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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At the festival, directed at professionals in the coffee sector in the region and coffee lovers, Brazil had a booth for promotion and tasting of the country’s specialty coffees, from the South of Minas, Mantiqueira de Minas, Cerrado Mineiro and the Mountains of Espírito Santo. Besides being served to those present, samples of these coffee beans were delivered to potential buyers.

“Finland has the second highest per capita consumption in the world and is an important buyer of Brazilian coffees, especially the specialty product. The region as a whole stands out in terms of consumption and imports, which makes our presence at the Helsinki Coffee Festival essential, where we could showcase all the quality, sustainability and availability in quantity of Brazilian coffees to this important market, aiming to add value and expand business,” said Henrique Cambraia, BSCA’s president.

In addition to participating in the main festival of the sector in the Nordic countries, the Brazilian Embassy in Helsinki is preparing a documentary about the presence of Brazilian coffee in Finland. Among other information, the material will include statements by experts, including the BSCA president.

The Brazilian participation in the Helsinki Coffee Festival is another action of the sectorial project “Brazil. The Coffee Nation” sector project, developed by BSCA and ApexBrasil, focused on the commercial promotion of the Brazilian product in the foreign market. The objective is to strengthen the image of Brazilian beans worldwide and to position the country as a high-quality supplier, using state-of-the-art technology resulting from research.

The current project has as target markets: i) Australia, China, France, Japan, Malaysia, Poland, Russia, South Africa, South Korea, Spain, Taiwan, the United Arab Emirates and the United States for specialty raw coffees; and ii) Canada, Chile, China and the United States for the products of the roasting and grinding industry.

The project also aims at exposing the exclusive certification and traceability processes adopted in the national production of specialty coffees, highlighting their socio-environmental responsibility and incorporating a competitive advantage to Brazilian products. Companies that are not yet members can obtain more information directly from BSCA by calling +55 (35) 3212-4705 / 99824-9845 / 99879-8943 or by e-mailing info@bsca.com.br.

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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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