The global coffee market size was valued at USD 120.59 billion in 2021. It is projected to reach USD 182.63 billion by 2030, growing at a CAGR of 4.72% during the forecast period (2022-2030). Coffee beans are collected, processed, and then dried when their color changes from green to vivid red. A color change indicates the ripeness of the berries. Coffee has a stimulating effect due to the presence of caffeine in the beverage. Most people consume coffee in the morning to boost their energy levels. In many nations, it is an integral element of food culture, especially widespread in the food service business, and is one of the world's most widely traded commodities. Numerous coffee beverages are on the market, and a study found that regular coffee consumption has many health benefits, including a reduced risk of Type 2 Diabetes, Alzheimer's disease, depression, and heart disease, as well as increased longevity, decreased pain, and increased fiber intake.
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Increasing Global Exposure, Western Culture, and Penetration of Established Coffee Brands
Coffee shops recently experienced explosive expansion as they became well-liked hangout spots for friends, family, coworkers, and business associates. The growth of the coffee market is ascribed to the advent of high-end shops from businesses like Coffee Day Enterprises Ltd, Starbucks Corporation, and Barista Coffee Co Ltd. Moreover, by establishing appealing and soothing environments, these establishments have introduced an experiencing component to coffee consumption. Additionally, as these establishments provide amenities like free Wi-Fi, entertainment zones, etc., changing the work habits of corporate leaders is also boosting demand for these coffee shops and cafes.
Rising Number of Favorable Government Policies
Since coffee is a commodity in high demand around the world, its price and availability are determined by supply and demand on a global scale. The state of the crops in the nations that produce coffee affects the market's expansion. With the overarching goal of increasing coffee production, several governments in the European Union and industrialized countries, including the United States, assist coffee growers through partnerships with corporate institutions and regional technology programs.
Several governments are developing sustainable plans to expand coffee output to solve the economic and environmental vulnerabilities faced by the coffee sector. For instance, the Vietnam Sustainable Coffee Plan up to 2020 and the Vision to 2030 was published in 2014 by the Vietnamese government. The proposal aims to establish environmental guidelines, including investigating water-saving irrigation techniques and employing environmentally friendly herbicides and fertilizers. It tries to make future production circumstances steady. Countries like India are encouraging the increase of coffee production in traditional coffee-growing regions by providing subsidies to coffee growers to meet the expanding demand for coffee worldwide.
Erratic Climatic Conditions and Global Warming
Coffee thrives in the cool to warm tropical climate, rich soil, and absence of most pests and diseases typical of the tropics. The coffee belt stretches globally, with production occurring throughout North, Central, and South America, the Caribbean, Africa, the Middle East, and Asia. Currently, Brazil is the nation that produces the most coffee worldwide. In the following decades, if Earth's temperature continues to warm, barriers to coffee growing could grow and have a detrimental influence on product quality and quantity, which could hurt sales of coffee.
The coffee plant's fruit development and ripening speed up under higher than average temperatures. Even though quicker ripening might not harm agriculture, it could eventually lower the caliber of the coffee beans. The CIAT and World Coffee Research are attempting to lessen the damage done to the planet by coffee plants by developing new shading methods, hardier bean varieties, and employing biological pest control. Companies like Starbucks started the Sustainable Coffee Challenge to improve the efficiency of the coffee manufacturing process.
Growing Demand for Certified Coffee Products
Consumers' concerns about poverty, social injustice, and environmental destruction have driven a growing market for 'certified' and 'sustainability' brands and labels in the food and beverage market. Sustainable coffee refers to various coffees that meet social, environmental, and economic criteria and are certified by an impartial third party. Certified coffee is also an assurance to the consumer about the product's reliability, as coffee is becoming an increasingly common target for food counterfeiters. Several coffee certification organizations are checking coffee's production procedures and supply chain. Some of them include UTZ Certification, Fair Trade Certification, Rainforest Alliance Certification, USDA Organic Certification, and many more.
The global coffee market is segmented by product type and distribution channel.
Based on product type, the global coffee market is bifurcated into whole bean coffee, ground coffee, instant coffee, coffee pods, and capsules.
The instant coffee segment is the highest contributor to the market and is expected to grow at a CAGR of 5.63% during the forecast period. The product's convenience of use primarily drives the demand for instant coffee. Due to the existence of multiple international firms, the instant coffee market is highly fragmented. Large corporations associate with several other businesses to remain competitive in the market and get into joint ventures, collaborations, and product launches. To compete with Nescafe and Bru instant coffees, Tata Global Beverages, an Indian multinational non-alcoholic beverage firm, launched its instant coffee brand, Tata Coffee Grand. This product is a Robusta and Arabica coffee combination. Furthermore, many businesses are adopting flavors that cater to regional palate preferences. Additionally, advancements in the market are being driven by the fortification of coffee, which offers several health benefits.
Due to its potent aroma and the availability of high-quality brands, ground coffee is preferred by customers worldwide in the middle-income bracket. A study published in the JAMA Internal Medicine polled 500,000 people in the United Kingdom, primarily a tea-drinking nation, and found that 10-15% of coffee drinkers have a lower risk of premature death than non-drinkers. As a result, businesses attempt to develop their goods and promote coffee as a healthy beverage. Consumer preference for green ground coffee, which contains chlorogenic acid, which slows down the absorption of carbohydrates and aids in the breakdown of fat, is another factor boosting the ground coffee industry. Large international corporations dominate the ground coffee business, including Kraft Foods, Nestle, JM Smucker Company, and Starbucks. These businesses provide a wide variety of goods in various flavors.
Based on distribution channels, the global coffee market is bifurcated into on-trade and off-trade.
The off-trade segment owns the highest market share and is expected to grow at a CAGR of 4.98% during the forecast period. Supermarkets' and hypermarkets' extensive product visibility expands the consumer base and drives sales. The actors heavily impact the market, such as business growth and the increase of supermarkets and hypermarkets, which boost sales of various retail formats. The rising demand for bulk purchases of products, such as coffee, has contributed to the industry's overall growth due to the segment's increasing market share. For clients constantly on the go, convenience stores provide economic and practical cups of coffee.
Additionally, many convenience stores have eating areas, attracting even more consumers. Specialty coffee goods, which are frequently absent from chain stores, are known to be offered by specialized retailers and webshops. For instance, the Indian company Sleepy Owl is converting its online retailing into in-store marketing as part of its retail channel expansion. The business intends to promote its coffee goods via 100 shops.
As more people consume coffee at cafes, restaurants, and workplaces worldwide, on-trade distribution channels like cafes and bars are expanding. Additionally, the demand for gourmet coffee has significantly increased, primarily due to the expansion of specialty coffee chains. This has helped to develop the coffee industry and, in turn, the on-trade sector. For instance, the Coca-Cola Company purchased Costa Coffee to grow its coffee business. This USD 4.9 billion deal includes 4,000 retail locations and numerous coffee vending operations. The amount of money invested by local and international companies to expand in developing nations has increased, which has increased sales of coffee products through the on-trade channel. For instance, India has about 3,500 organized chain cafes. It is anticipated to rise by more than 50% in the next three to four years, reaching 7,000 organized cafe chains nationwide.
Europe Dominates the Global Market
The global coffee market is bifurcated into four regions, namely North America, Europe, Asia-Pacific, and LAMEA.
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Europe is the most significant shareholder in the global coffee market and is expected to grow at a CAGR of 4.16% during the forecast period. With a per capita consumption of roughly 6.5 kg, Germany is the most coffee-consuming nation in Europe. Additionally, it is one of Europe's major importers of green coffee beans. Sales of coffee are driven by the significant demand for freshly brewed coffee. Robusta is not as popular in Germany as Arabica. This premium coffee bean is the only one that businesses, like Tchibo, use in their coffee mixes. Germans favor drinking Arabica coffee that hasn't been heavily roasted. According to a Nestle Nespresso SA survey, younger generations in Germany have a stronger sense of coffee connoisseurship. About 24.1% of people between the ages of 18 and 29 want to sample various coffees and coffee recipes, and they want the coffee industry to be diverse. According to the British Coffee Association, ninety-five million cups of coffee are consumed daily in the UK, giving the significant competitors plenty of room to innovate in the market. One of the main factors influencing the growth of the ground-coffee market in the nation is coffee pads and cutting-edge coffee makers.
North America is expected to grow at a CAGR of 4.84%, generating USD 42.33 billion during the forecast period. One of the most popular drinks in the US is coffee. For instance, more than 70% of consumers prefer making coffee at home, according to a poll by the National Coffee Association. By processing various coffee products and re-exporting them to the global market, the United States dominates the specialty coffee market. The total amount of coffee produced in Vietnam and Peru is imported into the United States in about equal amounts. The nation's consumers consume a lot of coffee, which has increased imports of the goods. Due to this, the United States is now the world's second-largest importer of coffee beans. In the coffee supply chain in the US, roasters are crucial. Some top roasting firms that rule the US market include Starbucks, Maxwell, and Dunkin' Donuts. The Coffee Association of Canada (CAC) reports that most Canadians prefer coffee to tea and are more interested in high-quality coffee. Canadian consumers have demonstrated a high awareness of label claims and sustainability when buying coffee. To improve the perception of their brand, many coffee players are concentrating on developing personal connections with their customers.
Asia- Pacific is expected to grow significantly during the forecast period. In Mainland China, coffee has been incorporated into the culture. Coffee has established itself as a hip, Western luxury among Chinese customers, with coffee shops lining the busy streets of cities like Beijing and Shanghai. Regarding industrial competition, Starbucks is currently in the lead and has over 3,400 locations throughout China. Most manufacturers now acquire their coffee from the Yunnan province in China due to the emergence of branded organic coffee blends and the recent rise in worries about trends and controversies involving food safety in China. Aeropress coffee competitions recently gave way to experience centers and coffee-related events as India's coffee culture developed. In addition to government measures, the HORECA sector is significantly transforming the Indian coffee business. The Tamara Coorg hosts a three-day coffee festival that teaches attendees about the various types of coffee, how they are grown, and how to prepare the perfect cup.
Brazils takes pride in the popularity of coffee drinking outside the home, where several coffee varieties, such as espressos, cappuccinos, and other milk-based preparations, are prominent. Due to the adverse climatic effects on many producers and exporters in the nation, the future of the coffee industry is predicted to be appealing. The Brazilian coffee market is still robust even if many fast-moving consumer products continue to decline. This is anticipated to result in significant growth during the forecast period. Argentina's consumers are drawn to higher-quality coffee and specialty coffee drinks as they are exposed to increasingly specialized coffee shops. Millennials are drawn to chains' facility and outlet expansions, including those of Starbucks, Havanna, Café Martinez, Bonafide, The Coffee Store, and other independent and high-end specialty coffee shops. As a result, the coffee market is expanding, and the product's consumption is rising.