The closure of foodservice as part of the government’s response to the emergence of the pandemic in March 2020 saw a slight transference of consumption of coffee towards retail because of the home seclusion trend. Volume sales of coffee dominate hot drinks in Lithuania due to the rising café culture, with standard fresh ground coffee the most popular format.
The emergence of the pandemic in Lithuania impacted the retail and supply of coffee in different ways, with food/drink/tobacco specialists for instance struggling due to the temporary closure of non-essential businesses and reduced footfall, while the nascent distribution channel of e-commerce experienced impressive volume growth due to a wider range of products at competitive prices whilst offering home delivery. Brands such as Kavos Zinovai (Solid Red) and Kavos Draugas (Maina & Co) both experienced a notable upturn in demand through e-commerce by offering an expanded range, and free and fast delivery, while physical store sales declined, in addition to witnessing fallout from the closure of offices and foodservice outlets such as cafés and restaurants which they would normally supply.
The competitive landscape of coffee remained fairly consolidated amongst players Jacobs Douwe Egberts LT UAB (fresh coffee and instant coffee), Paulig Baltic AS (leading player within fresh coffee) and Daisena UAB. Nestlé Baltics UAB retained its overall leadership of instant coffee with its well-known brand Nescafé which experienced flat growth in line with the category’s waning popularity.
While the temporary closure of foodservice resulted in a slight channel shift in coffee consumption towards retail in early 2020, the second major lockdown introduced in November and set to run until 31 January 2021 could further strengthen retail sales of coffee in Lithuania, particularly over the winter months as local consumers remain at home for longer periods of time. Nevertheless, as restrictions gradually ease, there is likely to be a more notable switch back to foodservice demand for coffee, with the latter predicted to result in double-digit volume growth for coffee in 2021 before returning to greater levels of normalisation in terms of purchasing behaviour.
Prior to the emergence of the pandemic, ongoing growth in foodservice outlets and their different offers meant that the takeaway coffee market had become extremely saturated, making it increasingly difficult for brands to maintain consumer loyalty. Therefore, in addition to offering new formats or flavours, cafés are likely to continue to find ways of providing their customers with a unique experience.
While modern grocery retailers such as supermarkets are likely to remain the dominant distribution channel for coffee over the forecast period, with sales hardly impacted during the lockdown due to the essential nature of these stores, the nascent channel of e-commerce is likely to gain further ground moving forward after posting impressive retail volume growth in 2020. In addition to home delivery, e-commerce offers a wider range of products and attractive prices due to regular promotions.
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This report originates from Passport, our Coffee research and analysis database.
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