How Coffee Will Look Different in Ten Years
Consumer-driven changes will reshape the global coffee world. To help companies throughout the coffee value chain prepare for the future, in our latest RaboResearch report “How Coffee Will Look Different in Ten Years: Consumer-Driven Changes Will Reshape the Coffee World”, we look ten years out at key changes that could stir up the coffee market.
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Report Summary
We don’t always notice big changes in the beverages world on a year-by-year basis, but the significant shifts become readily apparent over a ten-year time horizon. Whether it’s the rise of local breweries, value-added bottled water, rosé wine or specialty coffee – these trends create entirely new markets and are fundamentally driven by consumer desires.
“The coffee market will be in a completely different place in ten years,” says Jim Watson, Senior Beverage Analyst. “Those companies that build brands, create sticky consumer connections, and best leverage the healthy attributes of the coffee bean, will be positioned to capture more than their share of the growth.”
To examine what will change, three fundamental consumer trends shaping all beverage segments are key:
1. The desire for natural, traceable, and sustainable products
2. The blurring of lines across product categories
3. Our inability to look up from our phones
These consumer trends will impact coffee in the US and Western Europe in the following notable ways:
Bean-to-cup replaces pods and capsules
One of the biggest trends across beverages is the shift towards drinks that are natural, traceable, and sustainable. We see this movement through start-ups entering the market, consumer survey data, and brand innovations. These different qualities are all related – it is about the consumer understanding not just the brand, but the ingredients, process, and environmental impact.
No more unbranded coffee in foodservice
In today’s beverage world that is fully branded, the idea of unbranded coffee is rather out of place. The relative lack of private labels in beverages compared to other consumer food categories shows us the power that beverage brands have in driving market share and growth in general, indicating the potential market for greater branding in coffee. Consider the soda or alcohol segments, where most developed market consumers will have a branded option during virtually every occasion.
Big food & beverage enters the coffee segment
Coffee is no longer a standalone category within beverages, sold separately in dedicated coffee shops or in a different section of the grocery store. Coffee is now another beverage that must be included in the broader portfolio. For many larger non-alcoholic drinks companies, it is a white space to fill. Most importantly, younger consumers view coffee as another category competing for the same occasions as every other beverage brand.
Loyalty apps and subscriptions will drive sales
Beverage consumers, especially the younger ones, live online. An Experian study found that 40 percent of millennials spend more time interacting with their phones than with the people around them. Currently, having a strong digital presence is a strategic advantage for a coffee brand owner – but far from a necessity. This will change.
