Trade

Global Coffee: instant coffee dominates local market

Global coffee consumption is set to increase while total coffee production is expected to stagnate according to the International Coffee Organisation. 

“Consumption in Africa is expected to increase by 2.1% at 12.27 million bags. At the regional level, African output is expected to remain unchanged at 18.68 million bags in coffee year 2020/21 in comparison with the previous coffee year.” 

The Euro Monitor International said Nestle (Pty) Ltd retained its convincing lead of coffee in 2020, due to offering a wide product portfolio which spans both instant and fresh coffee. 

“The player’s brands performed well at the end of the review period, with its instant coffee brand Nescafé Gold and its Nescafé Cappuccino (instant coffee mixes) each recording above-average volume growth to help boost Nestlé’s overall sales share of coffee.” 

It was not hard to take cognisance of Nescafé’s prowess as it had operational presence in many African countries producing coffee such as Ivory Coast, Ethiopia and Uganda. 

According to Nestlé’s approach to business, it had developed a ten-year Nescafé Plan in Africa as part of the company’s “CHF 350 million investment in coffee projects.”

Ethiopia is forecast to produce “7.6 million bags (60 kilograms) of Arabica coffee in 2021/22 and its the world’s third‐largest Arabica producer behind Brazil and Colombia” according to a report produced by the US Foreign Agriculture Service. 

South Africa last reached this level of production in a decade with average yields not exceeding 1,2t/ha (2012) yet it was its consumption rate of instant coffee dominating the market. 

“Instant coffee dominates the overall category for two reasons. It is seen by consumers as a “step up” from other plant-based hot drinks, which are typically positioned as “coffee” (though regulation changes in 2021 will impact this)” Euro Monitor International further indicated. 

Before lockdowns, restaurants and coffee shops produced increasing volumes sales of fresh ground coffee but will continue to show decline according to Stats SA Food and Beverage February 2022 report. 

Cheaper price of coffee instant varieties also buoyed consumer demand complimented by the rising demand for convenience. 

“The trend is likely to be more noticeable from 2021 as time spent at home gradually lessens, driven by time-constrained South Africans turning to instant coffee or fresh ground coffee pods as they will be less willing to prepare fresh coffee from scratch in the home” according to Euro Monitor International.

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