Asia Shows Fastest Growth In Global Coffee Market

Tuesday, March 7th, 2017 | 1039 Views

Three of the five fastest rising retail coffee markets are in Asia, with Indonesia leading the market at a compound annual growth rate (CAGR) of 19.6 percent over the last five years.

Asian markets currently make up the majority of the world’s fastest growing coffee consumers with those in Europe and Australia now among the slowest, according to research from Mintel. India and Vietnam follow behind Indonesia in having the fastest growth rate at a CAGR of 15.1 percent and 14.9 percent respectively. The global coffee market is expected to grow with a retail volume of 2.7 percent, which has risen from a 2.5 percent increase in 2015.

The growth rate in Finland has decreased the most between 2011-2016 with a CAGR of -3.7 percent, followed by Australia remaining stagnant at 0 percent, Poland with a growth rate of 0.1 percent, and both the Netherlands and Belgium at 0.5 percent.

The significant growth in Asia’s coffee market was propelled by a surge in product launches like coffee pods and capsules. The amount of coffee products launched has increased by 95 percent between 2011 and 2016. During this time period, the number of tea products has only risen by 55 per cent.

Outside of Asia, coffee pods account for a quarter of all global pod sales, which has increased from 11 percent in product launches in 2011. Pod sales are showing positive signs of growth in Asia, with coffee pods taking 13 percent of all coffee launches in the region, an increase from four percent in 2011.

Tea consumers in Asia are slowly converting into coffee drinkers, which accounts for the rise in coffee products launched in Asia. Coffee and tea hybrids such as the combination of organic black tea and Colombian coffee beans, and ‘cascara’ which is made from the outer peel of a coffee cherry are also gaining popularity. These hybrids are used to lower the barrier in Asia’s tea-drinking culture, and entice consumers to convert to coffee-drinking.

In Asia Pacific, 29 percent of coffee launches are ready-to-drink coffee products, in contrast to just 10 percent in Europe. Instant coffee still leads the coffee market in Asia, with 42 percent of coffee launches being soluble coffee granule products, as compared to only 20 percent in Europe and six percent in North America in the year 2016.

Many Asian countries are now progressing from the ‘first wave’ to the ‘second wave’ in the coffee movement. The ‘first wave’ refers to the exponential growth of coffee consumption and the ‘second wave’ refers to the enjoyment and defining of specialty coffee.

America is still leading the ‘third wave’ in the coffee movement, with 27 percent of all global coffee launches in this area. The amount of coffee products launched in Asia labelled premium has risen to 15 percent in 2016, from 11 percent in 2013. The third wave of coffee is a movement to the production of high-quality coffee, with consumers focusing on where coffee beans are sourced, how they are roasted and the overall appreciation of coffee. Countries such as Singapore, South Korea, Japan and Indonesia are moving towards the ‘third wave’.