DeloitteCoffeeStudy2024

ForcesshapingthemarketandconsumerbehavioursSeptember2024

Contents

1.Keyfindings04

2.Settingthescene05

2.1Thewavesofcoffee05

2.2TheSwisscoffeeindustry07

3.Trendsshapingthemarket11

3.1Sustainablecoffee11

3.2Specialitycoffee16

3.3Certifiedcoffee19

3.4Functionalcoffee21

3.5Directtrade23

3.6Conveniencecoffee25

4.Thecoffeeconsumer28

4.1Generationalgaps28

4.2Homebrewing31

4.3Coffeee-commerce33

5.Conclusion35

6.Contactsandauthors36

7.Endnotes37

02DeloitteCoffeeStudy2024|Forcesshapingthemarketandconsumerbehaviours

Aboutthestudy

Thisstudyisbasedonanonlinesurveyof7,000coffeedrinkersaged16andabove.ThesurveywasconductedinMarch2024across13countries,500participantsinBrazil,China,France,Germany,India,Italy,Japan,Mexico,SouthKorea,Spain,the

UnitedKingdom,andtheUnitedStatesaswellas1,000participantsinSwitzerland.

Thedataofallcountrieswereweighted

equallyintheanalysis.Thecountry

sampleswerenationallyrepresentativeofageandgender–inChinaandIndiaalsoofincome,andinSwitzerlandoflanguagedistribution.Additionally,facetoface

interviewswereconductedwithexpertsfromthecoffeeindustry.Independentinitsapproachanddrawingonourresearchcapabilities,theDeloitteCoffeeStudyisaholisticindustryassessmentcomprisingdiversepointsofview.

DeloitteCoffeeStudy2024|Forcesshapingthemarketandconsumerbehaviours03

04DeloitteCoffeeStudy2024|Forcesshapingthemarketandconsumerbehaviours

1.Keyfindings

Thecoffeeindustryandenvironmentareevolvingfastwhichrequirescoffeeroasters,traders,brands,distributors,retailersandmachinemanufacturerstofollowrelevanttrendsandunderstandconsumerpreferences.InthisstudyDeloitteexploresprominenttrendsincoffeeandconsumerinsightsbased

onasurveyofaround7,000coffeedrinkersin13countriesandinterviewswithexpertsfromthecoffeeindustry.

Thebeanboom

Coffeeconsumptionisspreadingtopartsoftheworld

whereitisnotatraditionalbeverage–forexample,to

ChinaandIndia.Thepopularityofcoffeeisgrowingin

theseemergingmarketsandthenumberofcoffeeshopsisincreasingrapidly.

Greenstampofapproval

Coffeeproductionfacesseriouschallengeswhereclimatechange,deforestationandplantdiseasesareconcerned.Consumersincreasinglydemandsustainablecoffeeandlookforcertificationsthatensuresocialandecological

standardshavebeenrespectedinthevaluechain.

Generationrevelations

Coffeeconsumptiondiffersbetweenyoungerandoldergenerations.Forexample,youngercoffeedrinkerstendtoconsumelesscoffeeonaveragebutshowahigherpropensitytogetittogo.

Howconvenient

Easyaccessibilitytocoffeeandsavingtimeduring

preparationarecrucialfactorsincoffeeconsumption.In

thiscontext,cannedandbottledcoffeearetwowell-knownoptions.Buttheyarenotoftenadoptedbyconsumersfortheirregularconsumption.

Doityourself

Preparingcoffeeathomeratherthanbuyingittogoor

drinkingitinacaféhasriseninrecentyears.Animportantdriverofthisdevelopmenthasbeentheinflationsurgefrom2021to2023.Instantcoffeeisthepreferredchoiceathome.

Fromfarmtocup

Intherelationshipbetweencoffeegrowersandroasters,directtradewithoutanyintermediariesisontherise.Inturn,roastersareincreasinglyusinge-commercetosellandcommunicatewithconsumers.Bothtrendsallow

closerconnectionsbetweenmarketparticipants.

2.Settingthescene

2.1Thewavesofcoffee

instantcoffeeandrestaurants

brewedfiltercoffeeinbulk,

beforeitdroppedagaininthe

secondhalfofthecenturyas

manyconsumersswitchedtosoftdrinks.

Thesecondwave,beginning

inthemid-1990s,introduced

brandedchainstomainstream

culture.Coffeeshopssuchas

StarbucksandCostaCoffee

aimedtoprovidetheircustomerswithahigher-qualityproduct

and,evenmoreimportantly,a

cosyandtrendyenvironment

notonlytodrinkcoffeebutto

socialise,workorpassthetime.Thus,drinkingcoffeebecame

moreabouttheexperience

andpartofalifestyle.Thisshift

wasaccompaniedbyafocus

onespresso-basedbeverages

thatcouldbecustomisedto

suitindividualpreferencesand

typicallycontainedmoremilkthan

coffee–hencethewidelyusedterm,lattérevolution.2

Thethirdwaveofcoffeebeganinthemid-2000sandfocusedoncraftandqualityawareness.Thistrendwasledbyartisanroasterswhichprocesssmalleramountsofcoffeecomparedtocommercialfactories–anapproachknown

asmicroroasting.Theaimof

microroastingistoshowcase

theindividualtasteprofileofa

premiumcoffeefromagiven

region.Forthispurpose,artisanroastersentereddirect-trade

relationshipswithcoffeefarmsandcooperatives,allowingbettertraceabilityinsourcing.Thefocusonaparticulargrowingarea

coinedthetermsingle-origincoffee.3

Thecoffeeindustryandcoffee

culturehaveundergonerapid

changeinrecentdecades.To

describethisdevelopment

expertsoftenusetheconceptofcoffeewaves,asshownin

Figure1.Essentially,awave

referstoanewtrendincoffee

associatedwith,forexample,

changingmarketdynamics,

technologicalinnovationsorshiftsinconsumerattitudes.Experts

differinthenumberofcoffee

wavestheyseebutmostgenerallyagreeonthree.

Inthefirstwave,largeretail

andsupermarketbrandsmadecoffeeaccessibletothemassesduringthe20thcentury,sothatitbecameacommoditythatcouldbefoundineveryhome.1Beforethen,onlytheelitewasable

toaffordcoffee.Consumptionincreasedexponentiallyas

householdsgainedaccessto

DeloitteCoffeeStudy2024|Forcesshapingthemarketandconsumerbehaviours05

06DeloitteCoffeeStudy2024|Forcesshapingthemarketandconsumerbehaviours

Someexpertsseeadditional

wavesofcoffeethatinclude,

forexample,therisinginterest

inthescienceofcoffee–to

betterunderstandthechemicalprocessesallthewayfromcoffeeproductiontoconsumption–

ortheincreasingawarenessofcoffee’senvironmentalimpact.4Inanycase,thedifferentphasesofdevelopmentillustrate

thattheindustryisevolving

continuously.Forthisreason,itisofvitalimportanceformarket

participantstokeeptrackoftherelevanttrendsandchanges

inthesector.Acoffeemarket

thathasdevelopedparticularlystronglyintherecentpastis

Switzerland–asillustratedinthenextsection.

Figure1.Thewavesofcoffee

1900s1990s2000s

Firstwave

Largeretailand

supermarketbrands,

instantcoffee,

restaurantsbrewing

filtercoffeeinbulk

Secondwave

Brandedcoffeeshops,

focusoncustomer

experience,espresso-

basedbeverages,latté

revolution

Thirdwave

Artisanroasters,

focusoncraft

andquality,micro

roasting,directtrade

Source:Deloitteresearch,Progreso,EcoBean

DeloitteCoffeeStudy2024|Forcesshapingthemarketandconsumerbehaviours07

2.2TheSwisscoffeeindustry

InrecentdecadesSwitzerland

hasbecomeahubforcoffee

despitethefactthattheproductdoesnothaveaparticularlylongtraditionintheAlpinenation.

TheSwisscoffeeecosystemhasgrownrapidlyandnowconsistsofmajorinternationalstakeholders,includingrenownedroasters,

someofthemainglobalcoffeetradinghouses,andtheworld’sleadingmachinemanufacturers.

TherapidgrowthanddynamismofSwissroastersisevident

inthecountry’scoffeetrade

developmentoverthepastthreedecades(seeFigure2).While

Switzerlandwasnotexporting

noteworthyamountsduringthe1990s,exportstookoffinthemid-2000sandhaveincreasedmorethantwentyfold,fromCHF0.16

bn(USD0.19bn)in2005toCHF3.27bn(USD3.85bn)in2023.

Thevalueofimportsexceeded

exportsuntilthemid-2000sandhasgrownsincethen,butexportshaveexpandedfarmorerapidly.

08DeloitteCoffeeStudy2024|Forcesshapingthemarketandconsumerbehaviours

Figure2.AnnualSwisscoffeetrade(inbillionCHF)

3.503.002.502.001.501.000.50

0.00

2023*

3.27

2023*

1.12

199419992004200920142019

ExportsImports*Provisionaldata

Source:FederalOfficeforCustomersandBorderSecurityinSwitzerland

Theincreasesinimports

andexportsareassociatedwithdifferenttypesofcoffee:

Switzerlandprimarilyimportsunroastedgreencoffeeand

mostlyexportsproductsthatcontainroastedcoffee.5Thus,Swissplayersusetheimportedrawproduceasabasisfor

theexportedfinalproduct

andaddtremendousvaluetocoffeebyroastingandfurtherprocessing,andthisisreflectedinprices.Whileimportscost

aroundCHF5(USD6)per

kilogramme,exportsreachasixfoldvalueofoverCHF30

(USD35)perkilogramme.

TheriseofNespressointhe

early2000swasamajordriverofthegrowthinSwisscoffee

exports.6Thecompanybecameaglobalbrand,openingits

firstboutiquesinmajorcitiesaroundtheglobe.7Nespressoproducesitscapsules

exclusivelyinthreefactoriesinSwitzerlandandsellstheminover60countries.8

InrecentyearsSwitzerland

hasrankedamongthetop

fivecoffeeexportersbyvalue

worldwideandiscurrentlyinsecondplacegloballyafter

Brazil.Thisisaremarkable

achievementgiventhatthe

countryisnotacoffee-growingnationsuchasBrazilor

Colombiaanddoesnothave

eitheralargedomesticcoffeemarketliketheUnitedStatesorFrance.9ItislittleknownthatcoffeeisSwitzerland’smost

exportedagriculturalproductandthatitsannualexport

valueisfarhigherthanforothermoretraditionalSwissproducts,suchaschocolateandcheese.

DeloitteCoffeeStudy2024|Forcesshapingthemarketandconsumerbehaviours09

TheSwisscoffeeindustryplaysanimportantrolenotonlyin

roastingbutalsointrading.

Tradingcompaniesbuyand

sellcoffeeabroad,whichdoes

notenterthecountry,contrarytoimports.Itisestimatedthat

Swisstradinghousesaccountforapproximately70percent

oftheglobaltradeinraw

coffee.10Switzerlandishome

tohalfadozenoftheleading

coffeetradersintheworld,withheadquartersintheLakeGenevaorZurichmetropolitanarea.

Thereareseveralreasonsforthisstrongcoffeetradingclusterin

thecountry.Thetradinghousesareinanecosystemwithbanks,insurers,shippingandforwardingcompaniesthatsupport

andfacilitatetheirbusiness.

Additionally,Switzerland’slocationallowsconvenienttradingacrosstimezones:withAsiainthe

morning,theAmericasinthe

afternoon,andAfricaalldaylong.

ThethirdelementintheSwisssuccessstoryin

coffeeismachinery.Swiss

Figure3.AnnualSwisscoffeemachineexports(inmillionCHF)

900

2023*820

800

700

600

500

400

300

200

100

0

2023*227

199419992004200920142019CommercialuseDomesticuse*Provisionaldata

Source:FederalOfficeforCustomersandBorderSecurityinSwitzerland

manufacturersareamongthegloballeadersindomesticand

commercialcoffeemachines.

Jura

and

Eugster/Frismag

are

examplesofwell-knowndomesticcoffeemachineproducers.

Franke

isarenownedmanufacturerof

machinesforcommercialuse.ItisestimatedthatcompaniesinSwitzerlandproduce

approximately70percentofallfullyautomaticcoffeemachinessoldworldwide.11

Swissmanufacturershave

notalwaysbeeninsucha

commandingposition(see

Figure3).Thirtyyearsago,

Switzerlandexportedaround

CHF100million(USD118million)incoffeemachinesfordomesticuseandasimilarfigureinthoseforcommercialuse.Sincethen,

exportsofcommercialcoffee

machineshaveincreasedmore

thaneightfold,toCHF820million(USD965million)in2023.Exportsofdomesticcoffeemachines

initiallygrewtomorethanCHF

500million(USD588million)in2007buttheirvaluehasfallen

backtoCHF227million(USD267million)in2023.

10DeloitteCoffeeStudy2024|Forcesshapingthemarketandconsumerbehaviours

ThesuccessstoryofSwiss

coffeemachinemanufacturersisexemplifiedbyafamilybusinessbasedintheCantonofLucerne:Thermoplan,thecompany

thatsuppliesStarbuckswith

coffeemachinesforallitscafés

worldwide.In1999,justfouryearsafterenteringthecoffeemachine

businessin1995,Thermoplansecuredthepartnershipdeal

withStarbucks.12Almostall

themachinesthatThermoplanproducesareexported–toover80countriesintheworld.13

Thepositivedevelopmentinrecentdecadesdoesnot,

however,guaranteethefuture

successofSwitzerland’scoffee

industry.Tomaintainandexpandtheirleadingposition,Swiss

playerswillhavetocontinuetokeepupwiththelatesttrendsinthemarket.

PhotocourtesyofSwissSpecialtyCoffeeAssociation/JustinGroep

DeloitteCoffeeStudy2024|Forcesshapingthemarketandconsumerbehaviours11

3.Trendsshapingthemarket

AstheconceptofcoffeewavesanalysedinChapter2showsthecoffeeindustryandcoffeecultureare

changingconstantly.Ouranalysishasidentifiedsixproduct-relatedcoffeetrendsthatareshapingthemarketandimpactingroasters,traders,brands,retailersandmachinemanufacturers,whicharehighlightedhere.

3.1Sustainablecoffee

Asformanyotherconsumer

products,sustainabilityhas

becomeanimportantissuein

thecoffeeindustry–bothfrom

anenvironmentalandsocial

perspective.Scientistsexpect

thatclimatechangemaymake

morethanhalfoftoday’scoffee

cultivationareasunsuitable

forproductionby2050.14In

addition,deforestationand

plantdiseasesareendangering

thesurvivalofmostwildcoffee

species.15Potentiallandlossfor

coffeegrowingandthepossibleextinctionofmanycoffeevarietieswouldhavesubstantialeffects

notonlyoncoffeesupplybutalsoonsocialsustainabilityas125

millionfarmersworldwidedependoncoffeeproductionfortheir

income.16

Manycoffeecompanieshave

introducedorjoinedinitiatives

thattackletheseenvironmentalandsocialissuestoprovide

consumerswithcoffeethatis

producedmoresustainably(for

example,the

coffee&climate

industryinitiative).Governmentsalsoplayanimportantrolein

promotingsustainablecoffee.

Thisisexemplifiedbytherecent

EUDeforestationRegulation

(EUDR)

thatwillrequirecoffee

productssoldinorexported

fromtheEuropeanUniontobe

freeofanydeforestationinthe

supplychain.Coffeecompanies

willneedtoconductduediligenceandprovideastatementthattheirentiresupplychainmeetsthe

regulationcriteriaby2025.

12DeloitteCoffeeStudy2024|Forcesshapingthemarketandconsumerbehaviours

“Leadingcoffeeindustryplayersputanincreasingfocusonsustainability,beitzero-wasteinitiatives,net-zerocarbonemissions,andadvocatingfairtradepractices.Nespresso’slong-standingcommitmenttotheenvironmentbeganovertwentyyearsagowiththeNespressoAAASustainableQuality?Programme,nowconnectingwithover150,000farmersacross18countries.Havingthisdirectconnectionwithfarmersandfullcontrolonoursourcing

processisakeycompetitiveadvantagewecontinuetoreinforce.”

PascalLebailly,ChiefCoffee&SystemsInnovationOfficer,Nespresso

Ontheconsumerside,almosthalfofthesurveyedcoffeedrinkers

(46%)areawareofsustainablecoffee,aroundaquarter(28%)indicatethattheyhavetriedit,andoneinsix(17%)statesthattheydrinksustainablecoffeeatleastonceaweek.Respondentsnameavarietyofreasons

whytheydrinksustainable

coffee–withthesocialand

theenvironmentalaspectsofsustainabilityleadingtheway(seeFigure4).Thetwomain

motivesarethatcoffeedrinkerswanttosupportfairwagesandgoodworkingconditionsin

coffeeproduction(52%)andto

contributetoasustainablecoffeeeconomy(47%).Otherreasons

includetakingresponsibilityforfuturegenerations(40%),healthbeliefs(39%),agoodconscience(37%),andbettertaste(27%).

Interestingly,whileconsumersinmostcountriesmentionsocietalbenefits–forexample,tocoffeegrowers–moreoftenthananypersonaladvantages,insomemarketsthatisnotthecase.Forexample,inBrazilandSouth

Koreacoffeedrinkers’main

motivationwasthattheybelievesustainablecoffeeishealthier(55%and46%,respectively).

PhotocourtesyofNespresso

Figure4.Reasonstodrinksustainablecoffee

Question:Whydoyoudrinksustainablecoffee?(n=1,139;onlyrespondentswhoindicatethattheydrinksustainablecoffeeatleastonceaweek)

52%

Iwouldliketosupportfairwagesandgoodworkingconditionsincoffeeproduction.

47%

Iwouldliketocontributetoasustainablecoffeeeconomy.

40%

Byleadingasustainablelifestyle,Iamtakingresponsibilityforfuturegenerations.

39%

Ithinkthatsustainablecoffeeishealthier.

37%

Sustainablecoffeegivesmeagoodconscience.

27%

Sustainablecoffeetastesbettertome.

15%

Myemployerofferssustainablecoffeeintheoffice.

Source:Deloitteresearch,answeroptionsbasedon

TchiboKaffeereport2022

appliesespeciallytorespondentsinGermanyandFrance(59%

and55%,respectively).Otherstudiesconfirmthathigher

costistheprimaryreasonwhypeoplerefrainfromconsumingsustainablefoodanddrinks.17

Thatmanyconsumersareawareofsustainablecoffeebuthave

nottrieditordonotdrinkit

regularlypointstosomeobstaclesthatneedtobetackled(see

Figure5).Coffeedrinkersmostfrequentlymentionthehigherpriceofsustainablecoffeeasthemainbarrier(44%);this

DeloitteCoffeeStudy2024|Forcesshapingthemarketandconsumerbehaviours13

14DeloitteCoffeeStudy2024|Forcesshapingthemarketandconsumerbehaviours

Figure5.Barrierstodrinkingsustainablecoffee

Question:Whatpreventsyoufromdrinkingsustainablecoffeeregularly?(n=1,833;onlyrespondentswhoindicatethattheyhave

heardofbutnottriedsustainablecoffeeordrinkitlessthanweekly)

44%

Sustainablecoffeeistooexpensive.

32%

Myfavouritecoffeeisnotsustainable.

30%

SustainablecoffeeisnotavailablewhereIbuycoffee.

13%

Whenitcomestocoffee,sustainabilityisnotimportanttome.

11%

Sustainablecoffeedoesnotofferanybenefits(addedvalue)tome.

Source:Deloitteresearch

“Inourexperience,thewillingnessofconsumerstopayforsustainablycertifiedcoffee

fluctuatesovertime.Manycustomershaverealisedthattheinflationofrecentyearshas

reducedtheirpurchasingpowerandareadjustingtheircoffee-buyingbehaviouraccordingly.”

RalfvandenBragt,HeadBUCoffeeatDelica

DeloitteCoffeeStudy2024|Forcesshapingthemarketandconsumerbehaviours15

Furthermore,oneinthreecoffeedrinkerssaythatabarrieris

thattheirfavouritecoffeeisnot

sustainable(32%)orthattheir

retailerdoesnotoffersustainablecoffee(30%).Limitedavailabilityismentionedparticularlyoftenby

respondentsinSouthKorea(48%),Brazil(44%),andMexico(42%).

Sustainabilityconsiderationshavealsoincreasedinimportancewhenitcomestopackagingandcoffee

machines.Forinstance,theSwissretailerMigrosintroducedthe‘no-capsule’system

CoffeeB

in2022.Thecoffeeballsforthismachineretaintheirshapewiththehelp

ofseaweed-basedmaterial

wrappersinsteadofaluminiumorplasticandthustheballsarefullycompostable.Themachineitselfhasamodulardesignsothatbrokencomponentscanbereplacedindividually.

PhotoscourtesyofDelica

3.2Specialitycoffee

Inthethirdwaveofcoffeethe

industryandconsumersfocusedmoreonqualityandcraft.This

trendisoftenreferredtoas

specialitycoffeeandwasledbysmallartisanroasters.Althoughmostconsumersstillbuyratherlow-qualitycoffee,theglobal

marketforspecialitycoffeehasbecomeremarkablybigand

continuestogrowatstriking

rates.In2023itwasvaluedat

morethanUSD24billionanditisexpectedtomorethandoubleby2031,resultinginamarketsizeofaboveUSD57billion.18

Specialitycoffeehasarangeof

characteristicsandattributes.Thekeyindustrymetricforqualityisthescorethatacoffeeachievesincupping–theprocessoftastingandevaluatingthearomaand

flavourofabrewedcoffee.To

qualifyasspecialitycoffee,this

cuppingscoremustreachat

least80outof100pointsonthescaleoftheUS-basedSpecialty

CoffeeAssociation.19Another

featureofspecialitycoffeeisthefocusonasingleorigin;inmostlarge-scaleproduction,coffee

frommanylocationsisblended.Thissingle-originapproachaimsathighlightingtheindividual

tasteprofileofcoffeefroma

givenlocation.Dependingontheinformationavailable,theoriginofacoffeecanbespecifiedwithoneofthefollowingterms:20

?Singlecountryorregion

describescoffeethatcomes

fromaspecificcountryorregionwithinthatcountry.

?Whenmoreinformationis

available,coffeecanbetraced

backtoasinglecooperative.Itiscommonincoffeegrowingthatsmall-scalefarmersformacooperativetoprocesstheirharvesttogether.

?Ifaplantationreachesacertainsize,coffeemaycomefromasinglefarmorestate.Thisisoftenassociatedwithpremiumqualityandthereforeahigherpricethantheafore-mentionedlevelsoforigin.

?Insomecases,coffeeiseven

tracedbacktothemicroor

nanolot–thespecificplot

oflandinafarm.Nanoare

smallerthanmicrolotsbut

bothrepresentverysmall-scaleproductionthattypicallyfocusesonextraordinaryquality.

16

DeloitteCoffeeStudy2024|Forcesshapingthemarketandconsumerbehaviours

DeloitteCoffeeStudy2024|Forcesshapingthemarketandconsumerbehaviours17

Roughlyfourintencoffeedrinkers(39%)areawareofspeciality

coffee(seeFigure6).Consumerswithawarenessofthiscoffeetypetryitinaroundtwooutofthreecases(64%),whichconstitutesahightrialrate.Finally,44percentofrespondentswhohavetried

specialitycoffeehaveadoptedit

insofarastheydrinkitmultipletimesaweek,orevendaily.

Awareness,trial,andadoptionofthiscoffeetrendareespeciallyhighamongcoffeedrinkersin

Brazil,SwitzerlandandtheUS,whileinterestamongconsumersinFrance,ItalyandJapanshowsbelow-averagerates.Onthe

generationallevel,millennials

(birthcohortbetween1981and1996)haveheardofandtried

specialitycoffeemoreoftenthanothers,andbabyboomersand

oldercoffeedrinkers(birthcohortpriorto1965)areattheotherendofthespectrum.

“Thepopularityofspecialitycoffeeamongmillennialscanbeexplainedontheonehandbytheirpurchasingpowerandontheotherbytheirlifestyle,whichcombineshigh-qualityconsumptionwithafastpace.ComparedtoBabyBoomers,Millennialsalsoidentifyanddifferentiatethemselvesmorethroughcoffee.”

RamonSchalch,CEOatViCAFE

18DeloitteCoffeeStudy2024|Forcesshapingthemarketandconsumerbehaviours

Figure6.Awareness,trialandadoptionratesofspecialitycoffee

Question:Whichofthe

followingcoffeetypes

haveyouheardof?Pleaseselectallanswersthat

apply.(n=6,526)

No

Awareness

61%

Source:Deloitteresearch

No

35%

Yes

39%

Question:Whichofthe

followingcoffeetypeshaveyoutried?Pleaseselectall

answersthatapply.(n=

2