The coffee market as a culture phenomenon

Coffee’s appeal continues to rise, fueled by growing demand across the world. Global consumption has grown by 18% over the last decade, based on volume estimates from the International Coffee Organization. The global coffee market is valued at US$132.1 billion in 2024 and will reach US$166.4 billion by 2029, according to Mordor Intelligence.

A few key drivers for the coffee market’s robust growth are:

• Consumers are starting to drink coffee at a younger age, shifting from 18-20 years for Millennials to around 15 years for Gen Z.
• It’s seen as a trendy and versatile drink, compatible with a variety of flavors and non-dairy milks.
• Café culture has also made coffee a bit of a lifestyle choice, especially in non-drinking emerging markets.

The rapid expansion of the coffee market and café culture in Asia is noteworthy, as this region has not been much of a coffee consumer. But it is a focal point for future growth opportunities as 60% of the world’s population lives here today. And many of them are young, with a median age for Asia being 31 years. Asia also has a number of countries that are coffee producers, like Indonesia, India, Philippines, Thailand, and Vietnam.

Other regions where coffee and café culture are gaining a strong foothold include Eastern Europe, including Romania, Lithuania, and Slovakia. In the Middle East, Saudi Arabia is investing in setting up a local coffee industry. Café culture in these emerging markets falls within the “new retail” aspect of coffee.

Coffee rituals

Coffee rituals encompass a variety of traditions that enhance the overall experience of coffee consumption. These rituals are not only about the act of drinking coffee but also about preparation and presentation. Traditionally, these rituals could be as simple as the Italian morning espresso or as complex as the Japanese tea-like precision. However, modern shifts driven by social media and rapid lifestyle changes are transforming these rituals, alongside the overall coffee market. Today's coffee rituals incorporate elements of speed, convenience, and innovation, adapting to the technological advancements and changing consumer preferences.

The coffee consumer

The demographic landscape of coffee consumers has shifted dramatically. Most adults drink coffee, but innovation within the coffee market overall is being driven by Millennials and Gen Z. These two cohorts account for 52% of the global population, making them a very important consumer base.

These two groups are characterized by being the most connected generations. Much of Gen Z may not even remember a time without the internet. They are the most racially and ethically diverse populations, and have significant exposure to different cultures and tastes. They also show a strong inclination towards sustainable and ethically produced goods.

Their repertoire of consumed products is also wide within today’s coffee market. The drinks span the gamut of temperatures, brewing styles, and functionalities, but they focus more on convenience rather than rituals. In fact, it could be said that convenience IS the ritual for these consumer groups.

Developing new products

In developing new products for the coffee market, a deep understanding of consumer sensory preferences is crucial. Coffee has over 250 compounds that influence the sensory aspects of the beverage, with different varieties offering different sensory features. The two main varieties – arabica and robusta – have different sensory attributes that can aid the innovation of new flavor profiles for a wide audience. Creating new coffee products and rituals also involves recognizing the specific drivers behind consumption for different day-parts and occasions.

In addition to these sensory and occasion-based factors, sustainability has also become a critical consideration for the market. Climate change and its impact on the quality and availability of the crop, along with the ethical aspects of production across the supply chain, are key elements to keep in mind. These also have a strong link to coffee prices.

All of these can become vital elements for creating products that are not only appealing in taste but also in their production backstory, propelling the growth of the coffee market.

Creating new experiences

The growth of the coffee market has been broken down into five “waves”, Starting as a commodity product post-World War 2 and evolving into more and more sophisticated versions of café culture. We are currently in the fifth wave, where the focus in on the experiential and business aspects of coffee. This wave integrates technological advancements with traditional brewing techniques, creating new products and experiences that cater to a tech-savvy consumer base – Millennials and Gen Z.

We’re seeing innovative products and flavors, smart ordering systems, adaptable café layouts, and the use of sustainable materials in café design. These innovations are part of a broader trend towards creating spaces that are not just places to drink coffee but also serve as social and environmental statement pieces. In this context, neo-futurism in coffee shops is an evolving concept as it emphasizes a blend of aesthetic appeal with functional design, focusing on sustainability and a better consumer experience.

Keeping in mind these broad factors about emerging markets, consumers, habits, sensory preferences, and design can help create new products and rituals for a constantly evolving coffee market.