Coffee Intelligence:Five words that will define the coffee industry in 2024
Dubai, January 19, 2024 (QW): The global coffee industry has witnessed major transformations in the past year, with 2023 marked by large-scale acquisitions and mergers as specialty coffee continues to consolidate.
Looking ahead to the next 12 months, Coffee Intelligence identified five key words that it said will define the coffee industry through 2024.
1. Consolidation
The trend of acquisitions and mergers witnessed in the previous year is expected to persist in 2024. Fueled by a desire to secure market share in a rapidly growing industry where brand equity is paramount, larger companies are likely to acquire smaller specialty coffee brands. This marks a shift toward the mass commercialization of specialty coffee, a development that draws both interest and concern from industry stakeholders.
Spencer, an industry expert, expresses a sentiment of sadness as multi-generational, family-run coffee businesses are absorbed into larger corporations, emphasizing the importance of maintaining brand identity and differentiation.
2. RTD (Ready-to-Drink)
The dominance of Ready-to-Drink coffee continues to shape industry discussions, representing the epitome of convenience in coffee purchasing. As this market segment expands, 2024 is expected to bring greater diversification with an influx of new flavors and formats. RTD’s growth is not only influencing coffee consumption but also providing opportunities for innovative coffee-based beverages, including cocktails and cordials.
Spencer Turer, Vice President of Coffee Enterprises, foresees creative innovation in coffee-based beverages as RTD continues to evolve, offering a natural progression for brand expansion.
3. Cold Coffee
Parallel to the rise of RTD, cold coffee is poised to steer the industry’s future. Starbucks reported that cold drinks accounted for about three-quarters of its total sales in the US in the previous year, underscoring the significance of this trend. Cold coffee, particularly popular among younger consumers, offers a platform for customization, with brands increasingly prioritizing diverse offerings such as flavored syrups and alternative milks.
Anticipating significant innovation in how retail locations present cold coffee options, 2024 is expected to witness the growth of this trend, potentially revolutionizing how coffee drinks are conceptualized and enjoyed.
4. Credit
The industry faces financial challenges in 2024, with high interest rates affecting coffee traders relying on finance for their business models. The perfect storm of rising interest rates and increased demand for cheaper coffees squeezes margins for traders, leaving some unable to cover their debts. As smaller boutique traders experience financial difficulties, the larger commercial traders acquire them, further consolidating the industry.
The cost of agroindustrial loans remains high, constraining farmers’ access to finance. With declining coffee prices and persistent high interest rates, only the largest coffee traders may find breathing room in the challenging financial landscape of 2024.
5. Retail
Specialty coffee roasters made notable entries into supermarkets in 2023, signaling a recognition by traditional marketplaces of the demand for higher-quality coffee. As the commercialization of specialty coffee continues, established roasters are expected to pivot to new channels, such as supermarkets, to reach a broader market.
To operate successfully in these arenas, roasters may initially offer more accessible blends to cater to a wider market less familiar with third-wave coffee. The trend reflects a broader consolidation in the industry, as some specialty coffee brands pivot to sustain growth.
Jesse Hartman of The Coffee Podcast predicts that creativity, novelty, and influencer recommendations will shine brighter in 2024, highlighting the evolving dynamics of customer preferences in the coffee market.
