Asia Pacific is the key region for RTD coffee globally, accounting for nearly 80% of global sales. Much of this is due to Japan, with sales of USD11 billion. However, home seclusion due to COVID-19 hit the Japanese market hard, which accelerated the struggles already seen prior to the pandemic. However, the regional presence of RTD coffee is growing in China, South Korea and Southeast Asia. Affordability and diversified variants will be the key growth drivers in the forecast period.
Asia Pacific is by far the largest market for RTD coffee in the world, accounting for nearly 80% of global sales. This is because the region includes the world’s top market, Japan, which accounts for more than half of total off-trade global volume sales. In terms of per capita consumption, however, Asia Pacific only ranks third globally. This is attributed to the low penetration of RTD coffee outside of Japan, which offers further growth potential.
Home seclusion and store closures due to the pandemic resulted in lost drinking occasions for RTD coffee, which caused declines or slowdowns in category growth in most countries in 2020. The exception was South Korea, where RTD coffee benefited from channel shift, as chained coffee shops were not allowed to operate eat-in.
Japan’s highest global consumption of RTD coffee has been supported by its positioning as a quick energy shot in the workplace, available from vending machines. The mature category was already seeing slow growth prior to COVID-19, but further struggles are expected in the forecast period, as many consumers continue to work from home, which will place RTD coffee in strong competition with other types of coffee prepared at home.
Most of the big RTD coffee players in the region are heavily reliant on sales in Japan. However, market maturity, the declining population, and competition from other drinks will limit the future growth prospects in Japan. RTD coffee players are therefore expected to shift their emphasis to other Asian markets, as seen by the launch of a new product in the Chinese market by Coca-Cola.
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