When the New Zealand Government announced in March 2020 the introduction of a 4-stage alert system designed to contain the spread of COVID-19, consumers’ behaviour became increasingly erratic. Despite pleas from the government and grocery retailers for New Zealanders to engage in their normal shopping patterns, this advice was largely ignored as consumers resorted to panic buying.
While COVID-19 and the subsequent lockdown drove greater demand for coffee as a whole, fresh ground coffee pods remained the strongest performer in terms of retail volume sales growth in 2020. Driving the performance of the category in 2020 was the increasing demand for coffee pod machines, with sales up by 77% year-on-year, therefore providing a significant lift in the level of retail demand for coffee, as consumers sought products which were more aligned with café-level experiences over the lockdown period.
Coffee is a fairly consolidated competitive landscape in New Zealand, with leading players Nestlé New Zealand Ltd and Jacobs Douwe Egberts NZ continuing to dominate in value share terms in 2020. Their positions are supported by wide product portfolios across major areas of the category including instant coffee with respective well-known brands Nescafé and Moccona, and the more dynamic fresh ground coffee pods where Nestlé offers leading brands Nespresso and Nescafé Dolce Gusto.
The lockdown and associated movement restrictions in New Zealand resulted in nearly all workplaces across the country (effectively all of those who were not considered to be essential services) resort to remote working. This has already started to see some New Zealand businesses realign their workplace arrangements, with a focus on moving to digital and remote working environments.
New product development by coffee players over the review period had attempted to add a premium positioning to the category, with manufacturers seeking to replicate the level of product quality typically offered through foodservice when creating products destined for home consumption. An example of this was the launch of Starbucks coffee pods.
While instant coffee received a surge in interest which positively impacted demand in 2020 due to the pandemic-induced lockdown, this growth is unlikely to be sustained over the forecast period. While continuing to hold marginally higher retail volume share compared to fresh coffee, instant coffee’s high level of maturity and strong competition from fresh ground coffee pods – which is expected to be heightened over the forecast period, given the surge in pod machine sales in 2020 – means that the category’s performance will be fairly flat.
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This report originates from Passport, our Coffee research and analysis database.
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