By Neena Rai
October 31, 2012
Coffee fans are
tightening their purse strings and consuming the beverage at home rather than
paying marked-up coffee shop prices as the economic crisis continues to bite.
In response, leading international coffee roasters such as Kraft, Nestlé and Starbucks
are setting their sights on a new model: the premium home market.
Roasters are looking
for new pockets of consumption and they believe they have found it in the
fast-growing market for small machines that can produce a café-quality brew
from single-serve pods of high-grade espresso grounds, for a fraction of the
cost.
The coffee pod sector
is forecast to see sales grow 47% in the U.S. and 38% in Western Europe over
the next four years, according to U.K. based research firm Euromonitor.
David Rogers, the
home sales and marketing director for Lavazza Coffee U.K. reckons that in
Britain alone, the sale of coffee capsules will soar by a minimum of 20% by the
end of this year.
Mr. Rogers said the
growing trend for consuming hot beverages at home during the economic crisis is
driving growth in the home coffee sector.
“People during the
downturn are more worried about going out, so instead of drinking coffee
outdoors, we’re seeing more people preferring to consume the drink at home
without compromising on quality,” said Mr. Rogers.
Francesco Tramontin,
sustainability director at Kraft Foods Europe, echoes his sentiment. “The
coffee market is transforming as the coffee shop revolution transfers in-home.
It’s a great opportunity to offer in-home quality upgrade, especially in
recession markets,” he said.
Mr. Tramontin added
that in austerity economies coffee brands will only be able to capture growth
by innovating.
The need for a fresh
take on the market has prompted major coffee roasters, such as Starbucks and
Nestlé, to launch products they hope will enable them to lap up a greater share
of this profitable sector.
This month, coffee
giant Starbucks saw sales of its new single-serve coffee machines, Verismo, sell out after company sales
surpassed initial sales forecasts. The machine offers coffee, latte, and
espresso.
Meanwhile, Nestlé
decided earlier this year to invest over €220 million in its Nescafé Dulce Gusto factory in Germany–its coffee capsule
system which serves both hot and cold drinks has witnessed huge growth since
its launch in 2006.
Jose Dauster Sette,
head of operations at the International Coffee Organization expects “very
strong demand” for home coffee machines.
“We’re seeing a
change in consumer habits and such machines help stimulate the demand for
quality coffee despite the economic crisis and we expect demand to grow,” he
said.
So, in tough economic
times it’s not that coffee lovers will ditch the hot beverage all together.
It’s just more attractive to get their morning caffeine hit at home rather than
a coffee shop.