Asia leads the way in global coffee growth

Turkey is not far behind Indonesia, having shown 17.5% growth from 2012-16, followed by India (15.1%) and Vietnam (14.9%) at the helm of a global coffee market that continues to grow steadily—from 2.5% volume growth in 2015 to 2.7% in 2016.

That is according to Mintel, which found that while Asian markets currently make up the majority of the world’s fastest-growing coffee consumers, those in Europe and Australia are now among the slowest. 

The market analyst found Australia to be behind only Finland in terms of countries where consumption declined the most. Though, unlike Finland’s market, Australia did not show negative growth, but remained stagnant at 0%.

The boom in Asia’s coffee market is apparently being driven by a surge in innovation. According to Mintel’s Global New Products Database, between 2011 and 2016 the number of new coffee products launched in Asia has almost doubled. 

In comparison, the number of tea products launched has risen by a comparatively low 55% over the same time period.

“Asia has far more growth potential as traditionally tea drinking consumers are converted slowly but surely into coffee drinkers​,” said Jonny Forsyth, global drinks analyst at Mintel. 

“In 2016, there was also an increasing number of coffee launches that blurred the boundaries between coffee and tea. A tea-drinking culture is the biggest barrier to coffee in Asia, and tea-coffee hybrids can be used to tempt consumers​.”

In terms of local tastes, currently Asia led the way in launches of ready-to-drink cold coffee in 2016, with almost a third of all coffee launches in the region being for ready-to-drink cold coffee products, compared to just 10% in Europe. 

Additionally, coffee mixes are a huge part of the retail coffee landscape. In the same year, sachets containing coffee, milk, sugar and other ingredients accounted for 16% of all related launches in Asia, up from 12% in 2014.

Instant coffee still dominates the regional retail market: last year, two in five Asia-Pacific coffee launches were for soluble coffee granules, twice as many as in Europe and way ahead of the 6% of launches in North America.

Coffee pods, meanwhile, were causing the biggest stir outside Asia, accounting for over a quarter of all innovation in 2016—compared to one in eight in the East. 

“As emerging market consumers develop their taste for coffee, innovation is stepping up a notch as drinkers trade up from instant to fresher-tasting coffee​,” said Forsyth. 

Though despite increasing demand for higher quality products in the global coffee market, soluble coffee granules—the most commodified form of coffee—remains hugely important in Asia. 

“As consumers trade up from instant coffee, pod and capsule sales will increase​,” Forsyth added.

While growth in the Asian premium segment has been increasing steadily in recent years—most recently 15% last year—a “third wave​” of hipster consumers is likely to propel this further, Mintel believes.

The analyst says this movement is taking coffee appreciation a step further, focusing intensely on where beans are sourced and how they are roasted, with a renewed focus on brewing methods.

Currently, America leads this movement, accounting for over a quarter of all global “third wave” coffee retail launches, though consumers across Asia are also now showing a developing love for quality coffee. 

Indeed, Mintel found that 67% of Indonesian urban consumers believed that the quality of the coffee was more important than how easy it was to make. Twenty-two per cent thought they were knowledgeable about coffee, and over half said it was important for them to learn more about the brew.

“Most emerging coffee markets remain in the 'first wave' of coffee; however, some are starting to enter the 'second wave' as foodservice outlets and coffee shops aggressively push Western coffee lifestyles and local coffee shops pick up the baton​,” said Forsyth. 

Many Asian countries are now making the progression from “first wave​” to “second wave​”, while some nations such as South Korea, Japan, Singapore and Indonesia, are moving towards a ‘third wave’ lifecycle development, he explained. 

“Some of the specialty coffee shops in Indonesia, for example, focus exclusively on Indonesian beans to showcase the richness of local coffee. Increasingly, these shops are also serving imported Arabica coffees sourced from around the world, thus enriching the 'third wave' coffee scene in the country​.”