Foodservice coffee consumption in Argentina was hit hard by COVID-19 lockdown restrictions and social distancing by consumers concerned about contracting the virus. Prior to the emergence of the pandemic, retail sales of coffee were experiencing strong competition from foodservice in line with Argentina’s popular café culture, with many consumers socialising, meeting and even working in cafés throughout the country.
While on-trade fresh ground coffee sales have fallen strongly, retail sales have increased strongly, along with demand for instant coffee. Instant coffee is a popular lower priced alternative to standard ground coffee or coffee beans and is much quicker and more convenient to make and drink than standard coffee in the home.
Nestle´ Argentina continues to lead coffee value sales in Argentina, followed by Cafe´s La Virginia, with the two companies holding a combined majority percentage. Nestle´ derives most of its sales share from instant coffee and has seen robust growth in recent years, with the Nestle´ Dolce Gusto brand performing particularly well in fresh ground coffee pods.
Retail coffee consumption is projected to rise at a moderate pace in 2021 and to reach pre-COVID-19 levels by the end of the year, as consumers will increase at-home coffee preparations as well as instant coffee, driven by rising awareness of coffee consumption.
Coffee pods is projected to return to rapid growth and see a strong rebound in 2012-2022, with prices set to rise below the rate of inflation due to the entry of more accessible Nespresso “compatible capsules brands” such as Cabrales, Lavazza, Café Martinez and La Virginia. Advertising and promotional activity will also increase, driven by the recent entry of Nestlé with Starbucks coffee pods in April 2020.
Manufacturers are likely to become ever-more focused on their distribution channel mix strategy. During the lockdown, consumers showed new shopping behaviour, favouring e-commerce and local convenience stores in order to avoid long queues and crowded public spaces.
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