The Australian Coffee Market
Presented to the Australian Coffee Traders Association, Annual General Meeting 19 September 2006
Australian Coffee Market
• Overall, the Australian
coffee market is very competitive but consumers are brand-loyal, and
becoming more sophisticated.
• The increasing sophistication of the Australian coffee market is shown in the growth of the pure coffee market. The pure coffee market is made up by the premium, roast and ground coffee segments. This means that more consumers are buying pure coffee products instead of instant coffee.
• More than one billion cups of coffee are consumed in cafés, restaurants and other outlets each year, this is an increase of 65% over the last 10 years.
• Australia imports virtually all of its coffee, around 45,000 tonnes of dry green bean for a total retail sales value of $636 million in 2001. Coffee consumption per capita has doubled over the last 30 years in Australia, from 1.2 to 2.4kg per capita in 1998/99; while tea consumption has declined from 1.2kg to 0.9kg per capita, a decrease of 60% over the same period.
• Instant coffee comprises 80% of total sales, with a value at $516 million, though this percentage is declining slowly.
• Roast and Ground is a growing sector of the market, currently worth around $96 million in total retail sales value (Source: Euromonitor, March 2002). This market sector has increased by 28 percent over the last 5 years and continues to increase as Australian consumers are beginning to appreciate the higher quality and the convenience of preparation provided by modern appliances now available.
(Source: BIS Shrapnel, Coffee in Australia 2006-2008; www.vittoriacoffee.com and Australian Bureau of Statistics 2000)
Worldwide Coffee Market
• The world coffee market is enormous, with almost 8 million tonnes of dry green bean traded with a farm gate value of over US $10 billion and a retail value of over US$50 billion.
Graph: Coffee drinking market (kg per head per
The Australian instant coffee market is worth approx $516M a year.
Dominated by the Nescafe with approx 83% (volume) and 70% market share Consumers are brand loyal & price is not the most important factor when buying. Product innovation and marketing is a key success factor to this segment
• Roast and Ground Coffee/Pure
This segment is growing and the competition is increasing.
Quality and high innovation is important to this segment and companies are constantly launching new specialty blends and ‘flavours’ and/or finding new ways of making their products more attractive and user friendly for consumers.
• Sustainable / Specialty Coffee /
Sustainable coffee is the sector with the largest growth in the coffee industry with an annual growth rate between 10% and 20% compared to general worldwide consumption of 1.2% annually. It has exceeded the ‘specialty coffee’ category which has been increasing between 5% - 10% per year.* Both Rainforest Alliance and Fair Trade coffees are now available in Australia.
100% certified organic coffee should be roasted in dedicated equipment. There are many Australian brands which claim to be 100% organic but the certification is questionable.
*Please note, that world production year ending 2003 was approximately 6.5Million MT of which totally sustainable coffees made up 85,000MT or 1-1.5% of total production.
(Source: DotPoint and BIS Shrapnel, Coffee in Australia 2006-2008 )
End User Customers
Inner City Folk: Caffe latte
Outer Suburban Folk: Cappuccino
Young Men: Espresso
Young Women: Caffe latte
Older Folk: Flat white
Trendy Young things: Variations on the espresso
The Coffee Consumer Away from Home
• The BIS Shrapnel report confirms Australians prefer their coffee with milk. In fact, 90% of cups sold in cafés in 2005 contained milk.
• The report also shows the cappuccino as the number one coffee beverage sold in cafés. However, cappuccinos are increasingly being snubbed by upper income consumers in favour of caffé lattes, particularly amongst young women.
• The report shows the number one reason for visiting cafés is “meeting friends” quoted by almost one third of respondents (32%).
• Consumers’ awareness of premium coffee is also on the rise. Once not understood by consumers, now almost a third of Australians (32.7%) prefer Arabica coffee beans.
• The hard-core espresso is preferred by young males and the flat white is more likely to be ordered by older drinkers.
(Source: BIS Shrapnel report entitled “Coffee in Australia (2006-2008) and www.vittoriacoffe.com)
End User Customers
This group includes people who buy coffee and coffee products from a shop or supermarket to prepare and drink at home or in the office.
• The in-home market segment is dominated by instant or soluble coffee. This type of coffee is still the largest single sector of the total hot beverage market.
• The retail market for instant coffee is worth A$452 million and represents 47.1 per cent of the total hot beverage market. However, the market for instant coffee is not growing because more and more Australian coffee drinkers are brewing their own coffee at home and often using high quality beans.
• The main area of sales growth for the in-home market is in pure coffee. The ‘Café’ style roast and ground coffees are becoming more popular and a wide range and variety of branded retail packs are now available in shops in Australia.
(Source: Retail World 2003 and BIS Shrapnel, Coffee in Australia 2006-2008 )