hot drinks | trends
Four key coffee trends for 2021
Covid-19 has altered consumer lives and on-trade coffee has taken a big hit. Despite this disruption, according to GlobalData, we can still predict the future trends for the 2020–2022 period.
It’s difficult to predict the full impact of Covid-19, but by the end of 2021 we expect hot drinks and iced/ready-to-drink (RTD) coffee growth to surpass the value generated in 2019, although it will remain behind previously projected values for several years.
Operations are unlikely to see normality return in 2020. Coca-Cola recently reported in its Q2 results that net revenues from global ventures declined 53%, and organic revenues declined 52%, claiming these declines were primarily driven by the temporary closures of Costa retail stores in Western Europe.
Here are the four megatrends to watch as lockdown rules are relaxed and society adapts over the next two years:
Sustainability and ethics
Sustainability will play a significant part in the coffee market as the world begins to move past the pandemic. While consumers have adapted to the need for some single-use plastic for items like facemasks during Covid-19 outbreak, global consumers remain conscious about what they consume.
People want to know where the coffee comes from and how ethically, environmentally and socially conscious the parties involved are. According to GlobalData, 43% of global consumers said that how ethical, environmentally friendly or socially responsible the product or service is always or often influences their product choice.
Ethics regarding coffee farmers will present a potential problem for coffee companies as many of the growing regions have poor labour laws and extremely inconsistent enforcement.
A campaign to protect the farmers in poorer countries from market price volatility, provide personal protective equipment and to advertise this in wealthier countries would help position a brand ahead of its competition in the current climate.
Premiumisation is still occurring in coffee, especially ‘speciality’ coffees with unique tastes due to where and how they are grown. Speciality coffees are a growing category, but demand for extra-premium coffees is likely to be impacted by the looming recession and periods of low economic activity, as well as the temporary closures of cafés.
So-called ‘third-wave coffee’ is still a significant trend in the coffee world. The first wave occurred in the 1960s as consumers got a taste for the drink and the product became much more widely accessible. The second wave came with the premiumisation of the café, on the backs of large companies like Starbucks.
The third-wave is the next stage of this evolutionary process, with more respect given to high-quality speciality roasts, hyper-specific beans, innovative brewing methods and origin information that combines with environmental, ethical and social credentials.
Third-wave coffee refocuses the experience on making a superior-quality coffee product at every point in the supply chain so the consumer can truly appreciate ‘the best’.
Value-focused deals are likely to be significant in the immediate future in many markets. In the UK, for example, the value added tax (VAT) cut, the Eat Out to Help Out scheme and Costa Coffee’s reusable cup scheme can bring the price of a single cup of coffee down to just 32p.
The threat of a global recession in the wake of Covid-19 is serious and significant. With many consumers losing their jobs and several governments trying to offset problems with stimulus packages, coffee, especially in the on-trade, must embrace value-for-money and deals that make use of stimulus money to secure a better position by the end of the pandemic.
Lockdown relegated many consumers and workers to their homes, with the potential for new cases of Covid-19 not receding as quickly as previously hoped, there have been signs that consumers are not yet ready to resume a normal life. For this group, in-speriences, reproducing experiences typically had outside of the home inside, is likely to be an appealing move.
In the UK, the supermarket Asda has promoted such ‘in-speriences’ under their ‘Bring Your Favourites Home’ campaign, which enables consumers to recreate their coffee shop favourites, such as Starbucks and Costa Coffee at home.
On the Costa Coffee page, they offer beans and signature blends, but also present milk, Monin syrups, sweetener and coffee machines, everything the consumer needs to recreate that café experience.
There are also successful crowdfunding campaigns for ‘roast at home’ kits such as BeanBon, and subscription services for premium speciality coffee such as Blue Coffee Box or the Roastery.
Brands successfully tackling the above trends in their offerings are well-positioned, despite the ongoing difficulties in the market, to gain share and benefit from the growth that will undoubtedly resurge in the space.