Premium trend spurs growth for coffee and tea

Consumers do not save money when it comes to warm drinks like coffee and tea, according to research firm Euromonitor‘s recent analysis. On the contrary, they show a growing preference to premium drinks and products with a focus on health. 

Looking for refinement and health

The major trends? Both in retail and food service, consumers are looking for refinement, which leads to higher turnover for fresh coffee beans and premium tea. An increasing number of consumers also expects their health to benefit from these warm drinks. On the other hand, convenience is still a major motivator, which boosts coffee pads and instant coffee sales. 

Worldwide, the warm drink sales in retail have grown 7 % in value, with the biggest volume growth for coffee pads (+ 13 %), but the market is becoming saturated and the growth is slowing down according to Euromonitor.

The return of the filter coffee

There even seems to be a counter movement going on, with increased consumer interest to make coffee manually, like the good old filter coffee. Pouring coffee this way should result in a tastier cup of coffee, consumers seem to think. This is also why the newest generation of coffee shops seems to follow that trend with a “craft coffee” approach.

This increases the demand for fresh coffee beans, as all these coffee ships grind their own coffee and in turn, consumers want to mimic that at home, leading to another increase in demand for fresh coffee beans.

Espresso-based coffee drinks, like latte and cappuccino, are becoming more popular, both at home and in the hospitality industry. European sales were up 4 %.

Demand for environmentally friendly coffee pads

Consumers are increasingly worried about the detrimental impact on the environment created by disposable coffee pads and that is why they have moved towards the traditional cup of coffee or Keurig‘s replenishable K-cups. Euromonitor expects more coffee manufacturers to create environmentally friendly coffee pads, either compostable or recyclable. These products should meet the double consumer demand to create more convenience and more ecologically-sound products.

Considering the major demand for convenience, instant coffee is doing well, particularly in traditional tea markets where consumers do not own a coffee machine. Instant coffee sales grew 6 % in the Middle East and Africa (even 16 % in Iran), where the youth considers coffee to be a part of the modern lifestyle in a country traditionally focused on tea.

Tea with health benefits

In developed countries like the United States and Europe, tea sales are on the rise thanks to its healthy image and the addition of premium tea specialists. Emerging markets like China also experience growth, from unpackaged tea in local markets (which Euromonitor does not measure) to packaged tea sold in retail, which is a consequence of the area’s urbanization. 

Consumers increasingly consider tea to have health benefits, mostly because manufacturers also highlight the presence of flavonoids (an antioxidant) or theanine, an amino-acid in green tea that elevates the mental awareness. New types of tea, like ayurvedic tea, detox tea, biological tea and so forth, are on the rise.

Specialized groups like European Le Palais des Thés, American Teavana or Davidstea aim for a young, urban and female audience, offering a wide selection of superior quality compared to supermarkets. This is also why premium tea is becoming more popular, while beautifully wrapped tea is now also considered a gift, like chocolate.