Per capita consumption of coffee in Asia Pacific is the lowest in the world, and is growing only slowly, as the dominant instant coffee category is mature. Lifestyle trends are, however, driving growth in smaller categories, paving the way for premiumisation. In the forecast period, off-trade coffee sales will be supported by high real GDP growth, but will also be challenged by competition from on-trade coffee specialists and RTD versions, as well as potential shortages of raw materials.
This report comes in PPT.
Asia Pacific has the lowest per capita off-trade expenditure on coffee globally. Instant coffee mixes, which are favoured for their convenience and affordability, account for the majority of the off-trade sales over the 2017-2022 period. Facing stiff competition from substitute and on-trade channel, this category becomes more mature, leading to the slow single digit growth of the overall category.
Health concerns regarding the high sugar content of instant coffee mixes, as well as a rise in demand for a better coffee experience and more sophisticated flavour, are driving the growth of fresh coffee. Fresh coffee, as well as innovative, fortified coffee products, are cannibalising the growth of instant coffee, especially instant coffee mixes. Sustainability is becoming more of an issue, with brands introducing recycling initiatives or environmentally friendly packaging.
Leading brands rely on their brand equity and ubiquity in retail channels to build a strong domestic consumer base or an international presence, and retain their dominance in the market. However, the leaders are losing market share to smaller local or international brands, especially with the help of e-commerce, which is making cross-border purchasing easier than ever.
Asia Pacific’s real GDP growth is expected to be the highest in the world over the forecast period. This will provide support for more premium-orientated lifestyles, favouring coffee consumption. However, companies should also pay attention to impending challenges, such as competition from other products, as well as potential shortages of raw materials.
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