Which trends offer opportunities or risks in the European coffee market?

The European coffee market is mature, but constantly evolving. Specialty coffees, single-serve methods and ready-to-drink coffees are growing in popularity among European consumers. Sustainability remains a top priority for industry stakeholders. The growing consumer demand for traceability and transparency in the value chain, as well as the growth in digital marketplaces, has intensified direct trade between producers and European roasters. At the same time, the increasing involvement of multinational companies in mainstream coffee trading and roasting has strengthened market concentration, putting pressure on prices along the entire chain.

1. European coffee consumers becoming more knowledgeable and demanding

Development of the current European coffee market has been defined by waves starting in the 1960s. The first wave was the popularisation of coffee consumption in Europe from the 1970s into the 1990s. The second wave consisted of a shift to higher-quality coffee and the development of coffee corner locations. This wave was marked by the introduction of chains, such as Starbucks and Costa Coffee, beginning in the mid-1990s in Europe. The third wave has been noted since the mid-2010s, marked by the growing demand for high-quality coffees. These coffees focus on particular taste attributes — a ‘coffee-like-wine’ consumer attitude — and direct sourcing, usually traceable to farm level.

The high-end segment of the European coffee market experienced a fourth wave, characterised by what is called the science of coffee. In this context, it became crucial to understand the intrinsic characteristics of the coffee bean and the influence of its preparation on its taste. During the third and fourth waves, consumers have also taken interest in the origin of coffee and understanding the story behind the product as well as the impact of their consumption at origin.

Currently, there is a fifth wave in the global coffee industry. This wave is aimed at achieving a highly successful, high-quality, customer-centric and sustained coffee business that meets the desires and needs of today’s demanding and knowledgeable coffee drinker.

Meanwhile, consumers can more easily connect with coffee farmers through increased traceability and digital tools. Consumers also have an increased interest in understanding the environmental impact of their consumption. This is further highlighting connectivity and the planet as important themes in the coffee market.

Coffee origins increasingly improving capacities and resources

Coffee-producing countries are increasingly developing capacities and gaining access to resources that improve their position in the value chain. For example, producers are learning more about buyer profiles, allowing them to better position their products and engage in negotiations. In addition, a rise in expertise about coffee quality and quality assessment has led to the creation of more cupping labs at cooperatives. In these labs, farmers evaluate and learn to appreciate different aspects of coffee quality according to international standards.

Examples of coffee cooperatives with integrated cupping labs and internationally trained cuppers are Cooperative Muungano (DR Congo), AsproUnión (Colombia), Koakaka (Rwanda) and Koperasi Arisarina (Indonesia). In some cases, national cupping schools have been established, for instance by IHCAFE (the Honduran Coffee Institute) and ANACAFE (Guatemala).

There is also an increasing number of educational short and on-demand online courses on offer. Topics include improving coffee quality, better harvesting protocols and developing cupping skills. These online courses make education more accessible to coffee producers and exporters across the globe. Examples of online courses include The Center (by Sucafina) and Boot Coffee Campus.

2. Convenience drives growth of European single-serve and ready-to-drink coffee market

European demand for single-serve coffee, such as coffee pods and capsules, has been growing strongly in the past decade. The European market for coffee pods and capsules is expected to grow further at an average annual rate of 6.8% until 2027. Sector growth was boosted by the COVID-19 pandemic. The pandemic led consumers to buy more and more coffee to be consumed at home, due to the closure of cafés, restaurants and offices.

Large industry players continue to invest in their single-serve coffees. For instance, in 2020, Nespresso announced it will invest about €145 million to increase production of their coffee capsules in Switzerland. JDE Peet’s announced in late 2020 that it would increase their coffee capsule production in France by 60% to meet increased global demand for at-home coffee products during and after the pandemic.

Especially in Northern and Western Europe, retailers keep expanding their assortments of single-serve methods. The ease-of-use of these products, their strong marketing, and the wide variety of flavours available have contributed to their popularity. The European market of pods and capsules is dominated by Nespresso, Starbucks, Lavazza and JDE Peets.

One important trend within the single-serve market is the introduction of specialty coffee capsules. This is still a very small market but is growing rapidly. There are more and more roasters including an offering of coffee capsules in their assortment. Examples of companies offering specialty coffee capsules are the British Difference Coffee, Halo, Hayman and Colonna, the Dutch Bocca Roasters and Belgium’s Caffènation.

The growing popularity of specialty coffee capsules brings interesting opportunities for specialty coffee exporters. This is mainly because it is helping to popularise high-quality coffees of different origins and flavours. Nespresso has also joined this trend by launching the Reviving Origins programme, aimed at bringing back lost coffee origins. Origins in their assortment include specific regions of Colombia, Zimbabwe, Uganda, DR Congo and Cuba.

Figure 1: Nespresso’s Reviving Origins programme

Source: Nespresso, 2022

The single-serve market has a major downside as well. This is the negative environmental impact of coffee capsules. In response, the industry has introduced recyclable and compostable solutions and alternatives. Today there are many environmentally friendly solutions found on the market. Examples are Dualit's compostable coffee capsules, Migros’ fully compostable ‘coffee balls’ and the biobased capsules by Dutch roaster Peeze. There are also several initiatives for recycling coffee pods. One is the Alliance for Aluminium Capsule Recycling in France, started by JDE Peet’s, Nespresso and Nestlé France. Another is the Podback scheme in the UK, set up by Nestlé and JDE UK.

Still a niche market, ready-to-drink (RTD) coffees form one of the fastest growing market segments in Europe. The market is expected to grow by 4.8% between 2022 and 2027. The convenience of RTD coffees and their perceived health aspects drive this trend, as RTD coffee is presented as an alternative to sodas and alcoholic beverages. Cold brew coffees and nitrogen brew coffees are examples of RTD coffees. Coca-Cola is the largest player in the RTD sector, followed by Starbucks (distributed by PepsiCo) and Nestlé.

3. Reshaping the out-of-home coffee segment

Following the COVID-19 lockdowns and social distancing restrictions in Europe, different segments of out-of-home consumption have revived in different ways. The number of coffee shops grew again in 2021, after having been hit hard by the pandemic in 2020.

Coffee served in the workplace is another main out-of-home segment in the European coffee market. Due to lockdowns, Europeans had to work from home during COVID-19. As of 2022, many offices have reopened for employees who choose to work in the office full time or part time. This means that not only is demand for office coffee reviving, but employers are also looking for ways to make the workplace more attractive for employees.

Across Europe, coffee quality awareness is growing in the workplace. Increasingly, employees expect similar coffee qualities and sustainability profiles as they would get at coffee shops. Sweet coffee flavours, cold brews and quality decaf options are especially popular. There are some variations between European countries. In the Czech Republic, for example, offices have seen growth in filtered/brewed coffee, which is becoming at least as important as classic espresso. Spanish offices have seen growth in alternatives to espresso, with more nitro coffee solutions (a type of chilled coffee).

Offices are also opting more for coffees that emphasise the environment and zero waste. This is in line with a trend towards more sustainable coffee consumption, which has been strengthened by the COVID-19 pandemic.

The changing profile of European office coffee consumption reflects a demographic shift in the workplace, with an increasing share of Generation Y and Z employees. It is estimated that Generation Y will make up around 75% of the workplace by 2025.

4. Consumers are concerned about the health impacts of coffee

European consumers are increasingly concerned about the impact of food on their health and wellness. The COVID-19 pandemic has made consumers even more health conscious, driving up demand for healthy and organic foods. Growing consumer interest in healthy living has also fuelled concerns about health aspects of coffee. According to the Institute for Scientific Information on Coffee (ISIC), global online searches for ‘health benefits of drinking coffee’ increased by 650% in 2021.

Research shows that moderate coffee intake reduces the risks of type 2 diabetes, heart disease, cancer, Parkinson’s disease and depression. This is likely due to anti-inflammatories and antioxidants found in coffee. The European Food Safety Association suggests that moderate coffee consumption fits within a healthy diet and active lifestyle.

The healthy living trend has changed consumer preferences. There is a growing range of coffee products with no added sugar or dairy. For instance, Starbucks offers four non-dairy milk options, including soy milk, coconut milk, almond milk and oat milk. The company regularly introduces new plant-based beverages. Sugar is often replaced with plant-based sweeteners such as monk fruit and stevia.

The coffee industry is also increasingly adding functional ingredients to coffee products. Functional ingredients are thought to boost energy and relieve stress. Popular examples are turmeric, collagen and mushrooms. Mushroom coffee, for instance, is said to have half the caffeine content of regular coffee. The Finnish-American company Four Sigmatic has introduced mushroom coffee in Europe and the United Kingdom, where it is available at Holland & Barret and other retailers.

At the same time, consumers are also more concerned about the negative side effects of high caffeine intake. The consumption of decaffeinated coffee in both the US and Western Europe has grown annually since 2017. There is also a slowly growing demand for specialty decaf coffees.

Concerns about high caffeine intake are also leading to growing interest in alternative products with no or lower caffeine content. Examples of alternative coffee products promoted as being caffeine-free include Chikko not Coffee (roasted chicory), available at Holland & Barret (the Netherlands), and Café Pino (lupine coffee), available at Miraherba (Germany). Other competing beverages include turmeric latte and matcha tea. The UK-based company Pukka Herbs sells three types of organic matcha teas across the UK and Europe. It is worth noting that, although these coffee competitors are growing, they still represent a small market share in specific health-related segments.

5. Specialty coffee is a growing segment in the European market

The majority of European consumers still buy cheap mainstream coffee, usually in the form of standard blends, ground-for-filter or capsules and pods. However, a growing number of consumers in Europe is willing to pay more for high-quality coffees. Some consumers are also willing to pay more for coffees with a good story related to origin, highlighting environmental, social aspects and other sustainability topics.

There is no exact definition of specialty coffee. In 2021, the Specialty Coffee Association (SCA) proposed a definition of specialty coffee based on both its intrinsic and extrinsic attributes. Generally, specialty coffee is often related to cupping scores, which reflect how coffee is evaluated during coffee cupping. There are different protocols you can use to score a coffee, such as the one developed by the Specialty Coffee Association. For some, coffees with a cupping score of 80 and above qualifies as a specialty coffee, while for others it has to have at least some certification or a cupping score of at least 85.

Growing specialty market

The fact that large trading companies are expanding their portfolio with specialty coffees shows how the segment is gaining importance. InterAmerican Coffee, owned by Neumann Kaffee Gruppe, was one of the first large players to set up a group dedicated to sourcing specialty coffees. Other more recent examples include Rehm & Co (owned by Benecke Coffee) and Sucafina Specialty. Olam Specialty Coffee expanded its brand and e-commerce platform from the US to Europe in 2022.

Although mainstream coffee actors increasingly engage in the specialty market, there is also a large number of specialised independent trading companies in Europe. These companies are focused on importing small volumes of high-quality or single origin coffees, for which they pay interesting premiums. Examples include Coffee Quest, Trabocca, This Side Up (the Netherlands), Belco (France), Falcon Coffees (United Kingdom) and Nordic Approach (Norway).

The increasing interest in specialty coffee is also reflected in the growing number of coffee bars, small roasters, small local brands and baristas in Europe. The specialty segment was hit hard in 2020-2021 because of the global COVID-19 pandemic, which led to the closure of many specialised coffee shops and bars. Especially the higher-end segment suffered, registering lower demand than in previous years.

However, the interest in high-quality coffees across Europe is embedded in consumer preferences and is here to stay. In fact, demand for unique and high-quality coffees may see further growth in the near future. This is mainly due to a growth in e-commerce and the consumption of higher-quality coffees at home during the global pandemic. Also, supermarkets are increasingly looking at specialty coffee, offering lighter roasts and starting up collaboration with local roasters, such as Lidl in Ireland.

Fine Robusta

Most specialty coffees are Arabica cultivars, of which Typica and Bourbon are the most widely known. High-quality Robusta (or: Fine Robusta) is not yet widely available. However, thanks to increased industry efforts to create a common language for Robusta quality, it has also become possible to become an R-grader. R-graders are cuppers specialised in Fine Robusta coffees. Also, updated Q Fine Robusta Standards and Protocols were published in 2019, as well as a Robusta Green-Grading Handbook.

These efforts are the result of a growing interest in Robusta varieties in the specialty coffee market. Some European coffee shops and roasters already focus on Fine Robustas. For instance, the Swiss micro-roaster Röstlabor offers single-origin Robustas from countries like Mexico and Thailand, alongside specialty Arabicas. Another example is Black Sheep Coffee in the United Kingdom, which serves single-estate specialty grade Robusta from India.

The growing demand and the current limited supply of high-quality Robusta coffees offers interesting opportunities for exporters that can provide a constant supply of fine Robusta coffees. Producers can improve the quality of their mainstream Robusta via processing techniques and post-harvest activities. Consider also growing organic Robusta, for which demand is also growing. Examples of Fine Robusta exporters include Beanspire Coffee (Thailand), Fazenda Venturim (Brazil) and Macenta Beans (Guinea).

6. Certified coffees continue to grow but require caution

European consumers are increasingly concerned about the social and ecological impacts of their consumption behaviour. This has a great influence on the coffee market, where sustainability standards are ever more popular and where companies are increasingly required to comply with such standards.

Certification standards are often part of the sustainability strategy and minimum requirements of European traders, coffee roasters and retailers. Many European retailers, for instance, have committed to sourcing only certified coffee for their private-label brands. An example is that all private label coffees from Lidl (Germany) must be Fairtrade, Rainforest Alliance/UTZ and/or certified as organic. Another example is Coop (Switzerland), which requires all coffee products in their assortment to be either certified with Fairtrade standard Max Havelaar or 4C. German discounter ALDI Nord also launched a new organic and Fairtrade-certified coffee brand, Hermanas del Café from Peru.

As certification has become essential for medium and large European coffee companies, it is increasingly difficult for non-certified suppliers to access the European market. However, small coffee roasters in the specialty segment are more interested in building trust with suppliers through direct sourcing practices and less in third-party certification.

Although the market for certified coffees is growing, there is more certified coffee on the market than is sold as certified. According to the Coffee Barometer 2020, about 55% of global coffee production is certified, while only 25% of total coffee production is purchased as certified by the industry worldwide. This means that not every producer or exporter will be able to sell their certified coffee at a premium price. However, certification is not just about profit. Thanks to better agricultural practices, certification can also help you boost yields by producing more efficiently, more sustainably and producing higher-quality coffee.

Certification standards in coffee

The major certification schemes in coffee are: Fairtrade, organic, Rainforest Alliance/UTZ and 4C. Rainforest Alliance/UTZ has large-scale operations, reaching mainstream markets in Europe. As of July 2020, Rainforest Alliance offers mutual recognition options for coffee. This means that companies at the end of the supply chain will be able to source UTZ and/or Rainforest Alliance-certified coffee and then use either the Rainforest or the UTZ label on their product. 4C, which stands for Common Code for the Coffee Community, also serves the mainstream market.

Organic and Fairtrade certifications have entered the mainstream markets but can still be considered niche markets. Fairtrade launched its first living-income reference prices, specific for Colombian coffee, in mid-2021. Besides Fairtrade’s mandatory minimum prices and fixed premiums for coffee purchases, the living-income reference price is voluntary. Living-income prices reflect the prices required for coffee farmers in Colombia to have a decent standard of living. Still, studies show that certification has mixed results in relation to coffee farmers’ income and welfare.

Smaller certification schemes for niche markets also gain more visibility in Europe, addressing issues such as biodiversity. An example is Bird Friendly Coffee, which is currently mostly available in the United Kingdom and France. Other examples include Demeter (biodynamic), Símbolo de Pequeños Productores (SPP) and Fair for Life (social and fair-trade standards, but not as popular as Fairtrade).

Figure 2: Several certification schemes for coffee

Source: ProFound, 2022 (logos retrieved from certification scheme websites)

7. Increased direct trade between small roasters and producers

The demand for greater transparency in the coffee chain has strengthened the links between coffee producers and roasters. More and more coffee roasters, shops and sustainability-minded brands are trying to form more direct links with farmers, coops and associations. This also helps them meet consumer demand to be more closely connected to the source.

There is a growing number of actors and digital tools that aim to bridge the gap between specialty coffee roasters and coffee producers. Examples are the digital marketplaces Algrano, Beyco and TYPICA. These platforms allow for the commercialisation of smaller trade volumes and direct contact to build trust between suppliers and buyers.

Many of the roasters engaged in direct sourcing are located in western and northern Europe, where the concept of direct sourcing appeals most to consumers. Examples of small roasters with direct links to origin are Carrow Coffee Roasters (Ireland), Clever Coffee (Denmark), Wakuli and Bacano (the Netherlands), Horsham Coffee Roasters (the United Kingdom). Examples of cooperatives exporting their coffee to specialised roasters are Muungano Cooperative (DR Congo) and Ethio Gabana (Ethiopia).

There has been pushback against direct trade, arguing that it might have led to self-enforced, self-regulated and firm-led schemes, because it lacks any form of outside control or validation. For exporters, engaging with reliable and ethical buyers or platforms will make the difference.

There are also examples of digital platforms in producing countries. For instance, Guatemalan Coffees is a web platform where Guatemalan producers can upload their coffee offers online. The platform does not allow for direct online purchases, but acts as a digital promotion system. It also helps connect sellers and buyers.

8. Blockchain is gaining ground as a tool to increase transparency and traceability

Blockchain technology is a tool that you can use to increase accountability, transparency and traceability. It is an open system of decentralised data tracking and storage that also supports cryptocurrencies. In the case of coffee, this means that the database records transactions in a verifiable and permanent way, so its origins and journey can be traced back. Coffee that is recorded into blockchain thus allows a roaster to see where the coffee comes from and how much was paid for it earlier on. Likewise, producers can see to whom their coffee was sold eventually and for how much.

By bringing together information about end-users and producers, blockchain offers a way to create and strengthen relationships. It enables roasters to make safe claims of direct trade, while producers can invest in connecting with buyers. It improves access to farms by providing information about the size and availability of harvests. Some see the accessibility of blockchain, especially in more rural areas, as well as the education about blockchain’s benefits as major challenges for the successful adoption of blockchain.

Examples of the use of blockchain technology in the coffee industry include Trace from Fairfood, which is used by the Dutch importer Trabocca and coffee brand Moyee Coffee. Another example is Farmer Connect. This platform, launched in 2020, aims to improve traceability in the global coffee supply chain. It has big industry partners on board, such as JDE Peet’s, Sucafina and Colombia’s National Federation of Coffee Growers. Farmer Connect also targets consumers with an app called Thank My Farmer. The app iFinca is another example, which connects consumers and farmers, and verifies farmgate prices.

Another implementation of blockchain is the coffee trading platform Farmers Direct Coffee, launched in 2021. This platform offers direct connections between potential buyers and sellers, using blockchain technology. It is the first platform co-owned by farmers and cooperatives.

9. Sustainability initiatives in the coffee sector continue to expand

Sustainability has three main pillars: economic, environmental and social. In social sustainability, issues around gender inequality and child labour are serious concerns. Economic sustainability refers to issues around low prices, price volatility, meeting market demands and earning a living income.

Regarding environmental sustainability, attention to climate change and biodiversity issues is rising in the coffee industry. Climate change is expected to substantially reduce areas suitable for coffee cultivation by the year 2050. Prolonged droughts, rising temperatures, biodiversity loss and heavy rains expected as consequences of climate change can severely affect the global coffee production. Several coffee varieties have already been declared endangered due to the effects of climate change. Plant disease outbreaks have also been directly linked to climate change, for example the 2020 outbreak of coffee rust in Central and South America. These issues might make it more difficult for exporters to fulfil contracts according to the agreed terms, as availability of coffee is under pressure.

The 2021 publication of the International Trade Centre’s (ITC) Coffee Guide pays special attention to sustainability in coffee. This book builds on collaboration with more than 70 coffee industry actors from across the globe, from seed to cup, to chart a path towards a more sustainable future for the industry.

Private and public sector take coffee sustainability into their own hands

Sustainability concerns are leading consumers to demand more sustainable coffees and stimulating industry players to take action. As a result, the main multinational coffee companies have developed their own sustainability programmes. These programmes either integrate existing certification schemes or bypass them altogether by creating their own responsible sourcing model.

Starbucks has its own private standard for quality and sustainable coffee production called Starbucks’ Coffee and Farmer Equity Practices (C.A.F.E. Practices). Nestlé also has its own private guidelines with a similar approach and focus on quality: Nespresso AAA Sustainable Quality. The large-scale roaster JDE Peet’s initiated the Responsible Coffee Sourcing Principles, and Lavazza has launched its own Sustainability programme. Retailers cover their sustainability concerns and requirements with their own codes of conduct as well, such as those by REWE (Germany), Ahold Delhaize (Netherlands) and Carrefour (France).

Companies are also directly engaged in projects at origin to improve sustainability matters. For instance, the trading group Neumann Kaffee founded the independent NGO Hanns R. Neumann Stiftung, with which it implements several coffee-based projects to promote a sustainable coffee economy. Roaster Lavazza founded the Lavazza Foundation, which implements sustainability projects to support coffee producing communities worldwide. Smaller and mid-sized industry players are also involved in projects directly at origin. For instance, access the websites of the Dutch trader Trabocca or UK trader Falcon to get an idea of the type of projects at origin traders are engaged with.

Global multi-stakeholder initiatives

In addition to the private sector, the number of sustainability initiatives and events in the global coffee sector is increasing. A few examples of multi-stakeholder, sector-wide collaborative sustainability initiatives include:

• The Global Coffee Platform, which is a multi-stakeholder sustainability platform. The Global Coffee Platform has promoted several initiatives, such as the Kenya Coffee Platform and the Coffee Data Standard to streamline reporting practices.
• Conservation International has started the Sustainable Coffee Challenge, which aims to transform coffee production towards fully sustainable practices. It mobilises governments, private companies and research institutions, including around 164 partners from 44 countries.
• The International Women’s Coffee Alliance, a global organisation with the mission to empower women in the international coffee community to achieve meaningful and sustainable lives.
• SAFE Platform, which is a multi-stakeholder knowledge platform that seeks to transform coffee and cocoa landscapes in Latin America.

What all of these programmes have in common is that they provide a platform for actors in the value chain to share experiences and to create a common understanding of the issues affecting them. They also generate knowledge, tools and policies which can propel the sector towards more sustainable and profitable practices.

European-wide initiatives

There are also developments on a European level. The EU is implementing the European Green Deal (EGD) to make Europe climate neutral by 2050. The EGD will impact trade within and imports to the EU. Mainly by introducing stricter environmental and sustainability standards, as well as by adding requirements for export companies from developing countries. One of the policy areas of the Green Deal is the From Farm to Fork strategy, which aims to create a healthier and more sustainable food system. Among the most notable targets set by this strategy is a 50% reduction in the use of pesticides by 2030. As part of this measure, the EU has proposed legally binding targets for maximum residue levels and set strict new rules to enforce environmentally-friendly pest control.

Another policy area of the EGD is the Biodiversity Strategy for 2030. This strategy includes specific measures such as the EU Regulation on deforestation-free products, for which the first legislative proposal was published in November 2021. This regulation aims to minimise consumption of six commodities, including coffee, that are produced on deforested and degraded land.

Another EGD area that the EU has been working on is an EU law requiring companies to address human rights and environmental standards in their value chains, including for coffee. In February 2022, the EU published a draft due diligence regulation to this effect for companies that do business in Europe.

The European Coffee Federation (ECF) reported that it supports an EU-wide mandatory due diligence approach for companies to identify, prevent, mitigate and account for actual or potential adverse impacts in their own coffee supply chains. The ECF also said it welcomes the European due diligence regulation to stop EU-driven deforestation, which includes coffee production.

10. Increasing consolidation in the mainstream coffee segment

Both the European and the global coffee markets are increasingly consolidating. In an already competitive and saturated market, large-scale players continue engaging in mergers and acquisitions.

In 2018, Jacobs Douwe Egberts’ (JDE) holding company JAB Coffee spent about €45 billion on acquisitions. In late 2019, JAB Holdings merged JDE with Peet’s, with more than 21,200 employees worldwide and a revenue of €6.9 billion. In 2020, JDE Peet’s became the first company to exclusively focus on coffee and tea to announce its listing on the Amsterdam stock exchange.

Nestlé spent about €6.2 billion on a deal with Starbucks in 2018 to sell Starbucks-branded coffee products in retail outlets outside the coffee corner chain, thus gaining market share in the United States. In another example, Lavazza allocated €2 billion on acquisitions in the coffee industry, acquiring, for instance, Mars Drinks.

Other more recent examples of acquisitions in Europe include the acquisition of 75% of the UK trader Complete Coffee Limited (CCL) by Swiss trader Sucafina in early 2021. CCL is the supplier of Costa Coffee, which is the largest UK-based coffee shop. In November 2021, the German coffee giant Melitta Group bought a 70% stake in the Italian-based coffee company Corsino Corsini.

There is also a trend whereby mainstream companies engage further in the specialty market. For instance, Nestlé acquired specialty roaster Blue Bottle in late 2017. JAB Holdings acquired Stumptown Coffee Roasters and Intelligentsia. Another example is JDE Peet’s acquisition of specialty roaster Campos Coffee in 2021. These large companies increasingly adopt terms common to the specialty market, such as single origin and premium quality, thus appealing to consumers who look for signs of quality. As a result, more and more producers are working under the umbrella of large-scale companies. This means producers will have to comply with volume, quality, traceability, certification and other requirements established by these buyers.

Another trend that explains acquisitions is the industry’s attempt to expand the consumption options in coffee, for instance, by marketing it as an alternative to sodas. Examples of this movement include the acquisition of Dr. Pepper Snapple Group by Keurig Green Mountain, the partnership between PepsiCo and Starbucks and the acquisition of Costa by Coca-Cola.

In the coffee shop market segment several acquisitions have also occurred. JAB Holdings has acquired major restaurant chains that sell large volumes of coffee, such as the British Pret A Manger in 2018. Starbucks is consolidating its market position by expanding globally. As described above, market consolidation leads to standardised products and requirements, where exporters eventually need to comply with, often pushing those that cannot comply out of the market.

This study has been carried out on behalf of CBI by ProFound – Advisers In Development.

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