Japan and Indonesia in top five global coffee retail markets as single-serve grows

By Lester Wan contact

- Last updated on GMT

Mintel's latest research, “Coffee — Global Annual Review 2018”, shows Asia has been a rising dragon in the global coffee market in recent years. ©GettyImages
Mintel's latest research, “Coffee — Global Annual Review 2018”, shows Asia has been a rising dragon in the global coffee market in recent years. ©GettyImages
Japan and Indonesia are ranked among the top five world’s largest coffee retail markets by volume.

At 304,000 tonnes and 268,000 tonnes, Japan and Indonesia are ranked behind the US (estimated 607,000 tonnes), Brazil (425,000 tonnes) and Germany (424,000 tonnes).

The latest research from market intelligence agency Mintel, “Coffee — Global Annual Review 2018”​, shows that Asia has been a rising dragon in the global coffee market in recent years.

Growing Asian giants

Furthermore, Mintel said Asia’s emerging markets will continue to grow in their role in the future of the global coffee sector as its research reveals that Indonesia, Vietnam and the Philippines are estimated to be among the top five fastest-growing coffee retail markets by volume from 2017 to 2021.

Significantly, Indonesia is expected to grow at a compound annual growth rate (CAGR) of 11.4%, Vietnam at a rate of 9.2% and the Philippines by 6.7%.

The other two fastest growing markets are Turkey (6.8%) and Mexico (6.1%), the only country not in Asia or the Middle East.

“Asia has great growth potential when it comes to coffee, with consumption continuing to rise across the region,” ​said Jonny Forsyth, associate director of Mintel Food & Drink.

“Coffee culture has surged in Asia with more and more specialty coffee houses setting up shop in countries like Japan, Singapore and Indonesia. Big brand coffee chains are also increasing their expansion efforts in the region.

“Additionally, Asia’s emerging markets have led global coffee growth in years past and will continue, with Indonesia leading this charge.”

Single-serve Asia

According to Mintel, when it comes to coffee formats, it appears that single-serve coffee — such as in pods, bags and pre-filled filters — remains lucrative in more developed markets such as the US, but growth has slowed. Nonetheless, the growth of single-serve coffee is strong in emerging markets, especially in Asia.

Asia and the Middle East-Africa region and Latin America accounted for almost a quarter (23%) of total global single-serve launches, up from 14% share in 2014, based on statistics from Mintel’s Global New Products Database (GNPD).

In South Korea, 30% of all coffee launches in 2017 comprised pods, up from 20% in 2016.

Moreover, in 2017, one in five (20%) urban Chinese coffee drinkers said they drank drip-bag coffee (a hybrid of pod and instant coffee) once a day or more, up from 3% in 2016.

“Single-serve coffee growth, though stalling globally, shows huge potential in emerging markets, with Asia being particularly promising because of a growing coffee habit among traditional tea nations like India and China, rising affluence, and rapid urbanisation,” ​said Forsyth.

“Single-serve formats, like the drip bag, are popular among Chinese coffee drinks as they have the familiarity of traditional tea bags. They are also viewed as more natural and less processed than soluble coffee.

“This suggests drip bags will have much more growth potential in 2018 and beyond.”

Chilled RTD and cold brew rising

Additionally, the GNPD states, in 2017, 19% of global new coffee launches were iced Ready-to-Drink (RTD) coffee, up from 16% in 2015 and 17% in 2016.

Globally, Japan still leads in RTD coffee innovation, accounting for 18% of all iced RTD coffee launches in 2017, albeit down from 20% in 2016. The US follows the Asian giant, accounting for 13% of these launches in 2017, up from 10% in 2016.

In a related sub-segment, cold brew growth is being driven by the US, with domestic retail sales estimated to have reached US$38m in 2017, more than double that of 2016.

“Global investment in chilled RTD coffee has increased as producers target a younger coffee drinker who enjoys the format’s taste, refreshment and indulgence. This is despite the fact that there is a current slowdown in the Japanese market, which previously dominated global iced coffee innovation and sales,” ​said Forsyth.

“Cold brew is helping to premiumise the RTD category, and is proving to be better for innovation than other hot-serve formats, with manufacturers continuing to push the format’s boundaries in 2017.”

He concluded saying that cold brew will grow in more countries, including in Asia Pacific, in the coming years.

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