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.

The post Decaf coffee shows potential in Europe appeared first on Tea & Coffee Trade Journal.

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

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

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

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

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

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

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

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

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

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

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

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

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

Where is consumption the strongest?

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

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

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

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

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

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

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

The post Eastern Europe is becoming a major market for decaf appeared first on Tea & Coffee Trade Journal.