The market size is predicted to reach $70.8bn by 2020.
A café culture, particularly among urban young people, is a major driving force in the market, both in terms of revenue and volume. As seen across other beverage categories, premiumization is taking hold.
Consumers perceive coffee to be healthier than other beverages on the market, while organic products are also growing in popularity.
Europe and the Americas account for much of the global market: predicted to hold a 43.9% and 44.1% share respectively in 2020.
Premiumization
An improved economy has made a greater variety of coffee products more accessible to younger consumers, said Technavio.
“These consumers are more likely than other groups to spend money on premium beverage brands of roast and ground coffee, which is driving sales.”
Technavio sees consumers move toward organic coffee, with consumers perceiving this category to be safer and nutritionally superior to non-organic products. This shift in preference is expected to be one of the drivers for the market’s growth.
However, the sector still faces a number of challenges.
“The disparity in demand and supply, low production, natural calamities, unfavorable weather conditions, unpredictable rainfall, and rising labor costs have led to volatility in coffee prices, challenging the global roast and ground coffee market,” said Technavio.
Europe
Europe’s roast and ground coffee market is expected to reach $31.07bn by 2020, growing at a CAGR of 5.38%. This is up from $23.91bn in 2015.
Italy, Germany, France, Spain and the UK are the biggest coffee consumers in the region.
Innovations in coffee products – in terms of flavor, variety, price, format and convenience – are helping boost the market.
“The market is driven by the demand for coffee products with added flavors such as
chocolate raspberry flavored coffee, cherries jubilee flavored coffee, and Highlander Grogg flavored coffee, among others,” said Technavio.
“Due to climatic conditions, coffee is not cultivated in this region, and so the region depends mainly on imports to meet demand. However, roasting and other processes like adding flavors are done in the region.”
Americas
The market size in the Americas is predicted to reach $31.24bn by 2020, growing at a CAGR of 6.38%. This is up from a value of $22.93bn in 2015.
“The roast and ground coffee market in the Americas will grow at a fast pace during the forecast period,” said Technavio.
“The market is driven by the innovations being introduced to coffee products, from flavors, variety, and price to formats and convenience.
“Despite the high sugar content in many coffee beverages, consumers in the US still perceive it to be healthier and lower in calories than other drinks. The emergence of premium coffee products with fewer preservatives further solidifies consumers' perception of the health aspects of this product.”
In the US, cafes have also started conducting coffee happy hours, where consumers can taste a variety of coffee cocktails.