Europe and North America dominate the global coffee market, collectively accounting for around 62% of global volumes. But that’s set to shift dramatically in the coming years, with markets such as Africa and the Middle East growing fast.
And it’s not just about category growth: innovations from these up-and-coming markets are set to influence the global coffee scene in the coming years.
Americans already love coffee...
Coffee is booming. Consumption has doubled over the past thirty years, and that’s set to continue.
But what will change is where growth is coming from. Today, Europe accounts for around 40% of coffee consumption; North American accounts for some 23%. But per capita consumption is these markets are extremely high.
“These markets are relatively stable, and that means they are saturated,” said Gerd Mueller-Pfeiffer, CEO of International Coffee Consulting, presenting at the London Coffee Festival recently.
“The consumption is very high per capita, especially in Nordic countries and Germany. And in parallel, the population is shrinking.”
In the US, Americans drink more coffee per day than any other beverage. But again, the drink is already integrated into daily routines for many Americans.
Innovation is happening fast in the coffee industry, with coffee companies looking to expand the consumer base and consumption occasions. That means there’s still room for growth: but only so much.
That’s why looking afield is further important.
Growth markets
Mueller-Pfeiffer, who’s lifelong passion for coffee has led him around the world including with high-level roles at Nestle, recommends turning attention to Africa, the Middle East and Asia.
Here, coffee is becoming increasingly popular: but still with huge runway for growth. China, India, the Middle East and Africa, for example, come in with a per capita consumption of around 40 cups of coffee per year: compared to more than 230 per person per year in the rest of the world.
Growth is expected across these regions because of various factors.
First of all is the sheer population growth: something that’s particularly important in Africa. Second is the expansion of premium offers, mirroring coffee shop culture in markets such as the US. These regions are also exploring new formats and new occasions: such as RTD coffee for the afternoons of other indulgent add-ons.
Population growth
Africa currently only accounts for 8% of the global coffee market. But the sheer population growth projected in Africa will increase its potential enormously, accompanied by a rise in disposable incomes. And as a large coffee producer, it also has the choice of the highest quality coffee.
“Africa is expected to double its population by 2050,” noted Mueller-Pfeiffer. “So that means that coffee production countries are turning into coffee consumption countries, like Ethiopia. Africa, for sure, there is plenty more on the long term horizon.”
Another example where population growth will be key is India: with 1.4 billion people and strong growth in coffee over the last decade.
Asia is already an innovator in coffee: accounting for around 26% of the global market and strong in RTD coffee. Here, trends already influence the global stage.
Nowhere is this more evidence than South Korea.
“You really see the coffee trends of the future in South Korea,” said Mueller-Pfeiffer.
“It’s amazing. The South Koreans have more than 100,000 coffee shops. One of the highest concentration of coffee shops in the world is in Seoul. And it’s a clear trendsetter for global coffee innovation.
“Here you see the affinity for cold brew and RTD. Cold brew, which originally comes from Japan in Kyoto style, is gentler and is naturally refreshing, and we see coffee is clearly moving from the traditional black cup.”
Australia is also a champion of coffee innovation (already claiming the invention of the flat white), fed by waves of European immigration and coffee culture over the years.
It has thriving coffee shop chains, but also thousands of independent coffee shops which are driving the specialty coffee trend.
Coffee concentrates, too, have been making their debut in Australia and are now rolling out globally: riding the wave of the RTD coffee craze.
Meanwhile, the US is driving forward innovation in functional coffees: with a growing array of protein-packed innovations, mushroom coffee, cognitive brews, collagen add-ons, gut health brews and more.
But perhaps one of the most exciting regions to look to, says Mueller-Pfeiffer, is the Middle East.
“Coffee is a social connector in the Middle East: it replaces alcohol in some countries where alcohol is forbidden,” He explained. “So coffee plays a completely different role.”
That’s accompanied by high incomes and a desire for luxury goods and new experiences, doubled with a futuristic mindset.
Dubai is already exploring the future of automated baristas: The CafeXbot Coffee Robot serves up customizable brews.
And then there’s another trend ready to tap into consumers’ love for flavor exploration.
“Another huge trend, which is coming especially from the Middle East and Asian countries, is coffee mixology,” said Mueller-Pfeiffer.
“You elevate your cup by blending herbs or fruits for a one-of-a-kind flavor experience. There’s flavor pairings: a rising interest of fusing traditional flavors with modern formats: such as saffron cold brew or cardamon lattes. You see especially in the Middle East, but also in South East Asia, local spices – cardamon, saffron, cinnamon, commonly infused into coffee drinks. So it’s a mixture that’s very interesting to see.
“Bring this into a RTD format, with a rising population in Asia, and this will be a huge business.”