Brazil's Robust Coffee Consumption—Odds for Premiumisation
Premium has been driving value growth in the largest coffee consumer markets in recent years. Whether it is improved blends, innovating formats or out-of-home sales, higher-priced coffee has boosted sales in key markets. This will be harder to replicate in Brazil, the second-largest coffee market in the world, as consumption patterns and the economy work against premiumisation on a large scale. However, given its size, there are important opportunities for further segmentation and a wider offering that can lead to higher value sales.
Market conditions have favoured the steady increase of robusta in the consumption matrix in Brazil. This has benefited the industry, with lower costs per kilogramme in blends, as more-expensive arabica beans have been gradually replaced.
However, premium coffee is gaining momentum in the Brazilian market. More people are getting acquainted with speciality products, and producers are aware of the big gains in value that single-serve can generate. Although the category is still niche in Brazil compared to other major coffee markets, product launches, investments and more advertising from leading companies all illustrate the local industry’s faith in premium’s future—one with a starring role for capsules.
The one factor that might slow down the expansion of premium is the weak economic performance Brazil is expected to have for at least two years, along with risk unemployment in 2015 and 2016. Nonetheless, with single-serve accounting for only 1 percent of the coffee consumed in 98 percent of Brazilian homes, there is considerable potential for growth in the coming years.
While the mainstream market will continue to shift towards robusta due to more availability and lower costs, Rabobank expects premium coffee to continue growing at healthy rates in Brazil the coming years, as consumers become better acquainted with a wider range of blends, formats and brands at both food service and retail outlets.
Read the full details about the Brazilian Coffee market in this report.
Download the full report
Where to go from here
- A Niche of 65 Percent
- USDA Disappoints Yield Bulls, Seasonal Price Low Approaching
- Beverages Sector Team
- Home