Euromonitor International’s Industry Forecast Model allows a way to break the world down into four kinds of country based on what is driving coffee demand in each location. The four groups are distinguished by their leading growth driver: income, population, premiumisation, or soft drivers. All four are playing a major role in growing global coffee demand, but the exact nature of their demand growth shows considerable variation.
There are, broadly speaking, four types of coffee market worldwide. This is based on the leading factor in their future growth potential: premiumisation, income, population, or soft drivers (generally lifestyle trends). It is rare that a market is only shaped by one, but in most cases one of these four is dominant over the others and plays a decisive role in shaping the nature of future coffee demand.
Premiumisation tends to be most important in the developed world and is especially strong in East Asia and Western Europe. Developing Asia and Eastern Europe, meanwhile, are generally income-led, while population is the most important driver in Africa and Central America. In all regions however, there are outliers that resist this neat geographical correlation.
About half of global value growth will take place in premiumisation-led markets as consumers trade up to higher-value formats of coffee. In volume terms however, they play only a minor role since these tend to be highly mature markets with slow population growth.
Coffee shops are growing worldwide but most global growth will come from income-led markets. For these consumers, the coffee shop is an important status symbol as much as it is about coffee.
Population-led markets are seeing prices stay relatively stable and little format switching occurring. What performs best is inexpensive products in categories already familiar to consumers. Nearly all future instant growth is taking place in these countries as well as a significant proportion of standard ground growth.
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