Instant coffee dominates the overall category for two reasons. It is seen by consumers as a “step up” from other plant-based hot drinks, which are typically positioned as “coffee” (though regulation changes in 2021 will impact this).
Retail volume sales of fresh ground coffee experienced a further and much deeper decline in 2020 due to the significantly cheaper prices of instant varieties amid severe economic recession, as well as the rising demand for convenience. The latter trend is likely to be more noticeable from 2021 as time spent at home gradually lessens, driven by time-constrained South Africans turning to instant coffee or fresh ground coffee pods as they will be less willing to prepare fresh coffee from scratch in the home.
Nestlé South Africa (Pty) Ltd retained its convincing lead of coffee in 2020, due to offering a wide product portfolio which spans both instant and fresh coffee. The player’s brands performed well at the end of the review period, with its instant coffee brand Nescafé Gold and its Nescafé Cappuccino (instant coffee mixes) each recording above-average volume growth to help boost Nestlé’s overall sales share of coffee.
In 2021, off-trade sales of coffee are expected to benefit further from continued flexibility in working arrangements in South Africa, which will allow many staff to keep doing their jobs from home. This situation is based on South Africa’s COVID-19 vaccine roll-out lagging behind many other markets, especially in the developed world.
Coffee in South Africa will continue to be dominated by instant varieties over the forecast period, supported by consumers’ changing lifestyles, particularly amongst the younger generation. As the pandemic eases and movement restrictions are removed, these consumers will increasingly opt for convenience to suit their busy lives, with both instant standard coffee and particularly instant coffee mixes likely to make further gains.
With increasing interest amongst local consumers in the different variants and formats of coffee on offer, niche areas are starting to appear including cold-brew coffee, which pre-pandemic was benefiting from a large influx of international visitors to South Africa, who enjoy another option to iced coffee during the warmer weather. Disruptors such as canned coffee and imported products could enable the transition of cold-brew variants into retail.
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Understand the latest market trends and future growth opportunities for the Coffee industry in South Africa with research from Euromonitor International's team of in-country analysts – experts by industry and geographic specialisation.
Key trends are clearly and succinctly summarised alongside the most current research data available. Understand and assess competitive threats and plan corporate strategy with our qualitative analysis, insight and confident growth projections.
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This report originates from Passport, our Coffee research and analysis database.
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