Eastern Europe is a market of growing coffee culture. Below average per capita consumption and increasing interest to coffee in region points to high untapped market potential. Further growth is achievable through improved product offer in fresh coffee, especially in coffee beans and fresh coffee pods. Specific features of coffee as a product (habit persistence, coffee as part of socializing) will likely support its retail sales at positive level during post-Covid recession.
This report comes in PPT.
With the closure of on-trade outlets and workspaces due to lockdowns, demand for coffee moved to the off-trade, whish is expected to result in enhanced coffee sales in retail in 2020. With the re-opening of on-trade outlets and workspaces in 2021, coffee demand will start moving back to the on-trade and B2B, which will result in lower off-trade coffee sales in 2021 than in the previous year.
Pre-COVID-19, fresh coffee pods were seeing among the highest growth rates in mature fresh coffee markets. COVID-19 and on-trade outlet closures stimulated further interest in coffee pods thanks to their convenience and consumers’ desire to replicate the on-trade coffee experience at home.
The negative economic effects of COVID-19 are expected to depress overall consumer incomes in the short term, thus most consumers are likely to prefer mainstream brands to premium products for financial reasons, and will stick to familiar brands with recognised good quality.
In markets where fresh coffee has not yet reached maturity, modern retailers are taking the lead in expanding the coffee offer and bringing fresh coffee to the suburbs. This is forcing producers to compete on quality and price.
On-trade outlets are the main driver of coffee culture in the region, but have suffered losses due to COVID-19 and forced closures. Although demand will start returning once on-trade outlets reopen, this will not be sufficient to prevent bankruptcies among some establishments, owing to low consumer confidence and the avoidance of on-trade outlets for hygiene and safety reasons. The on-trade is thus not expected to return to pre-COVID-19 levels of sales until at least 2024.
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