Coffee is a natural and organic caffeine beverage that is prepared in a coffee machine by combining coffee beans (green beans, soluble, or roast and ground) with either cold or hot water. Coffee can be drunk as a ready-to-drink beverage from coffee shops and coffee houses, or by brewing coffee beans at home. There are several varieties of coffee goods on the market that differ in terms of nutrient content, caffeine level, appearance, and flavor.
The market would grow in coming years on account of a growth in out-of-home coffee consumption, increased urbanization, expanding e-commerce retail sales, and an increase in gen Z income. The global coffee market is projected to reach US$124.96 billion in 2023, witnessing growth at a CAGR of 7.60%, during the forecasted period. Furthermore, the global coffee market by production and consumption volume are expected to reach 180.75 million 60Kg bags and 178.50 million 60Kg bags, respectively in 2023.
Asia Pacific dominated the market with highest share, owing to growing popularity of various coffee products among consumers in the region. The climate and geographical location of Southeast Asia make it ideal for growing coffee. It is the region's coffee culture and coffee production expertise that helped create the region's booming coffee industry. Within the North America region, the US is dominating the region due to increased out of home coffee consumption. Whereas, Within Europe, Germany is expected to dominate the market in the forecasted period, driven by the rise in the number of coffee bars, small resident brands, small roasters, and baristas.
Top Impacting Factors:
Driver: Growing Demand for Specialty Coffee
Coffee production is usually dependent on the favorable climate conditions that allow the producers to create demand for it in the desired market. Any change in weather conditions could lead to add supply pressures for the producers. The coffee tree requires heat, humidity and abundant rainfall. Higher temperatures may affect the quality of coffee, so the temperature needs to be moderate in order to grow high-quality coffee. If there may be any changes in the production level of coffee due to unstable climate conditions, it would affect the overall demand-supply chain of coffee in the world.
Health consciousness is usually seen in many people across the world. People, who are fitness freak, eat healthy and drink healthy. In recent times, consumers started having a mindset about “form and function” which means getting perfectly shaped and toned body. Functionality plays a greater role in beverages. Lately, many consumers want coffee with functional benefits such as metabolism, alertness, or energy, that aids in healthy skin or relaxation, has probiotics or is high in antioxidants. The global coffee market has shown a strong ability to adapt and evolve to meet diverse consumer demands.
The COVID-19 Analysis:
The outbreak of the COVID-19 pandemic caused disruption in the coffee industry. The out-of-home coffee consumption decreased significantly due to growing number of countries adopting a full or partial lockdown to contain COVID-19 spread. Offices, coffee shops and restaurants remain shut in order to restrict the spread of coronavirus which reduced the consumption of coffee in the pandemic year 2020. Also, due to COVID-19 pandemic, the movement of farm laborers and migrant workers was limited by social distancing measures, lockdowns and travel restrictions which forced them to migrate to their hometowns thus reducing the overall labor supply in the farms during the harvest periods. Coffee bean picking is highly labor intensive activity involved in coffee making which was hampered due to shortage of labor, thus hampering the overall coffee production.
Analysis of Key Players:
The coffee market is a highly competitive market, which is dominated by large number of players. The key players in the global coffee market are:
Some of the strategies among key players in the market for Coffee market are mergers, acquisitions, and collaborations. For instance, in 2022, Nestle S.A announced that the company is exploring emerging technologies for the development of animal-free dairy protein-based products. Whereas, Keurig Dr Pepper introduced the K-Café® SMART, the newest brewer in Keurig's connected line. The new brewer allows consumers to create delicious coffeehouse drinks right from home – the majority of which can be made in three minutes or less.