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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The Nordic instant coffee market is experiencing a serious stagnation, as the current dominance of ground coffee in the region has provides limited growth for major instant coffee producers.

In fact, the Nordic region, which consists of such highly developed European nations as Sweden, Norway, Denmark, Finland and Iceland to some extent, has long been known for its high coffee consumption, substantially exceeding even those in such coffee-drinking nations as Italy and France.

Similar to other EU nations, in recent years, the Nordic coffee market has undergone significant changes and experienced major transformation, which is primarily associated with the rise in popularity of ground coffee, as well as variety premium and specialty coffees. According to official market statistics, currently, the share of ground coffee is estimated at about 70 percent of the entire market, with the share of capsuled coffee and various specialty coffees being estimated in the range of 80 to 85 percent. The remaining 12 to 15 percent of the market accounts for the instant coffee segment, depending on the country. As a rule, the coffee market of each country in the region, including instant coffee segment, is characterised by high level of maturity with small room for a further growth of major players. As for the latter, Nestlé, with its flagship Nescafé brand, remains the leading company in the instant coffee market of the Nordic region.

In terms of Sweden – the major country of the region – according to a recent report prepared by the local coffee maker, Kafferosteriet Löfbergs (which is known as the first edition of the Coffee Report), four out of five Swedes drink coffee regularly, and ground coffee is undisputed as the leading choice, as 72 percent of local citizens drink it. The volume of imports into the country is rather small, mainly accounting for high-quality Arabicas.

Typical Norwegian coffee shop in the city of Oslo. Image: The JetSetting Fashionista

Specialty coffee and instant coffee account for the remaining 28 percent of the market. Instant coffee appeared in Sweden for the first time in 1942 during World War II.

According to the Swedish business paper, Orebronyheter, Swedes consume an average of 7.6 kilos of coffee per person per year, which corresponds to approximately 2.5 cups per day. That makes Sweden the world’s third largest country in terms of per capita coffee consumption.

Among the leading local players are Nestlé, Löfberg (its coffee factory in Karlstad also produces several instant coffee varieties including an espresso instant coffee called Bold Espresso, which is a dark roasted Arabica coffee), and Gevalia.

Finland still leads in consumption

The position of coffee in Finnish food culture is even stronger, which contributes to its record consumption. Coffee consumption in Finland remains the largest in the world. Over the decades, the amount of per capita coffee consumption in the country has remained steady, between 9-10 kilogrammes. Most local coffee companies do not believe that consumption will grow any further, so they seek growth through new premium products. Light-roasted coffee accounts for most of Finland’s market, but the popularity and supply of dark-roasted coffee has increased in recent years. Instant coffee’s share is estimated at 10 to 12 percent of the market.

The Russian-Ukrainian war and its economic consequences has led to a sharp growth of coffee prices in both Finland and Sweden in recent years. According to some Finnish media reports, the current prices for coffee in the local market are among the world’s highest, while a similar situation is also observed in Sweden. According to some independent coffee analysts, the high prices could provide a chance for instant coffee to retain its positions in the local market, mainly due to its more attractive price compared to ground coffee. Although, presently, the prospects for the segment’s further growth remain cloudy.

Salla Korpivaara, a senior consultant at Euromonitor International, said instant coffee in the Nordics remains a marginal category of the market. “Per capita consumption of instant coffee is more than 25 times smaller than fresh coffee. Traditionally, instant coffee has been used for special occasions, such as travelling, hiking, at summer cottages or for instance baking. I attach the volume growth for 2023 and forecast CAGR.”

She added that like in many other FMCG categories, “we saw a peak in retail sales during the pandemic when people were working from their summer houses. The growth, however, quickly returned to a normal, negative trend. In recent years, coffee beans and capsules are taking market space from instant coffee. We do know that instant coffee in the Nordics is more often consumed by the younger generation and they have a more positive perception of the category than older generations. This might be connected to videos on social media where people are preparing coffee cocktails with instant coffee.”

Little’s flavoured instant coffee has launched in several markets. Image: Little’s

According to Korpivaara, an impetus for the segment could be provided by more active launches of innovative products into the market, while some activities in this field are already ongoing. She said there has been little product innovation in instant coffee in recent years but there are some premium examples:

• Little’s flavoured instant coffee has launched in several markets and there is a wider trend for flavoured instant standard coffee (not mixes);
• Fairtrade, premium and organic products are being launched from time to time.

Given the high inflation the past few years, Korpivaara noted another trend is the rise of private label. “Coffee prices increased by double digit growth in 2022, slowing down a little in 2023, we see that consumers have been downtrading here.”

According to analysts, there was a ‘renaissance’ of instant coffee in the Nordic region between 2015 and 2019 when, according to data of Nestlé and some other global majors, the demand for instant coffee in some countries of the region – such as Finland – grew at 5 to 6 percent in some years and even higher in others. Thus, there were serious expectations that such a trend would continue to be observed during the 2020s. Still, a sharp rise in popularity of ground and specialty coffees, especially among the young, and the highest growth in coffee shops since 2010 in all of Europe, put an end to the hopes of further growth of the instant coffee segment, at least with the same rates during the next decade.

Norway and Denmark: same region but consumption habits differ

Coffee is considered a national drink in Norway, although the consumption of most of its varieties in this country is lower than those in Finland. According to the Norwegian Coffee Information agency, consumption in Norway among coffee drinkers is around four to five cups per day. Of these, the share of instant coffee also does not exceed 15 percent of the market.

Since the early 2000s, the consumption of coffee in Norway has been slowly decreasing, which affects both ground and instant coffee varieties.

Surprisingly, the current situation in the coffee market of Denmark is quite different, as, in contrast to other Nordic nations, there is a generally stable growth of demand for instant coffee among local customers.

Swedish Löfbergs organic instant coffee, one of the most popular instant coffee varieties in the Nordic region. Image Löfbergs

Presently, sales of instant coffee products in Denmark show serious growth because it has become the preferred coffee model among many young people. According to a study from 2024 of the Danish magazine, Kaffe Drikke, the best-selling coffee brand in Denmark is Nescafé, which has long been popular among Danes. In addition, other instant coffee brands, such as Merrild and Jacobs, are also popular in Denmark. Currently, instant coffee accounts for about a quarter of total coffee sales in Denmark, with younger people often preferring more exotic coffee varieties, while older people often stick with more classic varieties.

Euromonitor International analysts expect the demand for instant coffee in the Nordic region will remain generally stable within the next several years, although further growth of the market will be weak, while the demand for premium and specialty coffee will grow.

A spokesperson for Euromonitor International summed up the instant coffee segment in the Nordic states, noting, that overall, instant coffee is projected to see a flat off-trade volume CAGR in the future. “This is expected to be mainly due to instant coffee mixes, which offer more product variety and attributes, such as flavours. Instant standard coffee, on the other hand, is unlikely to see much new product development to stimulate interest. However, it is worth nothing that instant coffee mixes are predicted to see off-trade volume growth, before a level of maturity sets in. Meanwhile, instant standard coffee is expected to see declines until margins pick-up, albeit from a reduced sales base.”

• 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.

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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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It’s not ‘new news’ that caffeine can assist in weight loss (caffeine may help burn more calories and cause a decrease in body fat) and that coffee has a variety of health benefits, but according to a study by Harvard TH Chan School of Public Health (HSPH) researchers, drinking four cups of coffee daily could reduce body fat by about 4%.

The finding comes from a 24-week investigation in which 126 overweight, non-insulin sensitive adults drank daily either four cups of regular coffee or four cups of a coffee-like placebo beverage. The intent of the study was to determine if coffee consumption reduces the risk of developing type 2 diabetes.

The researchers noted that previous observational studies have linked drinking coffee with a lower risk of type 2 diabetes but coffee’s effects on blood sugar metabolism have not been well defined. With the current study, researchers did not find evidence that coffee affected the participants’ sensitivity to insulin — the hormone that regulates sugar levels in the blood.

However, the study did yield an unexpected result: drinking coffee was associated with a modest loss of body fat. Those who drank four cups of caffeinated coffee per day over six months saw a nearly 4% drop in overall body fat.

Derrick Alperet, a study co-author and research fellow in the HSPH Department of Nutrition, said in a HealthDay News article that he and colleagues think that the fat loss may be due to the caffeine in coffee increasing the drinker’s metabolism. He said it suggests that “this loss in fat mass was not likely to be due to changes in lifestyle, namely diet and physical activity.” Rather, Alperet and his colleagues think that coffee-fuelled fat loss may be the result of a ‘metabolic reaction’, in which caffeine causes the drinker’s metabolic process to ramp up. The end result, he said, is the burning of more calories and a notable drop in body fat.

The Singapore experiment lasted six months, during which time half of the study participants – who were all Chinese, Malay or Asian-Indian, per HealthDay News – were randomly instructed to drink four cups of caffeinated instant coffee on a daily basis. The other half drank a beverage that simulated coffee’s taste but was neither coffee nor caffeinated.

Alperet and his fellow researchers concluded that more research is needed, explaining that additional trials with more comprehensive assessments of body composition are needed to confirm their findings.

Some nutritionists in the HealthDay News article questioned the amount of coffee, believing the four cups daily to be “on the high side of intake.” However, scientists at the United States Food & Drug Administration (FDA), have asserted that caffeine can be part of a healthy diet for most people, For healthy adults, the FDA has cited 400 milligrams a day – that’s about four or five cups of coffee – as an amount not generally associated with dangerous, negative effects.

In December 2020, the Dietary Guidelines for Americans reaffirmed that coffee can be part of healthy diets. The National Coffee Association of the USA has long been touting the many health benefits associated with drinking coffee. For example, on the coffee and health section of its website the NCA notes that “In a review of 21 prospective studies totaling over 10 million participants, drinking one cup of coffee (whether decaf or with caffeine) per day was associated with a 3% reduced risk of death, and drinking three cups of coffee was associated with a 13% reduced risk of death.”

Additionally, per the NCA, “a study of over 500,000 people, spanning a decade, found that drinking coffee, whether caffeinated or decaffeinated, was inversely associated with mortality, including among those drinking eight or more cups per day.”

So, do not actually dump the dumbbell or abandon your cardiovascular routine, but do continue to confidently enjoy your daily cuppa Joe — and if you are not a coffee drinker, perhaps this is a good reason to become one…

• 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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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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Retail sales of coffee and tea in the United States are undergoing a transformation – especially in grocery stores and mass retailers.

Commenting on the changing retail world, Peter F Goggi, currently president of the Tea Association of the USA, and who previously spent 32 years working for Lipton Tea as part of Royal Estates Tea Company – he was the first American-born tea taster in the history of TJ Lipton/Unilever – said that during 2023, “inflation driven by supply chain costs, shipment imbalances, low unemployment and government spending reached levels not seen for 40 years”, averaging 8.0 percent for 2022 (In 1981 it was 10.33 percent). In that light, he believes “this level of inflation has certainly impacted the cost of goods and apparent growth rates in dollar terms.”

Tea Imports for 2023 were dragging, due mainly to the high level of inventories taken on by the trade during the supply chain-challenged Covid years. Tea companies anticipate that normal imports will return shortly. In regards to the market, Goggi thinks that “sales in dollar terms continue to grow. Volume declines are being seen in ready-to-drink (RTD), but are growing or staying flat in tea bags, specialty and foodservice.”

Qualitative research now indicates that at-home consumption remains high, and Goggi points out that “the likelihood for consumers to consume tea out of home declined. The hybrid way of working, with many workers continuing to split time between the office and home, will help sustain gains in consumption trends.”

Consumers are looking for specific health and wellness benefits from their food and beverages, placing that above sustainability. According to Tastewise’s 2023 trend report, “While health and wellness and international flavours have been trending in food and drink for years, this report shows preferences are evolving and consumers are zeroing in on specific niches that interest them.”

These trends complement tea’s strong position as a plant-based, healthful drink, consumed for its variety of benefits, rooted in its high flavonoid content. In fact, several new research papers were published in 2020 and 2021 illustrating tea’s extraordinary ability to act as a booster of human immune systems, followed by an important study in 2022 highlighting tea’s high content of a class of key bio-actives, flavan-3-ols.

Among the challenges facing the tea industry continues, Goggi points to these facts: too much tea is being produced; prices are too low; tea is a leader in ecological sustainability, but social and economic legs are struggling; retailers continue to push down pricing; costs are being pushed up the supply chain.

Americans still love their coffee

Which of these tea-related insights carry over into coffee’s retail reality? Three insights emerged in the 2023 National Coffee Data Trends (NCDT) report published by National Coffee Association of the USA. Firstly, more Americans drink coffee everyday than any other beverage, including tap or bottled water. The pandemic didn’t change how much coffee Americans consume, though it did impact where.

Secondly, “coffee consumption at home peaked when Americans were kept home by pandemic restrictions, with 85 percent of past-day coffee drinkers consuming their brews at home in January 2021.” Today, at-home consumption is slightly above pre-pandemic levels (82 percent compared to 79 percent in January 2020).

Thirdly, “coffee consumption outside of the home fell by almost 25 percent between January 2020 and January 2021,” before recovering as Covid restrictions eased. Today, out of home past day consumption is back at 34 percent, near pre-pandemic levels.

Fourthly, the most popular place of purchase for at-home coffee is the grocery store; 39 percent of past-day at-home coffee drinkers bought their coffee at the grocery store. Mass merchandisers were the second-most popular place of purchase for at-home coffee at 23 percent. “Both of these figures have remained consistent since January 2020.”

Stephanie Harlow, senior trends analyst at GWI, examines US consumers who regularly/often consume coffee and tea, said that buying by this type of person “has remained unchanged in the last three years. That said, if we look at Gen Z, there’s a slightly different story. The number of Gen Z regularly/often consuming coffee has sustained a small growth at 3 percent but the amount consuming tea has grown by 13 percent in the same timeframe.”

Harlow thinks “this growth is in part due to more Gen Z picking up a coffee to go or while out and about; the number who say they regularly/often drink coffee outside their home has grown 6 percent since Q4 2020.”

Among consumers who consume coffee at home, the number reaching for iced coffee has grown 19 percent since Q4 2020. And Harlow’s data indicates that, “while the number going for ground coffee pods has grown 8 percent in the same timeframe. The number of consumers preferring whole bean coffee has fallen 5 percent. The number who say they drink herbal tea has grown 13 percent since Q4 2020, with the number who say they drink black tea growing by 10 percent in the same timeframe.” Chamomile tea drinkers have also grown by 8 percent and green tea drinkers by 6 percent. Kombucha is more out of favour though, the number saying they drink it has dropped 13 percent in the same timeframe.

Harlow noted that Folgers is currently the top brand – and “among consumers who drink coffee at home, it has overtaken Starbucks,” which sat on the top spot in Q4 2020. The number choosing the brand has grown by 11 percent.

Beleaguered by labour shortages

Erwin Henriquez, Euromonitor’s senior research analyst, has a different take on the current situation. He believes that “coffee and tea continue to evolve and transform beyond the pandemic. Despite the apparent recovery of hot drinks in foodservice industry, the rising prices of goods and labour shortages continue to pose a challenge, which may impact the industry’s growth in the future. Foodservice has changed since 2019, with increased digital ordering leading to more complex orders”.

This has, of course, compounded labour problems for short-staffed teams. As a result, Henriquez thinks that “US coffee shops are pushing for higher wages and benefits. This is all to say that the industry is facing significant challenges in on-trade channels, which explains in part why the industry is focusing on the retail channels in search for growth.”

Henriquez and his colleagues said the data clearly shows that “pandemic purchasing behaviour is still very much present, with consumers still partially working from home and realizing that the difficult economic situation means fewer trips to cafés and more in-house coffee cups.”

However, retail sales growth of hot drinks (mainly in coffee) is driven by the continuation of price increases and inflationary pressures. Henriquez concludes that “while the industry saw declining volume, it managed to grow in value terms at higher rates than in the past. Inflationary pressures and general price action is part of the equation”, but he adds that premiumisation also plays a key role here.

Henriquez believes that consumers facing challenging economic conditions “are more willing to trade up in coffee/tea for the home,” which is still significantly cheaper than a cup in the on-trade. “We can see the rise of premium and specialty brands in the retail aisle, with more and more players gaining space in the already crowded market.”

Coffee and tea e-commerce retailing was significant in 2023, but for Henriquez “not as much as in the past.” The pandemic has played a significant role in adopting e-commerce retailing, especially for grocery items. While e-commerce sales continue to grow, they are doing so at a slower pace than in 2020. Due to rising inflation, there might be a significant shift towards in-person shopping soon. According to Henriquez, as grocery shopping is becoming increasingly expensive, data shows that people are now more carefully monitoring their expenses and removing non-essentials. Ordering groceries online, which often comes with an extra charge, is one such non-essential, especially now that the physical risk of Covid-19 has been reduced.

Coffee shop spending rebounds

Facteus’ co-founder and head of data & growth, Jonathan Chin, argues that spending at coffee shops “has definitely bounced back and surpassed 2019 numbers. Some regions in the US have bounced back higher than others. Surprisingly the Midwest and South have jumped way above their 2019 numbers more than the coasts. This is a bit counterintuitive, but perhaps with all the pandemic exoduses and work-from-home trends many coastal people moved to the South and Midwest. Maybe they took their coffee habits with them?”

Chin argues that “coffee shop spending has bounced back strong since the pandemic.” Spending is now well above 2019 levels, despite inflation; “it was always a question on how coffee spending habits would react post-pandemic with the influx of home coffee equipment and work from home trends.” Chin quotes Howard Schultz about the various ways in which coffee shops still offer, post-pandemic, “a ‘third place’ where people could enjoy and spend quality time.”

In the view of James Watson, executive director of beverages research at Rabobank US, “we’ve seen a strong post-Covid recovery for coffee shops. Meanwhile, retail coffee is not doing nearly as well.” He think there are many other segments of the beverages economy where consumers are looking for cheaper options. “It is not a completely zero-sum game. It’s possible to make coffee at home and then go out to get a second cup. Indeed, overall, coffee volume is probably slack, or growing ever so slowly. The shift is going back to on-premise. Covid saw a net decline in the number of coffee shops. This meant a boom for at home coffee. Office attendance is at 50 percent, during the very best weeks. What we have today is not a return-to-office story. What we have is a return to previous consumption habits.”

• Gordon Feller, based in California, travels the world reporting about innovations that can change our economies and strengthen small enterprises. Since 1980 he’s been publishing reports and magazine articles about coffee/tea innovations on five continents. He is both an ABE Fellow – Japan Fdn. and Global Fellow – at the The Smithsonian Instition. He can be reached at Gordon.Feller@gmail.com.

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Even though the cost of living continues to squeeze household budgets, this does not seem to be impacting consumers’ coffee buying habits, with the out of home (OOH) coffee market attracting an additional 1.56 million consumers from 2022 to 2023 (Kantar Out of Home | Total Coffee | Measure | 52 w/e 1 October 2023). 

UK-based private label coffee roaster, Lincoln & York, has offered five coffee predictions for the country, which include a growth in cascara drinking, expanded use of coffee extracts, increased coffee education, a strengthened focus on sustainability and purchasing ‘feel good’ coffee. 

Brewing growth in cascara 

“Recently declassified as a novel food, cascara is now more widely available as a ready to drink product and is set for expansion in 2024,” said Chris Tough, coffee buyer, Lincoln & York, who penned the predictions. “With its potential to strengthen the coffee trade economy, helping coffee farmers reduce waste and add income, this byproduct which was once thrown away is now set to take centre stage.” 

Cascara is the skin and pulp of the coffee cherry and offers notable potential to decrease the coffee industry’s carbon footprint whilst also providing new options for consumers and incremental revenue for coffee farmers. 

In terms of flavour, cascara’s unique taste lies somewhere between coffee and tea. “Whilst not as strong or rich as coffee, it’s full of fruity, slightly floral, and earthy notes whilst being packed with antioxidants and significantly less caffeine than coffee,” noted Tough, adding, “with its sustainability and health benefits, plus a novel taste profile, cascara will be one to watch in the year ahead.” 

New opportunities for coffee extracts 

Offering a combination of efficiency and speed of service, Tough said that “2024 could be the year that more widespread use of coffee extracts and coffee concentrates come to the fore.” 

He believes that whilst there are many iterations of coffee concentrates and different methods of extraction, all produce a concentrated coffee essence that can be used in cold coffees to avoid brewing and chilling an espresso for every serve. 

Cold coffees remain ‘hot’ in the UK with the iced coffee market currently valued at £178.9 million, up 37% (Lincoln & York analysis, NIQ Scantrack – MAT WE 26.08.2023), hence, more suppliers across out of home and retail are looking for quicker ways to create high quality iced coffees and RTD products, including dairy-free alternatives. Tough explained that the use of coffee extracts not only speeds up service and guarantees consistency of flavour: it also enables businesses to grow and scale at speed, meaning its potential goes way beyond just cold coffee. “This offers huge opportunities throughout the industry, and 2024 could be the year we see coffee extracts and cold coffee really take off.” 

Improving coffee education 

Coffee bean sales in the UK rose+14.3% in 2023, and this trend is set to continue in 2024 with support from the grocery sector in educating consumers around coffee buying and drinking. 

Although 52% of UK coffee drinkers continue to opt for instant coffee, Tough said there is growth in other options as consumers upgrade their at-home coffee in search of a fresher, fuller flavour (NIQ data 52 w/e 23 Sep 2023). 

To support and encourage this shift, Tough suggests retailers take inspiration from the wine aisles when it comes to their coffee assortments. “This could mean increased displays and merchandising in store to educate consumers about origins, roasts and flavour profiles, helping shoppers tailor their coffee purchases to their own tastes, as well as experiment with new flavours present in coffee.” 

He added that just as people have a preferred wine, “we predict that this will empower consumers to develop a deeper understanding of coffee that goes beyond whether they simply like the flavour or not.” 

A renewed focus on sustainability 

Lincoln & York expects consumers will become even more conscious of the carbon footprint of their coffee in 2024, with 63% of consumers actively looking for sustainably sourced coffee options (Lincoln & York research undertaken by Opinium Research. Sample size 2,000 UK adults. Fieldwork dates 27th – 29th September 2022). 

Sustainable sourcing has never been more important, and new EU legislation taking effect at the end of this year is designed to tackle this problem. Beginning in December, coffee produced from land which has been subject to deforestation in the last three years will not be accepted onto the European market, forcing coffee companies to prioritise the sustainable sourcing of their produce. 

A future of feel good coffee 

Lincoln & York believes that whether it’s added health benefits through functional coffees or a philanthropic pick me up by supporting cause-led brands, consumers will continue to look for coffee that offers more than a great taste and a caffeine kick in 2024. 

Functional coffees, created by blending coffee with ingredients such as botanicals and proteins for added health and wellbeing benefits, achieved significant growth in 2023. “With options such as antioxidant-rich turmeric lattes and CBD coffees also attracting consumer attention, it will be interesting to see if this growth continues or if we’re experiencing a classic case of fashion over function,” said Tough. 

However, he noted that for a different kind of feel good, “‘coffee with a cause’ brands will continue to thrive, with more cause-led brands expected to emerge in 2024.” As well as contributing towards worthy causes, such as supporting veterans struggling with life outside of service or providing homeless people with barista training and job opportunities, planting trees, supporting female coffee farmers, tying your brand with a charitable focus is a smart and worthwhile way to gain customer loyalty — particularly with the ever-important and ever-growing, younger consumer base. 

• 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 Argentinian tea and coffee markets are steadily growing this year thanks to generally improving economic situation in the region and stable domestic demand.

Argentina has rich traditions of tea and coffee drinking. While the Covid-19 pandemic and serious financial problems of the country had resulted in a serious drop of consumption of both drinks, the market has almost completely recovered, although the rise of coffee prices by almost 150 percent in the last year put a serious pressure on the market.

For many global coffee majors, the expansion into Argentina along with Brazil, is a priority due to the potential, which is associated with the Latin American region and the exodus of business from the markets of Russia and Ukraine — once the most important emerging markets for them.

With the population of more than 47 million people and a status of the second largest country in the Latin American region, Argentina has always been under the radar of some major tea and coffee producers.

Emanuele Uccellini, the Caribbean and Latin America BU Director for Lavazza Group BU Americas told T&CTJ in an exclusive interview, that Lavazza has been present in the Argentina for many years, and that the market represents a top priority within the Latin America region for two main reasons:

1. The growing interest of consumers in high-quality coffee brands. The demand for specialty coffees has been increasing significantly, especially during the pandemic, and we’ve seen the trend keep growing, mostly among younger consumers.
2. The relevant presence of people with Italian roots: they always feel at home when they sip a good Lavazza cup of coffee.

The Argentinian coffee market has always been of interest to other global majors as well.

One of them is JDE Peet’s, which in recent years has significantly strengthened its positions in the local market. A spokesperson for JDE Peet’s, said, “JDE Peet’s does sell a range of products across our brand portfolio in Argentina including NCC capsules. We anticipate that the demand for coffee and tea will only continue to grow globally. We recently signed an agreement to acquire Marata’s coffee and tea business in Brazil, and South America in general is an area in which demand for coffee and tea is increasing.”

The Argentinian market also attracts the interest of global coffee chains, many of which are considering accelerating expansion in the local market in years to come, which is primarily done through the expansion of the existing portfolio. One example is Starbucks, which considers the local market as a priority for its growth.

A Starbucks’ spokesperson told T&CTJ, “Starbucks entered Argentina in 2008 with our first store in Buenos Aires. Today, the brand operates over 130 stores in the market, providing employment opportunities to over 1,700 green apron partners,” noting that earlier this year, Starbucks celebrated its 15^th anniversary in Argentina, together with its licensed business operator, Alsea.

In April 2023, the spokesperson said that Argentina took a significant step toward a more sustainable future by certifying its first two Starbucks Greener Stores. “This is part of Starbucks global vision to have 3,500 Greener Store-certified locations worldwide, aiming to cut our climate, water, and waste footprints in half by 2030. Starbucks Argentina also continues to expand its plant-based menu offerings in an effort to deliver increased options for our customers.”

Furthermore, in collaboration with Alsea, Starbucks announced plans to operate 2,000 Starbucks stores in the 12 markets where Alsea operates the brand globally by the end of 2025.

Starbucks and other leading Western coffee chains operating in the country have faced strong competition with local players. An example of this is Café Martinez chain, a local chain that has almost doubled the number of its outlets within Argentina the last few years and which plans to continue its active expansion in years to come.

Coffee consumption is growing

A senior researcher at Euromonitor International said that in 2022, the total volume sale of coffee in Argentina is set to post a third consecutive year of growth, following a decline during the outbreak of Covid-19. “For the current year and beyond even though consumers have returned to pre-pandemic habits, total volume consumption is forecast to grow much slower. This is due to the long-term unstable economy, increased poverty, and high inflation, which is diminishing the purchasing power of middle and low-income consumers.”

However, coffee is set to post the highest total volume and current retail value growth in hot drinks, driven by the widening use of instant coffee, which began seeing consumption growth in 2021 and 2022. Instant coffee benefits from being affordable, while offering a widening variety of coffee mixes. New coffee consumers tend to start with lighter options, with less coffee flavour and with more milk content, with the inclusion of chocolate and other ingredients.

The coffee industry has suffered a major world price hike due to drought conditions in Brazil, which led to considerably lower production and higher freight costs. Coffee pod consumption rocketed as consumers prioritised high-quality coffee with a desire to replicate foodservice experiences at home. The coffee pod category was also stimulated by a continuous entry of new brands, including La Morenita, La Virginia, Jacobs, L’Or, Viaggio, and Nestlé Argentina’s latest novelty with Starbucks. Sales of coffee pods were fueled by the growth of ecommerce, the fastest-growing channel in the hots drinks industry in 2022.

According to Euromonitor’s spokesman, retail value sales of coffee in Argentina increased by 67 percent in current terms in 2022 to ARS 80.3 billion The instant coffee mix category was the best performing one in 2022, with retail value sales rising by 75 percent in current terms to ARS 5.4 billion. Retail sales in 2022 had a CAGR of 59 percent, hitting ARS 811 billion (CAGR of 15 percent over the forecast period 2022-2027).

Coffee does grow in Argentina; however, it is produced in only a single plantation in the Yungas — a bioregion of a narrow band of forest along the eastern slope of the Andes Mountains from Peru and Bolivia. It emerged in the early 1970s under the name of Café Baritú when authorities in the province launched an ambitious plan to make Northern Argentina a coffee-producing area.

Graciela Ortiz, the owner of Café Baritú in an interview with the Argentinian iProfesional business paper said that the coffee produced on the Salta farm is Arabica. “It is actually a mixture of two Arabicas, one Colombian and the other Brazilian,” he specifies. “It has a very subtle flavour, with fruity, perfumed notes.”

As for coffee, although Argentina is still far from countries like Norway, Finland or the United States in terms of coffee consumption – being stagnant for years at a per capita consumption of only one kilo per year – the sector has shown sustained growth recently, which is mainly due to the rise of popularity of coffee among local customers.

According to a study conducted by the Argentine Coffee Chamber in collaboration with the firm The Brand Bean, today, coffee in Argentina represents 45 percent of the beverages chosen compared to all other beverages and is consumed mostly by people between 25 and 44 years old.

Most local citizens prefer milder coffees instead of stronger roasts as in many European countries. According to some media reports, an average of one kilo of coffee per capita is consumed annually (208 cups) in the country, with the instant variety being the most consumed. Nine out of 10 Argentines prepare it at home and approximately 50 percent of consumers add milk.

Regarding the most chosen varieties, young people seek to customise it and choose to consume cold and instant coffees. On the other hand, those over 35 years of age choose the capsule format.

According to experts of La Nacion, local consumers are increasingly interested in knowing everything about the product: who makes it, what differential attributes it has, what extraction method enhances it, what the differences are between varietals and what the different types of filtering are like. In addition to choosing coffees from more exotic origins, such as Kenya, the Dominican Republic, Honduras or Haiti, they also turn to cold brew when the temperature rises.

Tea-growing & consuming are strong

In the case of tea, retail value sales grew by 62 percent in current terms in 2022 to ARS 21.3 billion. Green tea was the best performing category in 2022, with retail value sales rising by 73 percent in current terms to ARS131 million.

Retail tea sales had a CAGR of 41 percent in 2022, reaching ARS 118 billion (constant value CAGR of 2% over the forecast period).

Tea sales saw growth in total retail volume terms in 2022; resulting from the increasingly positive perception of tea as a healthy option. Argentinian consumers have always been very health conscious, but the outbreak of Covid-19 increased this, with consumers discussing and looking for ways to boost their immune systems. Greater interest has been given to specific functional benefits offered by different tea varieties, particularly those claiming to strengthen the immune system or provide a calming effect. Thus, green tea and herbal/fruit tea have seen strong growth, driven by their functional fortified options.

Argentina has a more robust tea production than that of coffee. According to Argentinian Mitre Y Elcampo business paper, tea production is in the southernmost part of Argentina, located between 26° and 28° South latitude, there are about 6,800 producers with an area of 40,500 hectares. About 94 percent of them are located in the province of Misiones, and the remaining 6 percent are in Corrientes. A characteristic of Argentine tea is its high concentration of polyphenols.

Approximately 90 percent of Argentine tea production is destined for foreign markets and its volume represents almost 2 percent of world consumption. The main destination is the United States, with 70 percent of the production. Currently, Argentina is the main exporter of tea to the United States of America. Other important destinations are Chile, Poland, Russia, Germany; followed by the United Kingdom, India, Malaysia and 30 other countries

The annual volume of tea exports from Argentina are varied in range of 70,000-75,000 tonnes mostly black tea for about USD $75 – $83 million in value terms. Nearly 64 percent of the cultivated area is certified with the RAS Standard (Sustainable Agriculture Network, triple impact).

Tea consumption in Argentina has been steadily growing with the biggest demand being observed in case of gourmet tea. This has even stimulated the development of tea tourism in the region, with the province of Misiones, which is located in the northeastern corner of the country in the Mesopotamia region, at forefront of this.

• 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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Green Coffee Price
The ICO Composite Indicator Price (I-CIP) averaged 153.13 US cents/lb in September, posting a median value of 152.74 US cents/lb and fluctuating between 147.86 and 160.17 US cents/lb.

The Robustas remained at a near-record high in September, staying firmly above the 120.00 US cents/lb mark. The Colombian Milds and Other Milds decreased by 1.4% and 1.7%, to 184.98 and 183.52 US cents/lb, respectively, in September 2023. The Brazilian Naturals and Robustas both contracted by 0.3% and 0.6%, reaching an average of 154.19 and 123.89 US cents/lb, respectively. ICE’s New York market fell by 1.9%, whilst the London Futures market shrank by 2.0%, to 153.55 and 109.14 US cents/lb, respectively.

The Colombian Milds-Other Milds differential grew 79.1% to 1.46 US cents/lb. The Colombian Milds-Brazilian Naturals differential shrank 6.4% to 30.79 US cents/lb, whilst the Colombian Milds-Robustas differential also contracted 2.9% from August to September 2023, averaging 61.09 US cents/lb. Meanwhile, the Other Milds-Brazilian Naturals and the Other Milds-Robustas both contracted 8.6 and 4.0%, reaching 29.33 and 59.63 US cents/lb, respectively. However, the Brazilian Naturals-Robustas differentials expanded 0.9%, averaging 30.30 US cents/lb in September 2023.

In September 2023, the Colombian Milds-Other Milds Arabica differential fluctuated between positive and negative.

Arbitrage, as measured between the London and New York Futures markets, narrowed by 1.8% to 44.41 US cents/lb in September 2023. This marks the lowest point since October 2019, when arbitrage sat at 44.07 US cents/lb.

Intra-day volatility of the I-CIP followed a consistent downtrend, reaching 6.3%, a 0.7 percentage point decrease between August and September 2023. The Robustas presented the strongest volatility decrease, with a 1.3 percentage point drop, averaging 7.4% for the month of September. The Colombian Milds’ and Other Milds’ volatility also contracted to 6.5% and 6.8%. Meanwhile, the Brazilian Naturals’ volatility dropped by 0.7 percentage points to 8.1% from August to September 2023, whilst the London futures market’s volatility also decreased by 2.1 to 7.3%. Lastly, the New York futures market’s volatility moved in the same direction as London, retracting by 0.9 percentage points and reaching 7.7% for New York.

The New York and London certified stocks moved in opposite directions, where London grew 25.7% to 0.73 million 60-kg bags, whilst certified stocks of Arabica coffee reached 0.49 million 60-kg bags, a 13.8% decrease.

The absence of market participants, as evidenced by the falling exports (see Exports by Coffee Groups – Green Beans), continued to prevail over the I-CIP, explaining the overarching trajectory of the I-CIP in September. However, currency movements, market sentiments, dwindling supplies, weather and the fundamentals all played their part in the coffee price movements in September, which saw the I-CIP rally, before falling once again due to foreign exchange movements.

From 22 August to 19 September 2023, the I-CIP recovered, increasing from a low of 148.79 to 160.17 US Cents/lb, ie, an increase of 7.6%. This came on the back of reports of heavy rain in Brazil and a continued fall in the certified stocks held at the New York ICE warehouses. Somar Meteorologia, a Brazilian meteorology company, reported on 5 September that Brazil’s Minas Gerais region, the country’s largest coffee producing region, received 22.8 mm of rain in the past week, or 308% of the historical average, leading to speculation regarding a delay in the completion of Brazil’s coffee harvest. Meanwhile, ICE’s Arabica inventories fell to a low of 0.49 million bags in September. The impact of these positive factors was more profound on the prices of the Arabicas, particularly the Brazilian Naturals which rallied by 5.3% and 81.%, respectively.

Nevertheless, this rally was halted and reversed by the sharp weakening of the real against the US dollar. From 19 to 29 September the real depreciated by 3.2%, from 4.87 to 5.03, while the I-CIP fell by 7.1% over the same period. Once again, the negative impact was felt relatively more by the Arabicas (-8.1%) and particularly the Brazilian Naturals (-9.3%) as compared with Robustas (-5.9%). The price of the Robustas fell at a relatively slower rate due to Vietnam’s current dwindling supply (see Exports by Regions – All Forms of Coffee), with supply from the 2023/24 harvest still at least two months away in November at the earliest.

Exports by Coffee Groups – Green Beans
Global green bean exports in August 2023 totalled 9.36 million bags, as compared with 9.07 million bags in the same month of the previous year, up 3.2%. As a result, the cumulative total for 2022/23 to August is 102.9 million bags, as compared with 108.26 million bags over the same period a year ago, down 5.0%.

Shipments of the Other Milds decreased by 9.7% in August 2023 to 1.99 million bags from 2.2 million bags in the same period last year. As a result, the cumulative volume of exports continued to fall, decreasing by 12.2% in the first 11 months of coffee year 2022/23 to 20.56 million bags, versus 23.42 million bags over the same period in 2021/22.

Green bean exports of the Brazilian Naturals increased in August 2023, rising by 10.2% to 3.06 million bags. For the first 11 months of coffee year 2022/23, green bean exports of the Brazilian Naturals amounted to 31.5 million bags, down 8.0% from 34.22 million bags over the same period a year ago. Changes to the fortunes of the Brazilian Naturals are mainly due to changes in Brazil’s total green bean exports, the biggest producer and exporter of the Brazilian Naturals, which also increased in August 2023 (27.6%) to 3.35 million bags from 2.63 million bags in August 2022.

Exports of the Colombian Milds decreased by 2.1% to 0.84 million bags in August 2023 from 0.86 million bags in August 2022, driven primarily by Colombia, the main origin of this group of coffee, whose exports of green beans were down 5.6% in August 2023. This is the fourteenth consecutive month of negative growth for the Colombian Milds and, as a result, the exports of this group of coffee for October 2022 to August 2023 were down 12.5%, at 9.9 million bags, as compared with 11.32 million bags in the first 11 months of coffee year 2021/22.

Green bean exports of the Robustas amounted to 3.47 million bags in August 2023, as compared with 3.22 million bags in August 2022, up 7.3%. This is the fifth consecutive month of positive growth for the Robustas and, as a result, the exports of this group of coffee for October 2022 to August 2023 were up 4.2%, at 40.94 million bags, as compared with 39.31 million bags in the first 11 months of coffee year 2021/22.

Exports by Regions – All Forms of Coffee
In August 2023, South America’s exports of all forms of coffee increased by 13.0% to 4.98 million bags. This is the first positive growth rate for the region since the 0.3% expansion in June 2022. The source of both the positive and strength of growth is Brazil, which saw its exports increase by 24.4% to 3.67 million bags from 2.95 million bags in August 2022. More specifically, it was the Robustas from the origin, which in August increased by 388.1% to 0.7 million bags from 0.14 million bags, that drove the region’s positive growth. The August 2023 exports are Brazil’s highest on record for Robusta coffee, beating the 696,873 bags exported in December 2014.

Fundamentally, the region’s turnaround is due to the recent downturn in Asia and Oceania, especially in Vietnam, the world’s largest Robusta producer and exporter. Pointedly, Brazil is the largest producer and exporter of Robustas in South America, and it has been taking advantage of the reduced volume of Robustas coming out of Vietnam. It is pertinent to note that Brazil is the fifth biggest exporter of Robustas in the world, having shipped 1.87 million bags in coffee year 2021/22 as compared with the 25.44 million bags exported from Vietnam or the 4.89 million, 4.28 million and 4.03 million bags from Uganda, India and Indonesia, respectively, the second, third and fourth largest exporters. However, in August 2023, Brazilian Robusta exports were second only to Vietnam with 1.34 million bags. To put this into perspective, in August 2023 Brazil exported the equivalent of four-and-half months’ worth of Robustas in a single month (as measured against the total Robusta exports in coffee year 2021/22).

Exports of all forms of coffee from Africa increased by 10.9% to 1.37 million bags in August 2023 from 1.23 million bags in August 2022. For the first 11 months of the current coffee year, exports totalled 10.84 million bags as compared with 12.31 million bags in coffee year 2021/22, down 1.5%. This is the third consecutive month of positive growth rate for the region. The continued global demand for Robustas, as reflected in the latest cumulative positive growth rates for Robusta green bean exports, is the fundamental source of Africa’s positive export growth rate in August. However, like the situation in South America, the reduced volume from the Asia and Pacific region, and more pointedly Vietnam, explains this growth.

Uganda, the largest producer and exporter of Robusta coffee in Africa, took the opportunity to fill the gap in the market left by Vietnam, increasing its exports by 48.4% to 0.74 million bags in August 2023 from 0.5 million bags in August 2022. This represents the second largest monthly exports on record, just behind the 0.79 million bags exported in March 1973.

In August 2023, exports of all forms of coffee from Mexico and Central America were down 2.0% to 1.23 million bags as compared with 1.26 million in August 2022. As a result, total exports are down 2.6% from October 2022 to August 2023 at 14.57 million bags, as compared with 14.96 million bags for the same period a year ago. The relatively shallow negative growth rate of the region masked the dynamic changes at the individual country level.

Two origins experienced strong positive growth rates (Honduras and Nicaragua), with a combined 37.2% increase in August 2023, while three others experienced sharp negative growth rates (Costa Rica, Guatemala and Mexico), with a combined 20.5% decrease. Honduras and Nicaragua outperformed both the region and group of coffee (Other Milds) to which they predominantly belong in August. This may reflect their competitive edge over other origins in Mexico and Central America – the average export unit value of Arabica green beans for Honduras and Nicaragua was 157 US cents/lb for coffee years 2017/18–2021/22, while it was on average 63 US cents/lb higher for the others (excluding Cuba, Haiti and Jamaica) at 220 US cents/lb.

Exports of all forms of coffee from Asia and Oceania decreased by 14.9% to 2.72 million bags in August 2023 and but were up 1.3% to 41.28 million bags in the first 11 months of coffee year 2022/23. August’s downturn was mainly due to Vietnam, with exports down 23.6% to 1.44 million bags from 1.98 million bags. This is the lowest month of August exports since the 1.4 million bags shipped in 2012. The decrease can be attributed to the depletion of available supply, reflecting the strength of its exports in the first 10 month of the current coffee year, where between October 2022 and July 2023 Vietnam shipped 25.98 million bags –3.3% higher than the same period in coffee year 2017/18, a record exporting year when the origin shipped 29.73 million bags over the full year.

Exports of Coffee by Forms
Total exports of soluble coffee decreased by 4.6% in August 2023 to 0.89 million bags from 9.3 million bags in August 2022. In the first 11 months of coffee year 2022/23, a total of 10.46 million bags of soluble coffee were exported, representing a decrease of 5.7% from the 11.09 million bags exported in the same period during the previous coffee year.

Soluble coffee’s share in the total exports of all forms of coffee for the year to date was 8.6% in August 2023, down from 9.2% for the same period a year ago. Brazil is the largest exporter of soluble coffee, having shipped 0.32 million bags in August 2023.

Exports of roasted beans were down 39.9% in August 2023 to 58,226 bags, as compared with 96,937 bags in August 2022. The cumulative total for coffee year 2022/23 to June 2023 was 0.66 million bags, as compared with 0.77 million bags in same period a year ago.

Production and Consumption
Under the current circumstances, the estimates and outlook of production and consumption for coffee years 2021/22 and 2022/23 remain the same.

World coffee production decreased by 1.4% to 168.5 million bags in coffee year 2021/22, hampered by the off-biennial production and negative meteorological conditions in a number of key origins. However, it is expected to bounce back by 1.7% to 171.3 million bags in 2022/23. Increased global fertiliser costs and adverse weather conditions are expected to partially offset the positive impact of biennial production from Brazil, explaining the relatively low rate of growth in coffee year 2022/23. The impact of biennial production is anticipated to drive the outlook for Arabica, which is projected to increase by 4.6% to 98.6 million bags in coffee year 2022/23, following a 7.2% decrease in the previous coffee year.

Reflecting its cyclical output, Arabica’s share of the total coffee production is expected to increase to 57.5% from 55.9% in coffee year 2021/22. South America is and will remain the largest producer of coffee in the world, despite suffering from the largest drop in output for almost 20 years, which fell by 7.6% in coffee year 2021/22. The recovery in coffee year 2022/23, partly driven by biennial production, is expected to push the region’s output to 82.4 million bags, a rise of 6.2%.

World coffee consumption increased by 4.2% to 175.6 million bags in coffee year 2021/22, following a 0.6% rise the previous year. Release of the pent-up demand built up during the Covid-19 years and sharp global economic growth of 6.0% in 2021 explains the sharp bounce back in coffee consumption in coffee year 2021/22. Decelerating world economic growth rates for 2022 and 2023, coupled with the dramatic rise in the cost of living, will have an impact on the coffee consumption for coffee year 2022/23. It is expected to grow, but at a decelerating rate of 1.7% to 178.5 million bags. The global deceleration is expected to come from non-producing countries, with Europe’s coffee consumption predicted to suffer the largest decrease among all regions, with growth rates falling to 0.1% in coffee year 2022/23 from a 6.0% expansion in coffee year 2021/22.

As a result, the world coffee market is expected to run another year of deficit, a shortfall of 7.3 million bags.

The outlook is taken from the newest publication of the Statistics Section of the Secretariat of the International Coffee Organization (ICO), the Coffee Report and Outlook (CRO). The full CRO can be downloaded from the ICO website: icocoffee.org. For further information, contact the Statistics Section at stats@ico.org.

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Despite strengthening of the BRL, where conventionally Brazilian Naturals might see an uptick in price, they contracted 11.4% in the month of June, hinting that the current and upcoming favourable weather in the region outweighs the USD/BRL variation. The Robustas, on the other hand, have been supported by a strong London market, where the arbitrage has declined to a two-and-a-half-year low, as the rate of growth outpaces that of the Arabicas. 

Average prices for all group indicators decreased in June 2023, with the Robustas being an exception, gaining 7.8% and averaging 132.13 US cents/lb. The Colombian Milds and Other Milds decreased by 6.6% and 5.8%, to 211.85 and 207.39 US cents/lb, respectively, in June 2023. The Brazilian Naturals contracted by 5.5%, reaching an average of 176.48 US cents/lb. ICE’s New York market fell by 4.7%, whilst the London Futures market grew by 5.9% to 174.54 and 119.23 US cents/lb, respectively. 

The Colombian Milds-Other Milds differential contracted by 34.5% to 4.46 US cents/lb. The Colombian Milds-Brazilian Naturals and Colombian Milds-Robustas differentials both contracted 11.9 % and 23.6% from May to June 2023, averaging 35.36 and 79.72 US cents/lb in the latter month, respectively. The Other Milds-Brazilian Naturals differential presented a more moderate loss of 7.3%, averaging 30.90 US cents/lb. However, the Other Milds-Robustas and Brazilian Naturals-Robustas both contracted by 22.9% to 75.26 US cents/lb and by 31.0% to 44.36 US cents/lb, respectively. 

In June 2023, the Colombian Milds-Other Milds Arabica differential has been narrowing considerably where, in the latter third of June, the differential averaged -2.57 US cents/lb. The Colombian Milds declined at rate of 13.4% in June, whilst the Other Milds contracted at the rate of 9.6% for the same month. The faster rate of decline of the Colombian Milds compared to the Other Milds had a knock-on effect for the last seven business days of the month. The Colombian Milds-Other Milds differential turned negative, making the Other Milds more expensive than the Colombian Milds. This trend feeds into a wider phenomenon, where the Arabica and Robusta prices have been decoupled, with the Robustas benefitting from a price-driven demand substitution for cheaper coffee versus the higher-quality and priced Arabicas. However, it is important to note that only Colombia, Kenya and Tanzania produce Colombian Milds, thereby making any shifts on the demand side more noticeable due to the smaller share of the total Arabica production. Thus, due to strong demand for Robustas in the month of June, they lost a marginal 1.8%, albeit exhibiting the highest monthly average since February 1995. 

The current Arabica-Robusta differentials are at their lowest point since October 2020, where demand for higher end qualities has waned in favour of more competitively priced coffees. Groups of coffee with varying qualities are seeing their differentials tighten throughout the board. This convergence marks a three-and-a-half-year low for the Colombian Milds-Brazilian Naturals, Colombian Milds-Robustas, Other Milds-Brazilian Naturals and Other Milds-Robustas differentials. The tightening of the spread between different growths can be attributed to the global increase in interest rates, actioned by the European Central Bank, the Bank of England and the US Treasury. 

This has the direct effect of making money more expensive to borrow, thereby limiting extensive leverage to coffee supply chain stakeholders as interest rate repayment fees eat disproportionately into operations profits. In turn, this limits how big purchasing budgets can be, with buyers focusing on more competitive origins and shying away from the more expensive growths. The trend of consumers and manufacturers shifting towards cheaper Robustas, due to the high cost of living, and the greater availability of coffee due to the ongoing harvest of the world’s largest Arabica producer (Brazil), may together explain the Arabica differentials being at a three-and-a-half-year low, in addition to a continuous rise in the price of Robustas. 

Arbitrage, as measured between the London and New York Futures markets, contracted by 22.6% to 50.31 US cents/lb in June 2023 as the Robusta growth rate outstripped the New York Market. This marks the lowest point since November 2020, where arbitrage sat at 52.66 US cents/lb. Intra-day volatility of the I-CIP followed a consistent downtrend, reaching 8.1%, a 0.5 percentage point decrease between May and June 2023. The Other Milds and Robustas presented the strongest volatility increases, with a 0.8 percentage point expansion, averaging 11.1% and 8.2% for the month of June. Whilst the Colombian Milds’ and Brazilian Naturals’ volatility contracted to 8.2% and 9.5%, the Robustas’ volatility expanded by 0.8 percentage points to 8.2% from May to June 2023. However, the London and New York futures markets’ volatility moved in the opposite direction from one another, retracting by 0.8 percentage points and reaching 9.6% for New York, whilst the Robusta contraction averaged 8.2% in June 2023, a 0.7 percentage point increase. 

The New York and London certified stocks decreased in tandem by 8.5% and 9.7%, respectively, closing in at 0.60 million 60-kg bags, whilst certified stocks of Robusta coffee reached 1.25 million 60-kg bags.  

Exports by Coffee Groups – Green Beans 

Global green bean exports in May 2023 totalled 9.56 million bags, as compared with 9.61 million bags in the same month of the previous year, down 0.6%. The downturn was driven by the Colombian Milds and the Brazilian Naturals. This is the sixth consecutive month of negative growth for total exports of green beans since the start of coffee year 2022/23. As a result, the cumulative total for 2022/23 to May is 74.59 million bags, down 5.6% from the year-ago period to 79.01 million bags. 

Shipments of the Other Milds increased by 8.7% in May 2023 to 2.57 million bags from 2.36 million bags in the same period last year. This is the second month of positive growth for green bean exports of the Other Milds since March 2022, when it increased by 1.9%. Despite the rebound, the cumulative volume of exports continued to fall, decreasing by 10.5% in the first eight months of coffee year 2022/23 to 13.77 million bags versus 15.38 million bags over the same period in 2021/22. 

Green bean exports of the Brazilian Naturals fell in May 2023, falling by 14.8% to 2.43 million bags. For the first eight months of coffee year 2022/23, green bean exports of the Brazilian Naturals amounted to 23.4 million bags, down 9.8% from 25.93 million bags over the same period a year ago. Changes to the fortunes of the Brazilian Naturals are mainly due to changes in Brazil’s green bean exports, the biggest producer and exporter of the Brazilian Naturals, which also fell in May 2023 (-16.2%) to 2.12 million bags from 2.53 million bags in May 2022. 

Exports of the Colombian Milds decreased by 7.2% to 0.91 million bags in May 2023 from 0.98 million bags in May 2022, driven primarily by Colombia, the main origin of this group of coffee, whose exports of green beans were down 10.3% in May 2023. This is the eleventh consecutive month of negative growth for the Colombian Milds and, as a result, the exports of this group of coffee for October 2022 to May 2023 were down 14.1%, at 7.28 million bags, as compared with 8.48 million bags in the first eight months of coffee year 2021/22. 

Green bean exports of the Robustas amounted to 3.65 million bags in May 2023, as compared with 3.42 million bags in May 2022, up 6.8%. In the first eight months of coffee year 2022/23, 30.13 million bags of Robustas were exported as compared with 29.22 million bags in the same period in 2021/22. 

Exports by Regions – All Forms of Coffee 

In May 2023, South America’s exports of all forms of coffee decreased by 11.5% to 3.47 million bags, driven by the three main origins of the region, Brazil, Colombia and Peru, which saw their combined exports fall by 12.29%. The two major origins of the region, Brazil and Colombia, saw their respective shipments of coffee decrease by 12.2% and 10.6% in May 2023, falling to 2.46 million and 0.85 million bags. In both countries, the availability of supply is the reason behind the decreases in their respective exports. Heavy rain led to a 21% fall in production in May 2023 in Colombia, while Brazil’s supply is relatively tight due to the two consecutive years of below-par harvests, especially in the current 2022/23 season which has been hampered by both frost and droughts. 

Peru is continuing to see its exports fall at a significantly faster rate, plunging by 24.9% in May 2023. Again, erratic weather played a part in Peru’s downturn, in addition to continuing social unrest which began in December 2022. However, the main reason behind the exceptional rate of decrease in May 2023 is mechanical. The May 2022 growth rate was up 54.7% at 137,948 bags, while the average volume of exports for May in 2014–2021 was 97,969 bags and 103,649 in May 2023, a 5.7% increase when compared against the average. 

Exports of all forms of coffee from Africa decreased by 7.2% to 1.14 million bags in May 2023 from 1.23 million bags in May 2022. For the first eight months of the current coffee year, exports totalled 8.1 million bags as compared with 8.6 million bags in coffee year 2021/22, down 5.8%. Côte d’Ivoire and Ethiopia are the main drivers behind the fall in the region’s exports, with their combined shipments decreasing by 19.4% to 0.45 million bags as compared with 0.56 million bags in May 2022. In Ethiopia, contract disputes arising out of a mismatch between the local purchasing prices and global market prices have been affecting the volume of exports since the early months of 2023, with exporters withholding the coffee until the disputes are resolved. 

In May 2023, exports of all forms of coffee from Mexico and Central America were up 12.4% to 2.14 million bags as compared with 1.91 million in May 2022. This latest month of positive growth is the third in the first eight months of the current coffee year. As a result, the rate of decrease of the cumulative total has decelerated sharply, up to 2.1% in the first eight months of the current coffee year, totalling 10.03 million bags, as compared with 5.4% rate of fall for the first seven months. Honduras was the main driver of the positive growth in May 2023, up 58.0%, to 0.83 million bags from 0.52 million bags in May 2022, the biggest rate of growth for the month of May since its 80.4% increase in 2000. This large jump in exports was mainly due to two factors. The first was mechanical, reflecting the 37.3% year-on-year (YOY) decrease in exports in May 2022, while the second was logistical, where deliveries scheduled for April 2023 were delayed to May. In the first eight months of the current coffee year, Honduras has exported 3.58 million bags, as compared with 3.33 million bags in 2021/22, up 7.5%. 

Exports of all forms of coffee from Asia and Oceania increased by 13.1% to 3.94 million bags in May 2023 and rose 3.2% to 31.73 million bags in the first eight months of coffee year 2022/23. Indonesia is the main source of the strong positive growth rate of the region, with exports increasing by 171.7% in May 2023, which in turn is a reflection of the 52.8% YOY fall in May 2022. Indonesia’s average exports for May amount to 0.54 million bags (2017–2021), though these fell to 0.23 million bags in May 2022 before leaping back up to 0.62 million bags in May 2023, the fourth highest volume for the month on record. Measured against the average (2017–2021), the May 2023 exports are up 14.9%, more in line with the year-to-date growth rate of 8.1% (October–May 2022/2023 vs 2021/22). 

Exports of Coffee by Forms 

Total exports of soluble coffee increased by 24.6% in May 2023 to 1.07 million bags from 0.86 million bags in May 2022. In the first eight months of coffee year 2022/23, a total of 7.93 million bags of soluble coffee were exported, representing a decrease of 0.4% from the 7.96 million bags exported in the same period during the previous coffee year. Soluble coffee’s share in the total exports of all forms of coffee was 9.6% (measured on a moving 12-month average) in May 2023, up from 9.0% in May 2022. Brazil is the largest exporter of soluble coffee, shipping 0.32 million bags in May 2023. 

Exports of roasted beans were down 4.8% in May 2023 to 72,925 bags, as compared with 68,003 bags in May 2022. The cumulative total for coffee year 2022/23 to May 2023 was 0.48 million bags, versus 0.52 million bags in the year-ago period. 

Production and Consumption 

The estimates and outlook for production and consumption for coffee years 2021/22 and 2022/23 remain the same. 

World coffee production decreased by 1.4% to 168.5 million bags in coffee year 2021/22, hampered by the off-biennial production and negative meteorological conditions in a number of key origins. However, it is expected to bounce back by 1.7% to 171.3 million bags in 2022/23. Increased global fertiliser costs and adverse weather conditions are expected to partially offset the positive impact of biennial production from Brazil, explaining the relatively low rate of growth in coffee year 2022/23. The impact of biennial production is anticipated to drive the outlook for Arabica, which is projected to increase by 4.6% to 98.6 million bags in coffee year 2022/23, following a 7.2% decrease in the previous coffee year. 

Reflecting its cyclical output, Arabica’s share of the total coffee production is expected to increase to 57.5% from 55.9% in coffee year 2021/22. South America is and will remain the largest producer of coffee in the world, despite suffering from the largest drop in output for almost 20 years, which fell by 7.6% in coffee year 2021/22. The recovery in coffee year 2022/23, partly driven by biennial production, is expected to push the region’s output to 82.4 million bags, a rise of 6.2%. 

World coffee consumption increased by 4.2% to 175.6 million bags in coffee year 2021/22, following a 0.6% rise the previous year. Release of the pent-up demand accumulated during the Covid-19 years and sharp global economic growth of 6.0% in 2021 explains the sharp bounce back in coffee consumption in coffee year 2021/22. Decelerating world economic growth rates for 2022 and 2023, coupled with the dramatic rise in the cost of living, will have an impact on the coffee consumption for coffee year 2022/23. It is expected to grow, but at a decelerating rate of 1.7% to 178.5 million bags. 

The global deceleration is expected to come from non-producing countries, with Europe’s coffee consumption predicted to suffer the largest decrease among all regions, with growth rates falling to 0.1% in coffee year 2022/23 from a 6.0% expansion in coffee year 2021/22. As a result, the world coffee market is expected to run another year of deficit, a shortfall of 7.3 million bags. 

For the ICO’s full Coffee Report and Outlook (CRO), visit: icocoffee.org. 

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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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66% of Americans now drink coffee each day, more than any other beverage including tap water and up by nearly 14% since January 2021, the largest increase since NCA began tracking data.

The Spring 2022 National Coffee Data Trends (NCDT) report prepared by Dig Insights on behalf of the NCA found that Americans have increased coffee consumption away from home by 8% since January 2021.

At home coffee consumption remains above pre-pandemic levels. Some 84% of coffee drinkers now have had coffee at home in the past day, compared to 80% in January 2020.

Consumption of espresso-based beverages, typically prepared away from home, have shot up 30% since the start of the pandemic, signaling recovery from the Covid-19 pandemic and also indicating new growth.

NCA president and CEO William “Bill” Murray commented: “Given decades of independent scientific evidence that coffee drinkers live longer than people who never drink coffee, it’s fitting to see America’s top beverage emerge from Covid-19 more popular than ever at home, on the go, in the office, and in coffee shops around the country.”

Other key NCDT findings include:

• Specialty coffee consumption hit a five-year high. 43% of coffee drinkers chose specialty coffee in the past day, up 20% since January 2021.
• Cappuccinos and lattes are tied for America’s most popular coffee beverage, followed closely by plain espresso and cafe mocha.
• 41% of coffee drinkers use a drip coffee maker, followed by single-cup systems (27%), cold brewing (9%) and espresso machines (8%).

For more information, including media highlights, and to purchase the complete NCDT, click here.

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The coffee market in the Nordic region, which is comprised of Sweden, Finland, Iceland, Norway, and Denmark, is steadily growing due to the traditional love local customers have for coffee. And as Covid restrictions in the region are easing, representatives of some leading local producers and independent analysts report that out-of-home consumption is growing again.

While the pandemic and its consequences have not resulted in a significant drop of coffee consumption in the Nordic region – of which each country is among the top-10 coffee-consuming nations in the world – it led to the change of structure of demand.

Such a trend, for example, is currently observed in Denmark, which is confirmed by some leading market research firm analysts.

“No negative effects have been noted, but a shift in demand has occurred. We’ve seen office spaces close, sending many home to work. This meant a decline in demand from B2B customers and an increase in B2C demand. The consumption was moved home from work,” said Christian Juul Andersen, chairperson of SCA Denmark, the Danish Coffee Association, in an exclusive interview. “Specialty coffee is becoming more sought after, as customers are becoming increasingly aware of all links in the supply chain are being treated fair, as well as a general heightened focus on higher quality. We at the SCA expect a shift from a high intake of inferior coffee to a higher quality coffee and a small decrease in consumption.”

In the meantime, in neighbouring Norway, the Covid outbreak has even led to growth of coffee consumption among local customers. Bjørn Grydeland, an official spokesperson of the Norwegian Coffee Association, said, “We have had a total growth in coffee consumption. The decline in the professional market (out-of-home) because of the pandemic has been more than compensated by the growth in the home market.”

According to Grydeland, coffee habits of Norwegians, however, do not change that quickly. “I cannot point to a particular segment that stands out. All kinds of coffee for the home market increased, both instant, capsules and roasted fresh coffee,” he explained. “When society returns to normal conditions, I think we will also return to the way we consumed coffee before March 2020. It is difficult to say whether this exceptional year will lead to lasting changes. Black filter coffee has for decades been our favourite. There is one trend that seems to last; sale of whole beans has been increasing continuously for several years. That will probably continue.”

The Finnish love their coffee

Representatives for roasters also confirm maintaining stable demand for coffee in the region, which creates conditions for their further development. Lenita Ingelin, senior vice-president of Paulig Business Area Finland & Baltics, said 2020 was an extraordinary year – especially in the HoReCa channel – due to the Covid-19 pandemic.

In Finland and the Baltics, the total coffee sales were slightly below the previous year. “However, during 2020 people were experimenting with new coffee tastes that had a positive effect on the sales of our premium coffee segment,” said Ingelin. “In Finland, our City [Coffee] product range, where each blend of coffee represents the coffee culture of a certain city, saw the most significant increase in sales — not being able to travel meant that customers bought 68 per cent more coffee in terms of the various ‘City’ blends than in 2019.”

Paulig Juhla Mokka, a light-roasted coffee, has been popular in Finland since it was introduced in 1929.

Paulig is especially optimistic for its traditional Juhla Mokka coffee — the light roasted ground coffee, launched in Finland for the first time in 1929, and its popularity and consumption have significantly increased since that time. According to Ingelin, today, almost every other cup of coffee enjoyed in the country is Juhla Mokka coffee.

She added that also last year, the iconic Presidentti coffee celebrated the 70^th anniversary of the coffee ambassador, a tradition of Paulig in which the company selects special ambassadors annually to promote the brand. This tradition dates back to the 1920s.

Furthermore, a new variety for the City Coffee range, Café Reykjavik, was introduced in Finland and Estonia, and Classic Cremoso in the Baltics. “In 2020, we also opened a Paulig Café & Store (a Paulig flagship coffeehouse) in Moscow, Russia. It´s a unique place for coffee lovers, inspired by the Finnish Paulig Kulma, which opened in in the heart of Helsinki five years ago,” said Ingelin. “At the moment, we don’t have any expansion plans in our coffee category. We’ll focus on our current markets and nurture the coffee culture in the Baltics, Finland and other Nordic states.”

Paulig Presidentti coffee brand celebrated the 70th anniversary of its ‘coffee ambassador’ in 2020.

Ingelin confirmed that Finland is an important market for Paulig as its coffee culture is one-of-a-kind, and the Finnish people consume the most coffee in the world per capita. She noted that Finnish coffee consumption is almost 10 kg per person yearly and the figure has been stable for years. In 2020, the consumption declined slightly due to exceptional times. The drop in consumption in the HoReCa channels did not shift fully to the retail channel.

Market analysts confirmed these statements. Sneha Varghese, senior research consultant at Fact MR shared that as with many countries, Covid-19 has had a negative impact on the coffee industry of the Nordic region. “As an immediate response to Covid, various government bodies of the region have introduced country-wide risk management services such as social distancing, travel restrictions, and partially lockdown in various countries. This has significantly impacted the countries’ economies and their coffee industry.”

According to Varghese, there was a disruption in various activities such as labour supply, trade operations, logistics networks as well as import-export infrastructure, which has resulted in shipment delay and transaction costs in the coffee industry of the Nordic region. “Thus, the price of coffee has been highly volatile due to disruptions in the supply chain and the production of coffee. This also affects small-scale coffee roasters that primarily supply hotels, restaurants, and cafés. Moreover, Finland, Sweden, and Norway are predicted to remain the most lucrative markets by the end of 202.

Echoing Ingelin’s comment, Varghese said that based on per-capita consumption of coffee, Finland is the biggest consumer across the globe. “The per capita consumption of coffee in Finland is around 12 kilograms. On the other side, per capita consumption of coffee Norway and Iceland is 9.9 kilograms and nine kilograms, respectively. In addition, the consumption of coffee at home has been increased as people restricted to work from home and has limited options to go outside, consume coffee is one of the few ways for them to take a break from work.”

According to a study of the Centre for the Promotion of Imports from developing countries (CBI), which is affiliated with the Netherlands Ministry of Foreign Affairs, imports traditionally account a small share of the Nordic coffee market (especially compared to other European countries), considering that most coffee is packed and produced at local processing factories.

In Denmark, Sweden and Norway coffee is predominantly consumed black, meaning without milk and sugar, so the quality of the actual coffee is especially important in these markets.

CBI analysts point out that coffee in Scandinavia is generally considered to be of high quality, which despite the pandemic, creates conditions for the development coffee chains and micro-roasteries, with the biggest number being observed in Sweden and Denmark.

Paulig achieved Carbon Neutral certification for its roastery in Vuosaari, Finland and aims to make all its production sites carbon neutral by the end of 2023.

In recent years, local coffee roasters and global majors operating in the region have started to pay greater attention to the issues of sustainability. For example, according to Ingelin, Paulig achieved CarbonNeutral® building certification for its Vuosaari coffee roastery. “Our ambition is to reduce the greenhouse gas emissions from our own operations by 80 percent by 2030, and the plan is to make all of our production sites carbon neutral by the end of 2023. Paulig has been a pioneer in the coffee industry’s sustainability work. As one of the few large roasteries in the world, the company uses coffee beans from only verified sustainable sources.”

Specialty tea on the rise

In addition to coffee, the demand for tea in the Nordic region remains also strong, with the biggest being observed in case of specialty teas.

Alexis Kaae, an official spokesperson of Simply Tea ApS, one of the largest tea importers in the Nordic region, based in Denmark, in an exclusive interview commented: There is a huge interest regarding specialty tea in Denmark and some other Nordic states and a decline in supermarket commodity tea. Since the outbreak of Covid19, we are experiencing more and more restaurants and fermented tea companies looking for sustainable specialty tea. The demand for a healthy beverage seems to be on everyone’s agenda.”

She said that quality is always an issue as most Scandinavians know very little about tea or its production. “In order to meet the demand for education we have now planted five acres of Camellia sinensis plants in our own tea garden in Denmark. I suppose this can be defined as our major achievement for this year.

As the demand for tea in the Nordic region remains strong, some leading Western European tea manufacturers and marketers are considering accelerating their expansion into this market. Mike Harney, vice president of New York-based Harney and Sons, said, “We as a family-run company do well in the Norway region and have started distribution in Sweden. In terms of expansion in the next year, we are hoping 2022 takes our company to a whole new level amongst consumers in the Nordic region.”

• 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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The report from the National Coffee Association states that Americans have increased coffee consumption at work by 55% and at cafés and restaurants by 20% since January 2021, driving an overall 16% increase in out-of-home coffee consumption as Covid-19 restrictions have eased around the country.

The report also shows that more Americans (60%) drank coffee in the past day than drank any other beverage (including tap water), continuing coffee’s decade-long reign as America’s favourite beverage.

NCA president and CEO William “Bill” Murray commented: “It’s no surprise that home remains the most popular place to drink coffee, and that the Covid-19 pandemic drove Americans to drink more coffee at home than ever.

“As Covid restrictions ease, coffee drinkers are returning to pre-pandemic routines but also keeping their favorite new coffee options like drive-through and app-based ordering. Wherever Americans go, they keep America’s favorite beverage with them.”

Additionally, through NCA’s collaboration with the Specialty Coffee Association (SCA), the NCDT gives new insight into consumer preferences within the specialty coffee segment. Young coffee drinkers continue to drive the segment’s growth, with nearly half (49%) of 25-to-39-year-olds surveyed drinking at least one cup of specialty coffee in the past day.

Other key findings of the report include:

• Coffee consumption among 25-39 year olds is at a record high – 65% drank coffee in the past day.
• The NCDT’s first-ever summer polling finds cold brew in the top three coffee preparation methods for the first time. Consumption of cold coffee is up 50% since January 2021, surpassing even the expected seasonal levels and continuing to show the increasing popularity of cold brew which was virtually unknown when first surveyed in 2015.
• Consumption of espresso-based beverages typically consumed away from home increased 9%, returning to January 2020 levels.

For media highlights or to purchase the complete NCDT, click here.

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Consumption held relatively steady (around 33 million liters) due to retail purchases, per Euromonitor. However, aside from the decrease in foodservice sales, ready-to-drink (RTD) coffee sales dropped slightly because of their tendency to be high impulse sales, which were hindered due to lockdowns during the pandemic. Currently, only bottled water outperforms RTD coffee.

According to Barry, coffee has strong retail prospects in 2021, particularly in RTD. He added that standard ground coffee sales had been declining but as more people started brewing at home, it became a growth category in 2020. Instant remains the only declining coffee category in the US market despite a slight spike in 2020 due to the Dalgona coffee fad (not a trend as it disappeared almost as quickly as it appeared).

Sales at chain coffee and tea shops fell 3.6% between 2019 and 2020 (many had the advantages of contactless, mobile ordering, even drive-thrus during lockdowns) while independent coffee and tea shops faired much worse with sales dropping 15% (most of which didn’t have the aforementioned benefits). “We don’t expect to see growth in independent coffee and tea shops until 2022,” said Barry.

He identified four key trends that will occur during the “new normal”:

Trend #1 — Slowing Down
Working remotely
Investment in the home (appliances, pets, etc.)
Lingering limitations on travel

Trend #2 — K-Shaped Economic Recovery
Some sectors exceed 2019 levels by early 2021; others may take years
Growing inequality, pressure on the middle price tier

Trend #3 — Digital Reliance
Massive acceleration of e-commerce adoption
Physical/digital lines get blurrier

Trend #4 — The Unwell Well
Interest in immune products falling
Mental wellbeing becomes a higher priority
A caffeine ceiling.

Regarding the “slowing down” trend, Barry pointed out that social distancing will last through at least most of 2021. More people are expected to continue working from home in the future – maybe not full time, but at least part of the time – which will affect on-premise coffee consumption. People will continue to spend more time at home because they invested in their homes during the lockdowns with home renovations, exercise equipment (like Peloton), pets, coffee machines (many consumers upgraded), etc.

In terms of the “k-shaped economic recovery,” Euromonitor expects the American economy will near recovery by Q4 2021. “The US is outperforming most of its comparable economies except Sweden,” said Barry, adding, “keep in mind that the recovery is not recovery for all people, it’s a fragmented recovery — a lot of people are still out of work or under-employed and will continue to be in 2021.

Amid this, there will be continued premiumization for consumers who were generally unaffected by the pandemic, although the foodservice channel will continue to be impacted. Barry explained that there will be economization for consumers who were affected by pandemic such as purchasing lower-priced or private-label brands, bulk sizes, etc. “There will be continued pressure on the middle tier, which will struggle in a polarized market.”

As the economy and markets recover, Barry said the foodservice/coffee shop sector recovery will splinter in two directions:

1-Efficiency oriented — fast, digital, personalized, contactless
2-Human oriented — slow, educational, sense of community

The reliance on digital (Trend #3) will continue as, once adopted it tends to stick around, said Barry, noting in particular, e-commerce adoption. “There is a huge and permanent shift to e-commerce.” [E-commerce sales of coffee, and tea, surged during lockdowns.]

Regarding the final trend, “the unwell well,” mental well-being appears to be replacing immunity as the key functionality of the future. “Americans are generally very stressed people, women and younger generations even more so,” shared Barry, noting that decaf sales are not doing as well in this environment as one would think. ‘Coffee mitigation,’ (functionality) not decaf will be key — there are lot of adaptogens out there that can be used in coffee. Products that add, rather than subtract, in order to create a less anxiety inducing coffee will be particularly popular, such as: cannabis, L theanine, cordyceps, rhodiola and Holy Basil (Tulsi). “This [mental well-being] is an exciting category as we move forward,” he said.

Summing up, the outlook for coffee in the US in 2021 is favourable for a variety of reasons, notably:

• Retail prospects will stay strong
• RTD coffee remains a growth category — expect cold brew to outgrow overall category
• Mental well-being is emerging as the hot functionality
• Habits that consumers picked up during pandemic will not go away (e.g., online shopping, brewing at home) — which is good for some sectors (coffee machine sales, retail coffee) and bad for others (foodservice/coffee shop channels, OCS, etc.)

Given these trends and outlooks, it will be quite intriguing to see how 2021 actually unfolds.

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

The post US coffee sales remained steady in 2020, perking up in 2021 appeared first on Tea & Coffee Trade Journal.

Although a small group (515 respondents), the survey, which was released in September, showed that home coffee consumption has risen compared to 2019, naturally, with 22% of respondents indicating an increase in brewed coffee using pre-ground beans versus other methods. While online sales were on the rise – 21% of respondents said they are buying more coffee online compared to 2019 – consumers reported buying less coffee for in-home brewing from coffee shops (18%) and specialty stores (15%).

With most consumers spending more time at home due to lockdowns, 45% of survey respondents tested a new brewing method to make coffee at home versus 2019. Those consumers primarily gravitated towards simple or basic systems such as single serve pod coffee makers (22%) and automatic drip coffee makers (20%). However, many consumers have been more adventurous with 33% of respondents experimenting with new coffee techniques and recipes at home during 2020. The majority of respondents also said that they would like to improve their home barista skills with 46% indicating a desire to know more about how to brew better coffee at home, and another 23% expressing interest in learning more.

Most respondents currently employed said that coffee was very important or important to their workday routine. However, more than half (54%) admitted that they are somewhat apprehensive about communal coffee options at work. Hence, about 45% of respondents planned to bring their own coffee or coffee brewing materials to work moving forward. (See Facts, Figures & Findings in T&CTJ’s November 2020 issue for more details on Covid-19’s impact on office coffee systems.)

Approximately 56% of survey respondents said they were planning to travel this year, with 35% sharing they already had vacation plans for this year. In contrast to coffee trends at work, only 16% of travellers planned to bring their own brewing equipment with them. While travelling, respondents said they would buy coffee on-the-go from their traditional stops, including coffee shops (69%), restaurants (58%) and hotels (54%).

Perhaps most noteworthy, is that many of the respondents planned to bring their own brewing equipment with them on their vacations. Of those respondents, about 41% said that they were planning to take a drip machine rather than more portable options such as a French press (18%) or pour-over (18%). (Although, this could be a reflection of the types of trips consumers planned to take such as renting cabins or recreation vehicles rather than staying in hotels.)

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

The post Covid is changing coffee consumption habits appeared first on Tea & Coffee Trade Journal.