Eastern Europe is becoming a major market for decaf
Image: Swiss Water
Decaf coffee’s popularity is rising in European markets where there is a significant consumption of caffeinated beverages and where consumers are paying more attention to health and wellbeing. While Western Europe might be the market that first comes to mind, the demand in Eastern Europe is strong — and growing. By Eugene Gerten
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 [email protected].
