Netherlands-based grocery store, Albert Heijn. Image: World Brand Design Society Website

Nowadays, it is believed that the share of the private label tea and coffee products is the highest among discounters, and they could drive growth in sales in Europe even further.

“Private label genesis and evolution are impossible without developed modern grocery retailers. Further penetration of discounters, especially in Eastern Europe, brings more space for private label moves and initiatives,” commented Julija Poliscuk, senior analyst of London-based market research company, Euromonitor International. “This is the main factor for healthy dynamics of retailers’ own brands across hot drinks. Channel shift transforms private label to comprehensive and trusted brands,” she added.

The entire European market is currently under an influence of the rising production costs, which affect all links in the production chain, and change consumer attitudes, Khansaa Ruiz, export manager of the Alicante-based coffee factory Burdet Coffee said. “There is a major crisis. Roasting factories are suffering at the moment because of the increase in coffee prices. We have been struggling to keep business going. The coffee prices have escalated tremendously due to the Covid-19, then due to the transport problems, and now due to the war. So, it’s a bit chaotic.”

“As for the private label coffee the trend is towards higher quality coffee, or at least this is our business, and we do see an increase here,” Ruiz said. She explained that there is a relatively high demand for new brands on the market. In general, many small businesses and people are looking for small business opportunities, and the market witnesses a very important increase in small businesses, including those wanting to create online websites to sell coffee.

“As for the quality of the coffee, we see that more and more a single-original coffee is being sold better. [This concerns] pure coffee, such as Colombian, Ethiopian, Guatemalan, Costa Rican, etc. People are starting to appreciate the meaning of good quality coffee,” she added.

Alberto Lusini, head of Northern Europe at Massimo Zanetti Beverage cited New York-based consultancy, Nielsen, estimating that private label share in the European coffee market is between 10 per cent and 25 per cent. “This data has had a relatively constant growth in past years. Private labels in the mass market and food service are no longer synonymous with entry-level pricing,” he explained.

The private label segment developed an important evolution in terms of innovation and improvement in quality, typical of the branded business, Lusini said, explaining that trade labels are answering the needs of consumers for additional transparency, and traceability, in case of single origins, and sustainability. “The increased sales of coffee beans is proof of a trend to bring the barista experience at home,” he added.

Poliscuk said that another reason why private label coffees are so popular is that there is more variety. “Most supermarkets offer several quality options and coffee from different origins. Many supermarkets have entered the premium segment and are expanding their range of certified coffee products. Retail sales of organic-certified private label brands are increasing. Examples of organic private label brands in Europe include REWE Bio in Germany, Carrefour Bio in France, and Waitrose Duchy Organic in the UK.

Covid-19 as a game-changer?

The coronavirus pandemic has reshaped the European grocery-retail landscape tremendously. With restaurants, cafés, and bars remaining largely closed in most countries during at least the first wave of the pandemic, consumers rushed to stock up on groceries.

The out-of-home coffee market was greatly affected during the Covid-19 crisis, said Utrecht, Netherlands-based consultancy ProFound-Advisers, in a post shared by the Dutch Centre for the Promotion of Imports from developing countries. Many coffee shops closed, and people worked and drank coffee at home instead. Coffee sales at supermarkets went up, which benefitted private label brands, and created a trend.

“Early in the Covid-19 pandemic, consumers around the world rushed to supermarkets to stock up on products. Retail sales went up a lot. Retailers also developed online sales and delivery solutions for consumers. This made supermarkets the main source of food and beverages during the pandemic,” the Dutch analysts added.

MZB says the demand for private label coffee is growing across Europe. Image: Massimo Zanetti Beverage

Lusini agreed, adding, “The Covid-19 pandemic and, even further the strong inflation on raw materials from Q4 2021, has pushed consumers towards private labels. In particular, the inflation driven by the strong price increases in green coffee has polarised the consumers towards entry-level prices on one side, and premium products on the other. Private labels could possibly take advantage of this.”

However, it is yet to be said that the Covid-19 pandemic has been a game-changer for the hot drinks market in Europe. Poliscuk explained that financial hardship caused by the pandemic forced consumers to re-think their spending, so value for money embodied in private label quickly became a priority, but that trend is primarily related to soft drinks. “Branded products remain important within hot drinks, due to their indulgence and rituality essence, in addition to the request for quality differentiation. Neither tea nor coffee of retailers’ owned brands did not gain share in 2020,” she added.

The European market is uneven

Private label hot drinks’ presence in Europe is not homogeneous and differs regionally and from country to country.

In 2021, almost 16 per cent of value sales of coffee and 14 per cent of tea in Western Europe were under retailers’ house labels. Meanwhile, in Eastern Europe this indicator does not reach 5 per cent for coffee and is 7 per cent for tea, Poliscuk said.

“The significantly stronger presence of private label in the Western part of Europe is explained with strongly developed chains of modern grocery retailers and already earned trust to own brands. Eastern Europe is only catching up with Hungary, Czech Republic, Poland, and Slovakia pursuing a Western model, with the strongest share of retailers’ brand overall and in hot drinks too,” Poliscuk noted, adding that these countries successfully adopted international – or developed their own – discount chains.

Single origin coffee is making its way into the private label segment. Image: Burdet Coffee

Different levels of development of store-owned brands define the way companies raise these products’ awareness. Thus, Eastern Europe usually puts the focus on low cost. More advanced chains enter the mode of portfolio expansion and product range broadening. Eastern Europe has already witnessed the evolution of basic needs’ satisfaction to catching up with expertise from brands they mimic, Poliscuk said.

Rising beyond the low-cost segment

As the popularity of private label products in Europe promises to gain traction in the coming years, this segment starts playing an increasingly important role for market players.

“We have a long-standing experience in private labels, both in mass market and food service. The management of private labels is part of our ongoing relationship with the trade at the global level and it represents one-fourth of our total turnover. We leverage our strong expertise in green coffee and the roasting capabilities of 18 plants located all over the world to support our PL clients,” Lusini said.

Poliscuk said that further projected penetration of modern grocery retailers and especially discounters will support the development of private labels across Europe with the highest dynamics in its Eastern part. “Private label in Western Europe is entering a new era where penetration of modern grocery and a developed omnichannel allow them to evolve towards something new and unique. Retailers’ own brands are ready to rise beyond low-cost, wide assortment and segmentation,” she said.

Currently, these brands target specific consumers’ needs and higher expectations with little or no sacrifice in terms of product quality. Poliscuk is confident that this will result in more private label coffee pods and fresh coffee beans with the underlined origin and technology of roasting, and private label tea will be able to offer more varieties and added value via functionality.

“As modern consumers are eager to buy sophisticated, premium organic or sustainable products, even price-sensitive private label [will be able to] enter the niches,” Poliscuk shared, adding, “It’s worth mentioning, that ever-continuing expansion of e-commerce with forms of dark stores and delivery services will draw new horizons for coffee and tea private label across Europe.”

• Vladislav Vorotnikov is a Moscow-based multimedia B2B freelance journalist writing about the tea and coffee industry since 2012

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Wellness teas have experienced an ongoing rise since the global Covid-19 pandemic began, and there’s no sign that the trend is ending anytime soon. Thus, it’s a clear opportunity for the tea industry and beverage developers alike, to capitalise on the growth.

In November 2020–amidst the early phase of tea’s newfound popularity during the Covid-19 pandemic–writer/reporter Rebecca Deczynski summed it up at Refinery 29: “Right now, tea culture is at its peak. You’ve likely found yourself scrolling past targeted ads for herbal elixirs or swiping through endless Instagram stories depicting still-steaming mugs. You’ve heard celebrity endorsements for choice brews, and you’ve read about ‘wellness tea’ in magazine roundups devoted to self-care. The stuff is more popular than ever…”

John Lenz, the vice president of sales and president of hospitality at Intelligent Blends in San Diego, California, reported that while coffee is still considered a relatively healthy beverage, tea boasts the most benefits over any other type of beverage. “Wellness teas were already on the rise before the pandemic, but as more people looked for solutions to boost immunity, they found tea,” said Lenz. “Living through a pandemic has made many people realise the importance of immunity-boosting food and beverages.”

High demand for functional beverages

Chicago-based ADM, a leader in nutrition and a partner to the world’s leading consumer brands, regularly looks at consumer trends through its proprietary “Outside Voice” consumer insights platform. The organisation’s recent 2021 research found that 31 per cent of consumers are purchasing more items tailored for their health, and 50 per cent report a preference for foods and beverages that naturally contain beneficial ingredients. ADM also noted that the desire to influence health and wellness through foods and beverages is creating new opportunities for nutrient-dense products with functional health benefits aimed at supporting immune systems, enhancing mood and sustaining energy.

Vince Macciocchi, senior vice president and president of ADM’s Nutrition business unit, and the company’s chief sales and marketing officer, explained, “The global health crisis has changed consumer preferences in new and unexpected ways. We are seeing a heightened demand for foods and beverages that support immune systems, enhance our mood and reduce our environmental impact, driven in part by emerging human tensions. This has provided a unique opportunity for brands to develop disruptive new products that will forever change the way we eat and drink.”

Maria Uspenski, founder and CEO of The Tea Spot – which offers numerous premium teas focused on wellness and functional benefits, shared, “Consumers are seeking natural ways to support wellness, whether it’s strengthening immunity, helping reduce stress, or bringing oneself ‘back into balance’ with a cup of tea. In fact, consumers are seeking all varieties of tea–including traditional teas, functional teas, botanicals, and herbal blends. We expect that premium tea and specialty wellness teas will continue to stay in the forefront of consumers’ minds.”

Clipper Teas launched a functional teas line in 2021 designed to improve moods. Image: Clipper Teas

Shabnam Weber, the president of The Tea and Herbal Association of Canada, a leading authority on all things tea in Canada, representing members from bush to cup, agreed. “The need to take care of one’s well-being, both physical and emotional, remains a strong driver for consumers,” she explained. “Today, 58 per cent of consumers are actively looking for healthy products when they shop, resulting in a 171 per cent increase of functional food and beverages introduced to market in the past ten years. This trend will continue, and it provides the tea community with an opportunity to boost its growth by focusing on tea as a healthy beverage.”

Indeed, consumers are eagerly seeking products that they believe support wellness. For example, Whole Foods Market global buyers and experts recently unveiled their top ten anticipated food trends for 2022, and functional beverages – including teas or beverages made with botanicals – are expected to rise in popularity in the next year.

“Last year, we saw tremendous pandemic-related shifts in grocery buying habits as the world adjusted to spending more time at home,” said Sonya Gafsi Oblisk, chief marketing officer at Whole Foods Market. “As the food industry slowly adjusts to a new normal, we expect to see consumers prioritise food and drink products that deliver additional benefits – like functional sodas and tonics – and products that support their sense of well-being…”

Major brands launch wellness teas

Some of the national and multinational brands that have recently introduced wellness teas in the marketplace include Celestial Seasonings, Twinings, The Tea Spot, Buddha Teas, and other major players.

Boulder, Colorado-based Celestial Seasonings, the specialty tea brand and subsidiary of Hain Celestial Group, launched Tea Well, a line of organic wellness teas that couples daily health benefits with flavour. Tea Well blends include Mood Tonic, Sleep (the first tea with melatonin sold in the United States), Laxative and Gut Health (featuring a blend of prebiotics, probiotics and fibre).

“Beyond the mental health benefits of sipping a warm cup of tea, many consumers choose tea for its health benefits,” said Tim Collins, vice president and general manager at Celestial Seasonings. “We want to make sure we are delivering on this promise with products that go above and beyond in providing the benefits you’d find in your typical cup of tea.”

In addition to the Tea Well line, Celestial Seasonings’ ‘Taste the World of Celestial Seasonings’ ad campaign highlights the feel-good benefits of drinking tea. Video vignettes focus on Celestial Seasonings Green Tea for energy, Vitamin C tea for immune support, and Sleepy time tea to winddown. Through whimsical imagery and narration, the campaign is designed to introduce hot tea as a healthy and flavourful choice.

“This campaign captures the essence of how Celestial Seasonings brings balance and benefits everyday,” said Melinda Goldstein, chief marketing officer at Hain Celestial.

In May 2020, The Tea Spot launched its Flu Fighter wellness tea, a caffeine-free herbal blend that features functional ingredients, including astragalus, honeysuckle, organic liquorice root, orange peel, tangerine peel, dandelion root, mulberry leaf, red root, and organic ginger.

According to The Tea Spot, the ingredients in the Flu Fighter tea were chosen based on a medical report published in Military Medical Research (Volume 7, Article Number 4, February 2020), on the diagnosis and treatment of the novel coronavirus (2019-nCoV), where a combination of herbs and roots were used to support flu-like symptoms.

The Tea Spot’s Uspenski said, “The pain and stress of the current pandemic has pushed The Tea Spot to think outside the box as to how we can help empower people to find and support better overall wellness.”

In October 2021,The Tea Spot reported that their line of women’s teas – called Goddess Women’s Teas – were a best-seller for the company that year, as more consumers discovered premium tea or sought tea for its wellness benefits. The tea line features three 100 per cent organic tea blends that showcase botanicals and herbs to support women’s health throughout different stages of life.

Buddha Teas saw sales of its immune-boosting and lung health teas rise during the pandemic. Image: Buddha Teas.

John Boyd, co-founder of Colorado Springs, Colo.-based Buddha Teas, also noticed that more customers discovered tea during the pandemic. “We saw a huge spike in our herbal teas that boost the immune system. Our pure Elderberry had an astronomical increase in sales, and we attribute that to the amount of elderberry in each tea bag–2,000mg. Everyone seemed to jump on the immunity boosting teas band wagon. Also, our lung health teas – such as Mullein and Eucalyptus – have gained tremendous momentum.”

Boyd shared that Americans have traditionally been coffee drinkers, however people are leaning towards drinking tea. “Society is becoming more health conscious and most people know that green teas are much healthier than coffee, and they still provide the same caffeine kick that people are looking for to start their day,” he said. “Not to mention the fact that some of our caffeinated teas contain an ingredient that totally takes the edge off that jittery feeling while still kicking you into overdrive. Specifically, I’m talking about matcha and L-theanine.”

Twinings, a leading wellbeing drinks brand, also focused on an ad campaign to attract consumers to the healthy tea lifestyle. Its ‘Drink in Life’ campaign showcases the company’s new Superblends collection, demonstrating how these new products help consumers “feel good, live well and enjoy life.”

Twinings’ Superblends line – at the heart of its “Drink in Life” campaign – features four new flavours that are fortified with vitamins and functional additives, and additional flavours are slated for 2022.

Twinings new Superblends wellness line is designed to help consumers ’feel good, live well and enjoy life.’ Image: Twinings North America

“Our ‘Drink in Life’ campaign is rooted in the idea that taking even the smallest step counts when it comes to reaching your wellness goals and contributing to your overall health,” said Mike Currie, vice president of marketing at Twinings North America, based in Clifton, New Jersey.

Currie noted that the wellness segment in tea has been growing for a while, but the pandemic has accelerated the interest in wellbeing and beverages that support this. “Consumers are putting their wellbeing at the forefront and paying close attention to the products that they’re consuming,” he said. “From an overall industry perspective, this directly correlates to the steady increase in wellness tea sales. These consumers are investing in authentic brands that value transparency and put wellbeing within reach with small steps, making them feel optimistic about their purchases.”

Herbal teas are also big in the wellness tea marketplace

When it comes to wellness teas, it’s important to note that herbals teas and herbal blends are among the teas on the rise, in addition to true teas from the Camellia sinensis plant.

On the whole, the herbal beverages market, which includes herbal tea, is experiencing considerable growth, according to a new report from analysts at Vantage Market Research. In fact, the herbal beverages market is expected to reach USD $2.45 billion by 2028, growing at a compound annual growth rate (CAGR) of 5.1 per cent between 2021 and 2028. Factors like the rising awareness of the advantages of herbal-based beverages – such as replenishing skin from the inside, enhancing health, supporting healthy joints and rejuvenating the body – are facilitating the growth of the market for herbal beverages, according to the research firm. The herbal tea segment, specifically, is anticipated to grow more than 4.6 per cent CAGR over the forecast period.

Northern California-based tea author, educator and tea festival organiser, Babette Donaldson, owner and publisher of T Ching and the founder of the International Tea Sippers Society, noted, “The sense of helplessness and frustration in this time of Covid-19 motivates many to look to ancient healing lore. Many do this to feel that there are ways to take control of one’s own well-being. In the past, some in the tea industry have focused on the ‘tea and health’ message to include only Camellia sinensis. But customers are looking for something more inclusive in their cups. Resources for herbalism are abundant and bridge many cultural divides.”

The next wave of wellness teas?

In a recent World Tea Conference + Expo white paper, Euromonitor International’s senior beverages consultant, Matthew Barry, based in Chicago, Illinois, pointed out that while not a cure, tea can serve as a valuable temporary oasis in a chaotic world. “An opportune area in the US market in the near future will be teas designed for relaxation and mindfulness,” said the senior beverages consultant. “While many beverage categories are eager to address this growing consumer need, tea starts with a considerable advantage. Tea – herbal tea in particular – is already strongly associated with calming effects. Chamomile, for example, has been used as a calming ingredient in tea since the time of the ancient Egyptians, so herbal tea could be said to have been active in the calming functional space for millennia. Consumers hardly need to know this history to be familiar with the idea that chamomile, mint, valerian or other herbs promote a sense of calm – and there is a new wave of teas targeting this space.”

Barry also noted, “Stress and anxiety levels continue to be at an all-time high. Tea can provide moments of quiet and calm amidst the turbulence. The American tea industry needs to prioritise products and blends that address mental health concerns. If done effectively, the mindfulness space will be the most dynamic in the US tea industry for years to come.”

• Aaron Kiel, based in Raleigh, North Carolina, has worked in the tea, coffee and beverage industries for nearly two decades, and he’s the editor of World Tea News. He’s a journalist and writer at heart, but he also wears a public relations “hat” through his PR consultancy, ak PR Group. He can be reached at akiel@akprgroup.com.

The post The pandemic spurs an ever-increasing demand for wellness teas appeared first on Tea & Coffee Trade Journal.

The Covid-19 pandemic is taking a heavy toll on all of us. Our daily life has been upside down, routines shacked up and most of us noticed our spirit and moods affected. It is not surprising that in these challenging times, we cling to our daily treats and a cup of Joe has never been so important.

“In this ‘new normal’ period, one of the four key functionalities for coffee consumer is the search for mental wellbeing rather than immunity booster. The pandemic is a major additional burden on global mental health,” wrote Matthew Barry, senior beverages consultant with London-based global market intelligence firm, Euromonitor International, in a 2021 calming beverages report. “Calming as a functionality is surging in importance, as consumer stress levels have been rising significantly around the world. Yet the rates of caffeine consumption are rising, and consumers show little willingness to cut back, despite some negative health consequence related to caffeine.” To deal with this side effects, he said consumers will want to blend their caffeine with something calming whether in a single beverage or to be consumed later in the day when caffeine consumption is used to relax or promote good sleep. “R&D in calming beverages remain a critical area of innovation, with a focus on anxiety-relieving beverages.”

With the pandemic still surging, consumers are looking for ways to aid mental wellbeing as much as physical wellbeing. As such, the popularity of functional coffee continues to grow.

But the equation of coffee and mental health is far from simple. Dr Géraldine Coppin, a senior researcher and lecturer in affective psychology at the University of Geneva and at the Swiss Center for Affective Sciences, noted, “While a large body of research has reviewed the physiological effects of coffee consumption, only few studies have considered the potential relationships between coffee consumption, mood and emotion. Although the effect of coffee intake on mood and emotion is difficult to study, as coffee drinking is part of an ingrained daily ritual for many, there is convincing evidence that a moderate intake of coffee improves alertness and attention and is associated with increased feelings of pleasantness and reduced feelings of anxiety.”

She said that when studying the effects of coffee, researchers must be conscious of the fact that disrupting the daily routine, particularly at the start of the day, may affect mood and emotion, irrespective of coffee consumption’s physiological effects. Likewise, the expectation of consuming caffeine has been shown to affect mood and emotion, even if no caffeine has actually been drunk. “The mechanisms behind the observed effects are likely to include a role for caffeine but also for other compounds present in coffee, including polyphenols, although further research is required in this area,” said Dr Coppin.

Mushroom coffee has many added benefits but consumer awareness is low.

Another scientific advocate of coffee intake and reduced risk of depression is Dr Giuseppe Grosso, a research fellow at the Integrated Cancer Registry, Azienda Ospedaliera Universitaria Policlinico Vittorio Emanuele, Italy, and a senior collaborator at NNEdPro Global Centre for Nutrition and Health, St John’s Innovation Centre, Cambridge, England. In a 2016 report for ISIC (Institute for Scientific Information on Coffee) “Coffee, tea, caffeine and risk of depression: a systematic review and dose-response meta-analysis of observational studies” (Mol Nut Food Res, 60(1):223–2), he stated, “We have researched on the impact of coffee and caffeine consumption on the particular health condition depression. While current research of an association is limited, a systematic review of observational studies does suggest that the risk of developing depression decreases with moderate intake of coffee (equivalent to approximately three to five cups a day).”

Furthermore, the effect of coffee may be modulated by compounds in coffee other than caffeine. Dr Grosso explained that other mechanisms may also be associated with a reduced risk of depression. “Dopamine, for example, is a neurotransmitter that helps to control the brain’s reward and pleasure centers and also helps to regulate emotion.”

Exploring added functionalities

All very well but rather than mitigating or removing caffeine from their brew, today, consumers are looking at additional functionalities. What is proven scientifically is that one of the best-known active compounds of coffee is caffeine. A mild central nervous stimulant, this substance is associated with increased alertness. Following the European Food Safety Authority (EFSA), a cause-and-effect relationship has been established between a 75mg serving of caffeine and both increased attention and alertness. Several robust studies are in progress, as health allegations are very arduous to prove. Currently, there are several popular functional coffees on the market.

Bullet coffee is coffee with added MCT oil grass-fed butter or ghee. It has gained popularity through claims that it gives long-lasting energy, boosts concentration and keeps you satisfied longer. Because of the fats or oils in it, it is much higher in calories than a simple cup of coffee, which could increase the energy level. The combined ingredients take longer to digest in the body, giving then a feeling of being fuller for longer. At the present one finds limited supports for the claim that it provides long lasting energy, boosts concentration or appetite suppressant. More research is needed in this area. But fats such as coconut oil and butter are rich in saturated fatty acids, which the body converts into cholesterol. This is opposite to the dietary guidelines advising a move towards unsaturated fats.

Vitamin Coffee claims to naturally support sustained energy, muscle repair, bone health and better moods, among other benefits.

Mushroom coffee is a blend of ground coffee with powdered fungus. It claims to have half the amount of caffeine and double the effects of coffee. What is demonstrated is that mushrooms provide a range of nutrients including potassium and selenium. It is supposed to increase alertness and boost immunity and cardiovascular function. Some experts suggest it may be the caffeine in the coffee that gives the energy boosting effect, and not mushroom extract.

When compared with roasted, green coffee beans have limited aroma and flavour. However, experts suggest the unroasted beans can aid numerous health conditions, primarily due to the presence of chlorogenic acids. These might have a positive effect on glucose and lipid metabolism cardiovascular disease, type 2 diabetes, and metabolic syndrome. Found in both green and roasted coffee beans, the levels of antioxidants are higher in green coffee.

Natural functional ingredients

When looking at innovative ingredients and adaptogens, we are entering troubled waters. What exactly are adaptogens? A buzzword in the wellness world, they are popping up everywhere but still no industry formal definition on what they are. They can be classified as nontoxic herbal pharmaceuticals, which claim to help us better cope with (or increase our resistance to) mental or physical stress, improve physical and mental performance, and possibly support the immune system.

“These herbs and roots have been used for centuries in Chinese and Ayurvedic healing traditions, but they’re having a renaissance today. Each one claims to do something a little different, but overall adaptogens help your body handle stress. They’re meant to bring us back to the middle,” said Dr Brenda Powell, co-medical director of the Center for Integrative and Lifestyle Medicine at the Cleveland Clinic’s Wellness Institute, in a 2018 article by Jamie Ducharme in Time magazine, “What Are Adaptogens and Why Are People Taking Them?”

Turmeric, for example, is the latest super food – or super spice – that is being added to a variety of items, including coffee. It has been used in India for thousands of years as both a spice and medicinal herb. Science has started to back up traditional claims that turmeric contains compounds called curcuminoids that have medicinal properties. The most important curcuminoid is curcumin, which is the main active ingredient in turmeric. It has powerful anti-inflammatory effects and is a strong antioxidant. Turmeric has reportedly shown promise in treating a variety of ailments ranging from arthritis to psoriasis to Alzheimer’s and cancer.

Ashwagandha, also known as Indian ginseng and winter cherry, is an ancient medicinal herb claiming multiple health benefits as an anxiety and stress reliever, fighting depression, and boosting fertility and testosterone in men. It comes in a powder and one to two teaspoons can be added into a daily coffee.

Cardamom has also been used in Ayurvedic medicine for thousands of years. A spice commonly added to coffee (in the powder form) in the Middle East, cardamom gives coffee a spiced flavour similar to ginger (they’re in the same family) and is packed with nutrients. A two-tablespoon serving has just 36 calories, is loaded with fiber, essential minerals, and claims to be cancer-fighting.

Rhodiola is a herb that grows in the cold, mountainous regions of Europe and Asia. The functional ingredients come from its roots. It claims to stimulate cognitive functions in situations of stress, fatigue, anxiety, and depression.

Peet’s Coffee ‘golden lattes’ – espresso-blended beverages with turmeric – launched in 2021 in both hot and cold.

Holy basil is commonly known in the Hindi language as Tulsi. A quite revered medicinal herb, Holy basil is a plant that has violet flowers and blossoms. Medicinal preparations are made from the leaves, stems, and seeds of the plant. Holy basil is often used for cooking Thai dishes and its spicy flavour has influenced the common name “hot basil.” Some advocates say that adding it to coffee reduces any jitters often associated with caffeine and removes the edge from caffeine. With milk, it almost has sort of a chai-like vibe.

Elderberry is a fruit that grows in small clusters and is of deep purple colour. It is packed with antioxidants and many vitamins, which is partly why it is so popular and desired as a health supplement. It claims to aid in inflammation and depression, but immunity booster is its most common use.

L-theanine is an amino acid that occurs naturally in tea leaves and is used in Asian medicine to treat medical and mental health problems. L-theanine is supposed to increase brain levels of serotonin, GABA, and dopamine. Promising studies talk of beneficial effects on memory, learning, and cognitive function as well as for treatment of OCD, bipolar disorder, panic disorder, and schizophrenia. Pure green tea contains both caffeine and L-theanine, but L-theanine can be added in usual coffee as a supplement, according to “L-Theanine for Different Mental Health Problems,” by James Lake, MD (Integrative Mental Health Care in Psychology Today, August 2019).

Finally, in the United States in particular, CDB (cannabidiol) extracts in coffee are taking an increasing share of the supplement for functional coffee. “We’re seeing new and exciting trends in the CBD space, which we’re fortunate to be able to react to quickly. With a sharp focus on wellbeing seen around the world, an increasing number of people are looking for new and innovative products with ingredients they know and trust,” said Mark Elfenbein, chief revenue officer of Austin, Texas-based ingredient supplier, Socati, a wholly owned subsidiary of Yooma Wellness Inc.

With new formulations, Socati is already working with several leading consumer brands to create new and unique products which will soon be available to customers. “But, today in the spotlight for mental health benefit is CBG, or cannabigerol,” said Elfenbein. “This is a minor cannabinoid since its cannabis availability is typically at very low levels — usually less than one per cent. But it plays a significant part as a precursor to other cannabinoids, CBG has popularly earned the name ‘mother of cannabinoids’.”

Bulletproof pioneered ‘bullet coffee’ – coffee with MCT oil, grass-fed butter or ghee – claiming it boosts energy and concentration.

If CBG research is still in its early stages when it comes to mental health issues, there is already some medical support for the usage of CBG oil for certain mental disorders. For those who don’t seek any treatment, CBG could provide them with some anxiety relief. Effects might or might not be like the effects of prescription medications, but CBG has none of the addictive and dangerous side-effects commonly associated. CBG can help with heart conditions, high blood pressure, depression, and even suicidal thoughts. These health allegations still need more scientific evidence but the US CDB industry is expecting FDA to rule on the topic this year.

“The global pandemic has made consumers aware that wellness is a vital concern. In the coming years, consumers will be looking for more products and services that offer mental and emotional health benefits,” said Alex Beckett, global food and drink analyst with London-based global market intelligence firm, Mintel, adding that new formulations and emotionally appealing multi-sensory products will allow food and beverage brands to differentiate themselves in the competitive world of mental and emotional health products. “We anticipate that innovative food and beverage formulations will help consumers learn how food can impact their mental and emotional health, sparking new interest in psychologically-based approaches to healthy eating.”

• Dominique Huret has been a journalist in the beverage and packaging sectors since 2005. She writes in French, English and Dutch for several press groups. She is the co-founder of Cape Decision consultancy based in Brussels, Belgium. She can be reached at dominique@capedecision.com.

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Competition in the United States ready-to-drink (RTD) coffee category continues to heat up, with cold brew increasingly represented among new entries. Globally, the category reached USD $114 billion in 2020 according to Dublin, Ireland-based Research and Markets, which expects the market to grow at compound annual growth rate (CAGR) of 7.5 per cent from 2021-2026.

The market research firm attributes changing lifestyles, increasing spending capacities and shifting dietary preferences of consumers as the primary drivers of category growth.

“Consumers are increasingly preferring food and beverages that require minimum time to prepare and can be consumed on-the-go,” the company stated in announcing its 2021 research report on the category. “The canned and bottled packaging of these beverages are also adding to the convenience of consumers, thereby increasing their overall demand.”

Category leader pushes adoption curve

With an already robust portfolio of ready-to-drink coffee products created under its 27-year-old North American Coffee Partnership with PepsiCo, Starbucks found itself intrigued by 2020 consumer purchasing data from Information Resources, Inc. identifying that 72 per cent of US households had never tried a RTD coffee product. The company said sales of its RTD products under that partnership grew 14 per cent in 2020, providing dual incentives to address.

What were these untapped customers seeking that was not already offered in the well-served marketplace, where a plethora of cold coffee offerings has built a significant category in recent years?

To answer that question, Starbucks Coffee – the RTD category leader holding a 61 per cent share in 2020, but down from 63 per cent in 2019 according to London-based global market intelligence firm, Euromonitor International – embarked on what it calls its “biggest body of research yet” to identify the unmet desires of RTD holdouts.

The company said the findings were clear: a desire for the smooth coffee taste profile that has propelled cold brew into the spotlight, a ‘splash’ of milk and flavour, lower sugar and calorie content than other category offerings, skip the preservatives, and an ‘accessible’ price point.

Manpreet Cheema, senior product developer on Starbucks R&D team, said the goal was to keep the lightly sweetened beverage under 100 calories and zone in on the best roast profile, narrowed down over months of tastings and consumer tests. Feedback revealed that less acidic cold brew has become increasingly appealing to those not currently drinking RTD coffee, and provided the desired complexity, balanced profile, and rounded taste for the new line.

Rolled out last year through mass, grocery and convenience store channels as Starbucks Cold & Crafted, the new line debuted in three varieties: Coffee with a Splash of Milk & Vanilla, Coffee with a Splash of Milk & Mocha and Coffee Sweetened Black. The suggested retail price was set lower than most RTD options on the market at under $3 per 11-ounce bottle.

Meanwhile, Starbucks continued its model of translating popular in-store beverages into RTD versions for grocery channels with the addition of Dark Cocoa Sweet Cream Nitro Cold Brew, expanding the store-inspired platform that launched in in 2020, as well as Starbucks Vanilla Sweet Cream Cold Brew, offered in both 11-ounce single serve and, in a 40-ounce multi-serve.

Dunkin’ through its own collaboration with The Coca-Cola Company that began in 2017, leveraged a strong branding opportunity with the launch of RTD bottled iced coffee last year. Produced and distributed by Coca-Cola using Arabica coffee blends with real milk and sugar, the new flavours are inspired by three of the most iconic Girl Scout Cookie varieties: Thin Mints, Coconut Caramel, and the S’mores (graham cracker, chocolate, and marshmallow notes), available in 13.7-oz bottles and joining the existing Dunkin’-branded bottled Iced Coffee varieties of French vanilla, mocha and original.

RTD and health

Fast-moving Super Coffee, the number three bottled coffee brand in the US behind Starbucks and Dunkin’, pioneered what Research and Markets now describes as an entire vibrant “better-for-you” beverage segment within RTD. Company revenue grew 106 per cent from $4 million in 2018, to $55 million in 2020, and its products are distributed to 40,000 stores across America.

“Super Coffee was born from the idea of removing negative ingredients and replacing them with positive ingredients,” explained company COO Jordan DeCicco, one of three brothers – all former NCAA Division 1 student athletes – who co-founded the company in 2015. Eschewing added sugar and instead utilising no-calorie monk fruit as a sweetener, the company’s RTD offerings draw from a range of ingredients including vitamins, protein, MCT oil, L-theanine for easing stress and 3/3 antioxidants.

One line is formulated with lactose-free milk and offered in mocha, vanilla, hazelnut, and white chocolate peppermint in 340gm PET bottles. A plant-based line is offered in coconut mocha, French vanilla, sweet cream, or unsweetened versions in 11-oz cans, while Super Espresso comes in 6-oz cans in vanilla, caramel or unsweetened triple shot.

Named as the fastest growing beverage company by Inc in 2020, Super Coffee has tapped a deep roster of professional athletes and celebrities as brand advocates and ambassadors. In 2020, global superstar Jennifer Lopez and baseball legend turned businessman Alex Rodriguez became minority owners in Kitu Life, Inc., the makers of Super Coffee. Last year, Super Coffee celebrated National Coffee Day in the US by sharing its trade secrets and challenging RTD market leaders and all competitors to stop using added sugars in their own products.

Coffee for a cause

Another unique, rapidly growing player in the RTD market in the US is Black Rifle Coffee Company (BRCC), founded in 2014 by former United States Army Special Forces member (known as ‘Green Berets’) Evan Hafer, a passionate coffee lover who travelled with his coffee grinder while serving in the Iraq war. He began roasting for friends after returning home to civilian life, but it wasn’t long before he turned it into a business with the mission of serving US military veterans, active military, and first responders, directly funding veteran causes even before he was able to draw a salary for himself from the fledgling company. Fast-forward five years, and BRCC posted USD $82 million in revenue in 2019, nearly entirely from direct-to-consumer operations of military-themed ground coffee sold through the company’s website.

After launching its first RTD coffee in cans in 2020, revenues doubled to $164 million in that year, and were on track to hit USD $230 million in 2021, elevating BRCC to the number four position in the US RTD coffee sector. Scaling rapidly over the past two years, the company’s RTD coffees are currently sold in over 40,000 locations across convenience, grocery, and drug stores as well as mass retailers.

Black Rifle Coffee Company Espresso is a premium product made from 100 per cent Colombian coffee with 200mg caffeine per 11-oz can. It is lightly sweetened to balance its ‘coffee-forward’ flavours while maintaining lower sugar content than similar products. It is gluten free, a ‘good’ source of protein, and offered in either espresso mocha or espresso with cream flavours.

The company recently extended its RTD offerings with the launch of Espresso 300, which contains 300mg of caffeine per 15oz can and an ‘energising blend’ of MCT oil and amino acids. It’s available in caramel vanilla and rich mocha versions.

• E Edward ‘Ted’ Hoyt has more than two decades of experience as a trade magazine editor and freelance writer, authoring many articles in the premium coffee, spirits and cigar industries, among others.

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The London-based global market intelligence firm’s annual report defines the trends motivating consumer behaviour and challenging business strategies in the year ahead. While not specific to coffee and tea businesses, many of these trends will most assuredly affect both industries in some way. Euromonitor’s Top Ten Global Consumer Trends are:

• Backup Planners: Consumers find creative solutions to purchase their go-to products or search for next best options as supply chain disruptions cause massive shortages.
• Climate Changers: Eco-anxiety and the climate emergency drive environmental activism for a net-zero economy. In 2021, 35% of global consumers actively reduced their carbon emissions.
• Digital Seniors: Older consumers become savvier tech users. Virtual solutions must be tailored to the needs of this expanded online audience.
• Financial Aficionados: Democratised money management empowers consumers to strengthen financial literacy and security. More than half of global consumers believe they will be better off financially in the next five years.
• The Great Life Refresh: Consumers focus on personal growth and wellbeing, making drastic life changes that reflect their values, passions and purpose.
• The Metaverse Movement: Immersive, 3D digital ecosystems begin to transform social connections. Global sales of AR/VR (artificial reality/virtual reality) headsets grew 56% from 2017 to 2021, reaching USD $2.6 billion last year.
• Pursuit of Preloved: Secondhand shopping and peer-to-peer marketplaces flourish as consumers seek unique, affordable and sustainable items.
• Rural Urbanites: Consumers relocate to safer, cleaner and greener neighbourhoods.
• Self-Love Seekers: Authenticity, acceptance and inclusion are at the forefront of lifestyle choices and spending habits as consumers embrace their truest selves.
• The Socialisation Paradox: Fluctuating comfort levels create a conflicting return to pre-pandemic life. In 2021, 76% of global consumers took health and safety precautions when leaving home.

I will not delve into detail in terms of all the trends, but I will highlight a few that will, in my opinion, directly, impact coffee and tea brands/businesses.

Euromonitor’s report finds that 36% of professionals expect supply shortages to be the most significant effect of the Covid-19 pandemic on their company’s supply chain. Supply chain shortages are forcing businesses to pivot and provide new solutions for customers to access products and services. If they cannot find their favourite brands or products, ‘Backup Planners’ will look for ways to purchase similar items or find creative solutions to obtain alternatives.

By late 2022, supply chains should start to stabilise and access to products should revert to pre-Covid-19 levels (many are projecting this will not happen before the third quarter). Yet, per Euromonitor, new shopping habits will dictate how Backup Planners discover and select products, from locally sourced to direct-to-consumer brands to subscription services. Localisation and optimisation will become the norm. Companies and distributors should use data to improve supply chain visibility, hone operations and rethink investments.

‘Climate Changers’ will affect brands and products across all industries. Green activism and low-carbon lifestyles are here to stay. Consumers expect brands to step up and are taking action through the products they purchase as concerns over the climate emergency escalate. The report reveals that:

• 28% of consumers tried to purchase locally sourced products and services in 2021;
• 67% of consumers tried to have a positive impact on the environment through their everyday actions in 2021;
• 78% of professionals think that climate change will impact consumer demand, changing behaviours, needs and prefer

To win over Climate Changers, companies should offer products that are carbon footprint certified. Transparent labelling of carbon-neutral products builds trust and enables consumers to make informed choices. Furthermore, digital innovation is reshaping how retailers, manufacturers and consumers transition to a new era of environmental transparency.

According to Euromonitor, tech tools, such as digital product labelling and mobile tracking apps, help consumers trace ethical claims, their carbon footprint and recycling habits on their phones. Millennials and Generation Z, especially, feel they can make a difference through their choices (see “Recognising the Power and Potential of Generation Z” in T&CTJ’s January issue). This largest spending group of the future will use tools to ensure minimal climate impact. The more offerings that align with expectations of Climate Changers, the more brands will see their products and services resonate.

The pandemic triggered consumers to make ‘The Great Life Refresh’, with passion and purpose driving action, which has resulted in drastic personal changes and a collective reboot of values, lifestyles and goals. (The Covid period – between 2020 and 2021 thus far – has also been called ‘The Great Resignation’ as scores of people have quit their jobs in search of new ones that they are passionate about, provide more happiness or better meet their new life needs and/or values.)

Businesses should innovate goods, services and experiences that respond to this moment, coupled with marketing that acknowledges and embraces the upheaval. Euromonitor explains that companies catering to The Great Life Refresh stand to be seen as partners, helping consumers adapt to a new way of life. Businesses should tailor marketing to acknowledge and support consumers’ decisions to take action. Consumers will prefer brands that match the moment. Companies need to offer policies and products that provide value and support personal growth to drive loyalty.

Individuality, authenticity, acceptance, self-care and inclusion are at the forefront of consumer lifestyles. ‘Self-Love Seekers’ prioritise their happiness, feeling comfortable in their own skin and indulging in goods and services that elevate their sense of self. Much like targeting Gen Z, to reach these consumers, businesses need to create deep connections with customers.

Products that evoke physical, emotional or spiritual wellbeing will resonate and enhance the lives of Self-Love Seekers. Furthermore, per the report, Self-Love Seekers purchase products and services that align with their motivations and identities, which should stay at the core of business strategies.

“Businesses need to transform alongside rapidly evolving consumer preferences,” said Alison Angus, head of lifestyles at Euromonitor International, in the report. “Reverting to a pre-pandemic playbook will not likely generate the same results moving forward.”

To download Euromonitor International’s entire report, click here.

• Vanessa L Facenda, editor, Tea & Coffee Trade Journal.
  Keep in touch via email: vanessa@bellpublishing.com Twitter: @TCTradeJournal or LinkedIn: Tea & Coffee Trade Journal.

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The digital Tea & Coffee World Cup (TCWC – hashtag #TCWorldCup21 on social media) is a combination of lectures and skill-building classes, as well as a virtual exhibition hall. Our speakers (their full bios are available here) all have highly informative, engaging and enlightening presentations planned. Presenters include:

• Rona Tison, executive vice president of corporate relations at ITO EN’s North American operations. ITO EN is Japan’s leading green tea brand and the world’s leading purveyor of premium and sustainably grown green tea and healthy beverages. Tison’s presentation, entitled “The Evolution & Globalization of Japanese Green Tea,” discusses the surging global popularity of green tea and matcha.
• William “Bill” Murray, president and chief executive officer (CEO) of the National Coffee Association, U.S.A. (NCA). His presentation, “Coffee, The Original Superfood: Challenges and Opportunities Communicating the Coffee & Health Message,” examines the overwhelming scientific research evidencing coffee’s healthy attributes and the stigmas and misinformation that continually surround the beverage.
• Matthew Barry, senior consultant at global market intelligence firm, Euromonitor International, specializing in global beverage industry trends, with a particular focus on coffee, tea and alcoholic spirits. While the pandemic did not stifle consumers’ love of coffee and tea, it did change how and where the drinks were consumed — and purchased. His presentation, “The Lasting Effects of Covid-19 on Coffee and Tea,” analyzes the change in consumer consuming and purchasing behaviour and offer a post-pandemic outlook for the beloved beverages.

Of course, our popular skill-building classes also return to the digital TCWC. The coffee classes will be run by Coffee Consulate and CVUA Karlsruhe and the tea, by the UK Tea Academy.

Dr Steffen Schwarz is managing director of the Hamburg, Germany-based Coffee Consulate, which he founded in 2005 to meet the increasing demand for training. In addition to extensive workshop programs, the company is engaged in research and product development, and manufactures barista tools, teaching and analytical materials.

Dr Dirk W Lachenmeier is state-certified food chemist, toxicologist, and director of the official coffee control laboratory for the German State Baden-Württemberg. He joined the Chemical and Veterinary Investigation Agency Karlsruhe (CVUAKA), Germany in 2003, and has served as director of the department of plant-based food since 2012.

Dr Schwarz and Dr Lachenmeier are hosting two skills classes for TCWC. The first, “Myths about Cold Brew Coffee” explores why there are so many wrong ideas and beliefs on cold brew and how to create a good one. The second, “Innovative Coffee Products made from Coffee By-Products,” highlights how other parts of the coffee plant can change the life of the farmer and the consumer.

Carri Hecks is the head of brewing and a tutor for the UK Tea Academy, where she currently teaches a sensory and practice online course, and part of the tea sommelier course. For TCWC, Hecks is hosting, “Creative Cocktails and Marvellous Mocktails,” which shows participants how to create a variety of fun cocktails – and mocktails – all of which use tea as a base. A second skills class, “The Art of Brewing,” teaches proper brewing methods for a variety of teas (black, green, white, etc).

Additional presentations are being offered by Petra Overall, export manager, Oxalis and Amaia Cowan, Futamura.

We hope you will be able to join us today – 8 September – for Tea & Coffee World Cup’s launch, or over the course of the following month. It’s not too late to register so please visit: www.tcworldcup.com so you may have 24/7 access through 8 October.

• Vanessa L Facenda, editor, Tea & Coffee Trade Journal.
  Keep in touch via email: vanessa@bellpublishing.com
  Twitter: @TCTradeJournal or LinkedIn: Tea & Coffee Trade Journal.

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Our stellar speakers all have highly informative, engaging and enlightening presentations planned. The roster includes:

• Rona Tison is the executive vice president of corporate relations at ITO EN’s North American operations. ITO EN is Japan’s #1 green tea brand and the world’s leading purveyor of premium and sustainably grown green tea and healthy beverages. Tison also serves on the Board of the Tea Association of the USA and the Tea & Health Committee, the US-Japan Council and Advisory Board of the Global Tea Initiative at University of California, Davis, was the first woman to receive the John Harney Lifetime Achievement Award and is fluent in Japanese. Her presentation, entitled “The Evolution & Globalization of Japanese Green Tea,” will discuss the surging global popularity of green tea and matcha.
• William “Bill” Murray is president and chief executive officer (CEO) of the National Coffee Association, U.S.A. (NCA), a role he has held since June 2014. He leads NCA’s advocacy, regulatory, and member support activities on behalf of the hundreds of coffee-focused organisations that comprise NCA’s membership. Prior to joining the NCA, Bill was CEO of the Public Relations Society of America (PRSA). Previously, Bill worked in Hollywood for more than 20 years, including as executive vice president and co-chief operating officer at the Motion Picture Association of America (MPAA), which represented the multinational entertainment industry in more than 70 countries. Murray’s presentation, “Coffee, The Original Superfood: Challenges and Opportunities Communicating the Coffee & Health Message,” will examine the overwhelming scientific research evidencing coffee’s healthy attributes and the stigmas and misinformation that continually surround the beverage.
• Matthew Barry is a senior consultant at global market intelligence firm, Euromonitor International, where he specialises in global beverage industry trends, with a particular focus on coffee, tea and alcoholic spirits. While the pandemic did not stifle consumers’ love of coffee and tea, it did change how and where the drinks were consumed — and purchased. His presentation, “The Lasting Effects of Covid-19 on Coffee and Tea,” will analyse the change in consumer consuming and purchasing behaviour and offer a post-pandemic outlook for the beloved beverages.

Our popular skill-building classes also return to TCWC, digitally, of course, but still educational and entertaining. The coffee classes will be run by Coffee Consulate, and the tea, by the UK Tea Academy.

• Dr Steffen Schwarz is managing director of the Hamburg, Germany-based Coffee Consulate, which he founded in 2005 to meet the increasing demand for training. In addition to extensive workshop programs, the company is engaged in research and product development, and manufactures barista tools, teaching and analytical materials. Dr. Schwarz is the author of numerous scientific journals and regularly teaches as a guest lecturer of food management-related studies at the Cooperative State University in Heilbronn and at the University of Hohenheim.
• Dr Dirk W. Lachenmeier is state-certified food chemist, toxicologist, and director of the official coffee control laboratory for the German State Baden-Württemberg. He studied food chemistry and carried out his PhD research in Forensic Toxicology at the University of Bonn. Dr. Lachenmeier joined the Chemical and Veterinary Investigation Agency Karlsruhe (CVUAKA), Germany in 2003, and has served as director of the department of plant-based food since 2012. He regularly contributes to working groups of the monographs program of the World Health Organization’s International Agency for Research on Cancer (IARC), including the working group on coffee consumption.
• Dr Schwarz and Dr Lachenmeier will host two skills classes for TCWC. The first, “Myths about Cold Brew Coffee” will explore why there are so many wrong ideas and beliefs on cold brew and how to create a good one. The second, “Innovative Coffee Products made from Coffee By-Products,” will highlight how other parts of the coffee plant can change the life of the farmer and the consumer.
• Carri Hecks is the head of brewing and a tutor for the UK Tea Academy. She currently teaches a sensory and practice online course, and part of the tea sommelier course. Her interest in all things culinary has led to a keen knowledge of tea use in cooking and cocktails. She is also judge for the Guild of Fine Food’s ‘Great Taste Awards.’ For TCWC, Hecks is hosting, “Creative Cocktails and Marvellous Mocktails.” The class will show participants how to create a variety of fun cocktails – and mocktails – all of which use tea as a base. (I audited a similar class she held in July for the UKTA—it was a lot of fun and it made me thirsty!) A second skills class, “The Art of Brewing,” will teach proper brewing methods for a variety of teas (black, green, white, etc.)

We hope you will be able to join us on 8 September, or throughout the following month (ending 8 October) for Tea & Coffee World Cup. To register, or for more information, please visit: www.tcworldcup.com.

There is still time to exhibit or sponsor, so if interested, please contact Chris Seldon: chris@bellpublishing.com.

• Vanessa L Facenda, editor, Tea & Coffee Trade Journal.
  Keep in touch via email: vanessa@bellpublishing.com
  Twitter: @TCTradeJournal or LinkedIn: Tea & Coffee Trade Journal.

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