Fresh coffee beans represent one of the most promising products for coffee retailers through 2015, according to Ross Colbert, global beverage strategist for Rabobank, an international bank. Colbert was a keynote speaker at the National Automatic Merchandising Association CoffeeTea&Water Show in Las Vegas in October 2011. The positive outlook for fresh coffee is consistent with Colbert’s positive assessment for the more premium segments of the coffee market.
Colbert noted that fresh beans account for just 10 percent of the coffee market but are the most profitable and greatest opportunity for growth. Sourcing the research firm Euromonitor, he presented a bar chart indicating that retail volume for fresh coffee beans will increase by 20 percentage points for the 5-year period from 2010 to 2015. The retail value for fresh coffee beans will increase by 32 percent during that period.
Fresh coffee beans will outpace regular coffee, fresh ground coffee and instant coffee in retail value, Colbert noted.
He said there are two divergent consumer trends caused by the recession; affluent consumers choosing to spend less frequently but spending more when they do spend, and less affluent consumers trending down to reduce expenditures. These divergent trends favor the higher and lower ends of the beverage market.
He noted the OCS market enjoyed top line growth during the current recession due to the rising demand for gourmet coffee and more expensive single-serve systems that help them meet this demand.
Looking at the lower end of the market, a demand for less expensive products has driven the growth in soluble coffee since it is less expensive, Colbert noted. Another factor driving soluble coffee is that the technology used to produce it has improved, he added.
Colbert’s chart indicated that instant coffee leads other segments in retail volume growth but fresh coffee beans’ retail profit growth will surpass instant coffee due to higher profit margins.
These divergent trends in the coffee market is a reason that OCS operators must think more strategically about their business than they have in the past, Colbert said.