Coffee in Asia Pacific

March 2023

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.

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This report comes in PPT.

Key Findings

Asia Pacific has the lowest per capita coffee expenditure, and is becoming more mature

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.

Lifestyle trends are paving the way for premiumisation and sustainability efforts in the region

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.

Most leading companies are losing market share to smaller companies

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.

Over the forecast period, coffee sales will be driven by income growth, but challenged by competition and supply chain issues

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.

Key findings
Asia Pacific has the lowest per capita coffee expenditure and is becoming more mature
Supply chain disruptions and shift back towards on-trade soften off-trade growth in 2022
Polarised factors driving coffee consumption in Asia Pacific: Experience vs convenience
Convenience still influence instant coffee growth for smaller markets, albeit maturing
Instant coffee faces challenges from rising health awareness and regulation in Southeast Asia
Fresh coffee sees much higher absolute growth, driven by Japan and South Korea
Lifestyle trends are paving the way for premiumisation and sustainability efforts in the region
Geodemographic factors – eg rural vs urban population: Determine channel distribution
E-commerce enables increasing sophistication in coffee consumption in Asia Pacific
Coffee remains relatively consolidated, with the leading brands dominating sales
Most leading companies are losing market share to smaller companies, except for Unilever
Leading companies rely on either diverse market coverage or domestic stronghold
Brands in more dynamic categories and less matured markets are gaining higher position
Low single-digit off-trade value sales growth predicted in most markets
Consumption is challenged by competition and supply chain issues despite income growth
Both hard and soft drivers support the highest-in-region growth for Taiwan and India
Azerbaijan: Market context
Azerbaijan: Competitive and retail landscape
China: Market context
China: Competitive and retail landscape
Hong Kong, China: Market context
Hong Kong, China: Competitive and retail landscape
India: Market context
India: Competitive and retail landscape
Indonesia: Market context
Indonesia: Competitive and retail landscape
Japan: Market context
Japan: Competitive and retail landscape
Kazakhstan: Market context
Kazakhstan: Competitive and retail landscape
Malaysia: Market context
Malaysia: Competitive and retail landscape
Pakistan: Market context
Pakistan: Competitive and retail landscape
Philippines: Market context
Philippines: Competitive and retail landscape
Singapore: Market context
Singapore: Competitive and retail landscape
South Korea: Market context
South Korea: Competitive and retail landscape
Taiwan: Market context
Taiwan: Competitive and retail landscape
Thailand: Market context
Thailand: Competitive and retail landscape
Uzbekistan: Market context
Uzbekistan: Competitive and retail landscape
Vietnam: Market context
Vietnam: Competitive and retail landscape

Hot Drinks

This is the aggregation of Coffee, Tea, and Other Hot Drinks.

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