With lockdown restrictions, which began in Australia in March closing foodservice outlets (with the exception of takeaway/delivery services) and consumers forced to work from home wherever possible, an increasing number of Australians took to creating home cafés, purchasing coffee to fuel their day. Traditionally, foodservice dominates demand for coffee in the country, but the pandemic saw a seismic shift in channels, with retail volume sales receiving a notable boost in 2020.
With foodservice (café and restaurants) significantly impacted by the development of the pandemic and the home seclusion trend resulting in a shift to retail sales of coffee, the category witnessed increasing premiumisation. The concept of local and the proliferation of craft beverages, trends already evident within alcoholic drinks, have rapidly gained momentum within coffee, especially for brands that have their own local roasting facilities.
Nestlé Australia Ltd retained its convincing leadership of coffee in value share terms in 2020 due to its strength in both the larger category of instant coffee, which it dominates, and the more dynamic fresh coffee with its popular brand Nespresso. Major players found that March and April 2020 were highly profitable due to the notable switch to retail from foodservice as a result of the pandemic and lockdown measures, with significant declines experienced by the latter channel.
With lockdown restrictions gradually relaxing, Australians are expected to gradually return to previous habits, visiting foodservice outlets more frequently, even for a takeaway, after long periods of time spent in the home. 2021 therefore, will see a notable increase in demand for coffee through foodservice with declines predicted for retail due to a shift in channels.
With environmental issues and sustainability very much at the forefront of many Australians’ minds, producers of fresh ground coffee pods are looking at the feasibility of composting pods by conducting a series of trials. However, one major issue they face is that Australia can reach extremely high temperatures during the summer months, resulting in trials being carried out in countries with similar weather, such as Italy.
Players have indicated that they will be attempting to educate consumers on the different processes that make decaffeinated coffee, with the latter continuing to hold low overall share within the category at the end of the review period. While some brands produce decaffeinated coffee through technically more expensive processes, resulting in a higher quality product, local consumers remain unaware of this, with many generally holding a low opinion of decaffeinated products in general.
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