Key findings

Premiumisation will become more difficult for coffee in the future than it has been in the past

The coffee industry has tried very hard to push premiumisation in the previous decades, particularly in the developed markets where volume growth prospects are minimal. This will become more difficult in the future as input costs (especially that of coffee itself) continue to rise and consumer reluctance to spend on value-added attributes increases.

The luxury segment will be the most isolated from wider economic pressures

A small, though high-spending, portion of consumers have enough income that they are largely isolated from these growing price pressures. They will continue to demand high-quality, 100% arabica coffee even as rising prices lead many other consumers to open themselves (if reluctantly) to alternative options.

Consumers are looking for fun splurges

The stressed modern consumer is looking for products that are simple pleasures. This can translate into spending on premium products, but not in the sense it does in the luxury segment. Rather, this kind of spending views coffee as a “little treat” that is a fun distraction at times when life as a whole is stressful. These sorts of splurges will be especially important for on-premise coffee.

Wellness is a financial priority for consumers, which coffee can potentially leverage

Wellness continues to rank highly as a consumer spending priority even as they tighten up their budgets overall. Coffee with a wellness angle, therefore, is a promising route towards future premiumisation. Energy will dominate the functional space as it always has, but emergent areas such as cognitive health and beauty are also set to become more important.