The global coffee industry is at a crossroads, enjoying unprecedented growth, yet facing a complex competitive environment. Developed markets offer competition, commodification and demand for more premium offerings. In emerging markets, coffee culture expands apace, yet meeting demand among lower-income consumers remains challenging. At the centre of it all is the coffee shop, the axis around which the entire industry turns, and an emerging presence in the global luxury market.
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Coffee as a category has steadily gained share of total consumer spending on beverages over the last 10 years, both globally and in every region.
A large and growing percentage of coffee occasions and sales now take place through foodservice channels. This creates demand for better-quality, higher-priced options through retail, while also driving increased competition, as out-of-home brands increasingly look to establish themselves in the retail space.
Instant coffee serves as the first rung on the ladder for new coffee consumers in Asia Pacific and the Middle East, while pods reflect growing demand among consumers looking for convenient, decent-quality coffee at home and in the workplace.
Asia Pacific and the Middle East and Africa lead growth, both regions where tea is overwhelmingly the most popular caffeinated hot beverage. This favours instant coffee, offering an affordable, branded alternative to tea which requires no additional machine.
More than almost any other foodservice channel, coffee shops have the credibility to create whole new categories of soft drinks, benefiting from daily consumer attachment and strong artisanal appeal.
The future of coffee is a story of brands - building out modern brands in emerging markets, while also creating the high-end brands of tomorrow amidst growing fragmentation in high-income developed markets.