The online segment has also seen significant growth in the demand for drip bag coffee in the last few years. The online channel is bound to increase during the forecast years, owing to the rising influence of digital media and marketing and the fact that it gives consumers plenty of options to choose from. However, the store-based retail such as the hypermarkets, supermarkets, and other convenience stores will have the edge over online stores as one can walk down to a store rather than awaiting the arrival of an online delivery package.
Additionally, the drip bag coffee market is still in the nascent stage, with the majority of the players engaged in the business operating at small and medium levels. This subsequently gives the global market an oligopolistic nature. Besides, as these players are focusing on expanding their business reach, they are exploring and adopting novel models of distribution and sales networks that can strengthen micro-enterprises and expand economic opportunities across both the domestic and overseas markets. To achieve the same, they are engaging and providing services to its customers through online platforms in efforts to maintain a long-term relationship with its current customers and further expand its customer base. This approach for business expansion is anticipated to add to the growth of the online retail segment during the forecast period.
COVID-19 Impact Analysis
The market analysis has been split into two parts, namely pre- and post COVID-19 scenario:
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The drip bag coffee market was growing at a rapid rate before January 2020. The demand for drip bag coffee observed a surge in demand in the past few years as it is easier to pour, cheaper, and convenient. Consumers across the globe are adopting drip bag coffee due to flourishing e-commerce globally. The novel coronavirus (COVID-19) pandemic has emerged as a dramatic public health crisis with significant impacts on economies around the world. The spread of the virus represents unprecedented economic shock, as the global demand and supply are primarily disrupted across various sectors. It has cast uncertainties for several industries worldwide.
The COVID-19 pandemic is expected to have a profound effect on the global drip bag coffee industry, including consumption, production, and international trade. Reduced household income can translate into lower demand for coffee in terms of volume. Furthermore, the price-sensitive consumers are slated to substitute higher-value coffee by lower-value blends, further impacting the market growth. Various social distancing norms and severe lockdowns in multiple nations have significantly influenced the global economic growth.
A one percent decline in the GDP growth is anticipated to reduce the growth of the global demand for coffee by 1.6 million 60-kg bags. In addition to this, the reduced out-of-home consumption and shutdown of the hospitality sector are other significant factors to limit the revenue potential. Despite steady overall growth in the industry, coffee prices have experienced a continued downward trend since 2016, dropping 30% below the average of the last ten years. Consequently, lowering the revenue of the key players present in the market. However, the data of retail and supermarket suggest increased demand in some countries due to panic buying and stockpiling.
The drip bag coffee market is predicted to take an upward swing in the next five years as the coffee industry continues to grow in the post-COVID era. Despite the current volatility, the long-term outlook for drip bag coffee is predicted to be positive. Although the pandemic has hit most of the sectors, the coffee sector is projected to have a more considerable impact. However, the various coffee producers and players involved in the HORECA sector, particularly of the developed nation, are temporarily surviving on government grants and business loans.
Coronavirus is projected to present critical short-term concerns due to lower production and disrupted supply chains. A growing number of savvy customers and a rise in the demand for a more diverse blend will influence the market. With a growing number of card payments, only cafes and cashless transaction systems will boost the market in the coming future. 5G will increase the scope of customization, faster delivery options, and IoT integration. The long-term future of the drip bag coffee market is expected to propel the cause of the consumers' burgeoning demand for the rich coffee experience. The digital technology is expected to play a pivotal role in devising new serving ways in the next five years
Drip Bag Coffee Market: Segmentation
By Distribution Channel
Central and South America and the Caribbean
The Middle East
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