17 May 2017
Coffee used to be primarily brewed at home, and still is among older demographics. For younger generations, though, it has become all about enjoying that primo, gourmet cup of java – consider that almost half of millennials have spent more money on coffee than on retirement planning.
In fact, powered by demand from millennials for high-quality coffee, consumers have moved out-of-house and into cafés, contributing to a 20% global increase in coffee shop sales in the last decade.
Over the last five years, on the other hand, sales of instant, whole bean and ground coffee have declined by about 10% in Europe and North America, the world’s top consumers at nearly 5 billion kilograms per year (more than half of the global total). However, sales of single-serve coffee – a method of brewing only enough coffee for one cup – have skyrocketed.
In the US – the world’s top coffee-drinker – as well as other big consumer markets like Europe, Brazil and China, young java junkies are driving demand.
As purchasing power increases for millennials, the focus is now on quality. From 2008-16, consumption of “gourmet coffee beverages” rose from 13% to 36% among 18-24 year olds and from 19% to 41% among 25-39 year olds.
In the US, single-cup brands now account for 41% of all coffee sales, almost double since 2012. A particular boon for retail, this trend contributed to the 4.6% compound annual growth rate in US coffee retail sales over the same period. Meanwhile, in Europe, where nearly 1,300 new coffee outlets started brewing in 2016, coffee shop markets experienced 6.4% growth.
Fresher-tasting, higher-quality coffee has also exploded in Asia, likewise driven by younger generations. A surge in innovation in the coffee industry has helped the market expand from the traditional instant coffee, as three out of the five fastest-growing retail coffee markets are in Asia.
This new wave of coffee connoisseurs has marked the $100 billion industry. With consumers more open to new and interesting ways to get their daily dose of caffeine, coffee culture steams ahead.