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Coffee Market is expected to secure a healthy growth rate in coming years owing to growing cafe culture

Author : Rahul Sankrityayan | Published Date : 2019-03-15 

Coffee Market will witness a dynamic gain over the projected time period owing to growing in cafe culture among young generation along with increase in disposable income, urbanization, white collar demographic and food service outlets. Changing working culture in corporate world and improving standards of living will drive the product demand.

Coffee is obtained from beans that are seeds of berries from its plant. Berries after getting ripe are processed, dried and roasted as per the desired flavour. It provides a stimulating effect due to presence of caffeine and is one of the most popular beverages. The major producers are Brazil, Vietnam, Colombia, Indonesia and Ethiopia. Consumer preference has shifted from standard towards organic product as these are free from chemicals and pesticides.

It is one of the most traded commodities and has significant share in agricultural export segment. These are most sought after commodity after crude oil in the world and have witnessed decent growth in restaurant business. The commodity chain includes producers, exporters, importers, roasters, retailers and consumers.

Lack of government support, aging trees, land clearing, climate change, increasing production costs are major restraining factors of the industry trend. In recent times, Brazil has faced political crisis that has affected product as they are largest producer. Its tree consumes around 140 litres to produce one cup of coffee and growing water shortage. Tea segment in beverage industry has witnessed growth and providing stiff competition. Health issues including nausea, insomnia, anxiety, nervousness and agitation can hamper its growth.

Roasters have significant profit margin in commodity chain. The trade relationship between producer and importer has improved with fair trade policy launched by World Fair Trade Organization as it excludes middlemen.

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Based on product, coffee market is classified into arabica and robusta. Arabica is superior in flavour and considered as champagne of coffee. Robusta has higher caffeine but is bitter and has less flavour. Arabica is costlier than robusta, sensitive to hot & humid climate and require high altitudes for cultivation. Hence for preparation of end products these are blended as per the consumer requirement.

On the basis of distribution coffee market, it is segmented into hyper and super market, convenience store, specialist retailers and independent retailers. Supermarket has substantial share as urban and semi urban population prefer these owing to ease in availability of product. Convenience and specialist retailers have moderate share and witnessing substantial growth with increase in local demand.

Based on end use, global coffee market is segmented into roasted, soluble, ready to drink and speciality. Roasted and ground has significant share owing to growth of local roasters. It provides opportunity for consumers to blend as per their requirement. These can be further classified into american roast, french roast, italian roast, european roast, viennese roast.

Latin America has significant share owing to presence of Brazil that is largest producer of coffee. Further, Mexico has grown in instant coffee market. It has become the powerhouse of coffee production.

Asia Pacific has potential market share with presence of Vietnam as it is second largest producer. Further, increase in population, urbanization and influence from western culture will facilitate the product demand in this region. Europe has decent share with the presence of substantial number of prominent players including Cafedirect, Caffe Nero and Barcaffe. Additionally, it has major share in green coffee market.

The companies are revamping their service strategies with emergence of contemporary brands to increase customer satisfaction and gain loyalty. The demand for organic type has increased with awareness regarding its health benefits that is expected to propel product demand in forecast period. There has been launch of different varieties and various tastes including CCD, Barista and Starbucks that has given customers an enriching experience.

The key players of coffee market are Eight O’ Clock, J.M. Smucker, AMT, Lavazza, Dulce Cafe, Keurig Green Mountain, Tchibo, Trung Nguyen, Kraft Heinz and Starbucks to name a few. Companies are strengthening their distribution channels and launching new flavours to increase their market share. In July 2016, Starbucks has invested in Italian bakery to offer premium products.

About Author

Rahul Sankrityayan

Rahul Sankrityayan

Fortified with a post-graduate degree in Computer Applications, Rahul Sankrityan writes for Fractovia, where he pens down news and articles spanning across segments of technology industry that excite him on a day-to-day basis. Rahul comes with a rich experience in technical field as well as writing. He can be contacted at- [email protected] | https://twitter.com/sankritsays

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