The total volume of coffee dropped heavily in 2020 due to the huge sales decline in the foodservice channel caused by COVD-19. In order to tackle the pandemic, the Hong Kong government imposed a number of measures on on-trade outlets.
Despite the drop in coffee sales, the coffee-drinking culture continued to develop in Hong Kong, driving the growth of taste sophistication of coffee. Both changing lifestyles and a shifted focus of coffee makers to promote pure and high-quality coffee resulted in the continuous development of a more sophisticated coffee-drinking culture.
Fresh ground coffee benefited from the continuous evolution of the coffee-drinking culture to become the fastest-growing category during the pandemic as more and more consumers were looking for higher-quality coffee products with a better taste and aroma. Simultaneously, whilst pursuing sophisticated coffee products, most consumers in Hong Kong still desire convenience, according to industry sources.
The total volume of coffee is forecast to rebound with a modest positive growth in 2021, followed by a period of stable expansion over the period of 2022-2025, as the underlying fundamental demand remain robust. As pointed out by trade sources, on the whole, consumer demand for coffee remains strong and resilient, therefore organic growth is likely to resume in 2021 when the foodservice channel returns to normal as the COVID-19 situation improves.
The significance of off-trade channels in coffee is likely to increase over the forecast period. A channel shift from on-trade to off-trade occurred during the pandemic since foodservice outlets were severely hit and therefore consumers shifted away to the off-trade channel for most of their daily beverages, including coffee.
Nestlé Hong Kong is expected to remain the leading player in coffee over the forecast period, having gone from strength to strength over the review period. It has long dominated the city in value share terms in coffee and was continuously active in innovation with a view to reshaping the coffee-drinking experience for consumers.
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This report originates from Passport, our Coffee research and analysis database.
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