With a global market value of $473.15bn (€414.30bn - Statista), coffee stands strong as one of the most sought-after commodities in food and beverage.
“Coffee continues to thrive as one of the most consumed beverages globally,” says a spokesperson for Statista.
And it’s not just beloved as a drink. It’s also one of the most popular flavours in sweet foods such as ice creams, chocolates and cakes.
But recent global challenges, including extreme climate events, trade wars and increasing energy costs, have pushed coffee prices up and up, peaking at 431.82 USd/Lbs in February this year (Trading Economics).
This led to fears coffee could become unaffordable to many consumers, pushing it into the luxury beverage category.
However, rather than abandoning coffee as prices escalated, consumers adapted, proving just how important it is to them. In fact, for many, it’s a non-negotiable.
“Coffee is crisis proof,” says Gerd Mueller-Pfeiffer, CEO of International Coffee Consulting. Meaning that even when times are tough, consumers view coffee as a priority.
Is coffee crisis proof?
From a morning cuppa to get the synapses firing, to an after-dinner digestif, coffee has insinuated itself into every facet of daily life.
“Without my morning coffee, I’m just like a dried-up piece of roast goat,” said Johann Sebastian Bach, while Thomas Jefferson declared it, “the favorite drink of the civilised world.”
More recently (this century!) the phrase “but first coffee”, is often used as a shorthand for the understanding that nothing can be started until coffee has been consumed.
And it’s for this reason that at home coffee sales are projected to grow at a CAGR of 2.96% over the next five years (Statista), despite the average price of a cup of coffee increasing by 17% since 2022 (Lumina Intelligence).
“Coffee has remained resilient in turbulent times,” says Flora Zwolinski, senior insight manager at Lumina Intelligence.
One of the main reasons for this is its ability to serve a multitude of occasions, including as an on-the-go drink, an excuse to sit and chat with friends and family, and a mid-afternoon pick-me-up at work, to name but a few.
“The expanding needs and occasions for coffee purchases - from treat to health - showcase growing opportunities to drive transaction spend,” says Zwolinski.
Coffee is also seen as an affordable treat, allowing consumers to indulge without overspending.
Moreover, there’s the option for consumers to adjust how much they spend on coffee without having to cut it out completely. This could mean making a coffee at home rather than buying it from a cafe or purchasing a lower-priced brand. Though consumers expect value for money and are ready to switch to more affordable brands, if they feel they’re being overcharged.
“Value for money remains central to consumer decision making, leading operators and consumers to balance cost and quality,” says Zwolinski.
Having said that, brands should not be afraid to increase product prices where necessary, particularly as many in the industry believe it has been under-priced for too long.
“Coffee farmers have been ripped off for 30 years,” says Will Little, managing director of Roastworks. “We’ve got to rebalance the books.”
And history shows that consumers will go with a shift in prices.
“When we first saw the market move last year and prices increase, the first thing we heard was that demand would drop unless prices came back down. But actually the coffee market is more elastic than we think because demand remained,” says Jonny England, director of coffee at Löfbergs.
Prioritise quality
Brands are strongly advised against changing their products to make them more affordable or increase profits.
“Even if global market prices go up, never touch the product,” says International Coffee Consulting’s Mueller-Pfeiffer. “Don’t give up the taste and don’t give up the quality. There are other ways to manage the costs in the profit and loss, through things like pricing. Don’t touch the blend.”
That’s not to say that brands shouldn’t get creative and launch new products to grow their range. In fact this is actively encouraged.
“We have a rising demand for coffee,” says Mueller-Pfeiffer.
And brands have been quick to embrace the opportunity to innovate, with pistachio coffee, mushroom coffee, beetroot coffee, and of course cold brew coffee all growing trends in the sector.
Just don’t mess with existing formulations that customers know and love.
