The premium market for coffee continues to gain ground. According to IBISWorld research, consumers have educated themselves more about coffee beans and traded up in quality over the past five years. Experts credit the growing availability of a broad range of coffee varieties in supermarkets and other retail outlets for this increased demand and awareness. Also noted are the expansion of coffeehouses and their sociological implications.
This premiumization of coffee has benefited whole bean sales. According to IBISWorld, the segment has increased gradually from 2008 to 2012 and now accounts for more than 13 percent of the category’s revenue.
Although still the category leader, ground coffee sales decreased 2.4 percent for $4.4 billion in sales for the 52 weeks ending May 19 in U.S., according to Information Resources Inc. (IRI). Now in the market for more than a year, Kraft Foods Group Inc.’s premium brand Gevalia had the largest gains with over 284 percent sales growth, IRI reports.
As the market shifts due to the premiumization of coffee, “quality will continue to dominate as a deciding factor for consumers,” the IBISWorld report states. Additionally, as disposable income rises over the next five years at an average annual rate of 1.8 percent, consumers are expected to continue to pay more for high-quality coffee.
Sources: Premium outlook for coffee. (September 12, 2012). Beverage Industry.
The 2013 State of the Industry: Coffee & RTD coffee. (July 10, 2013). Beverage Industry.
The trend towards premium capsules. (July 2013). Global Coffee Review.