Caffeine addiction getting an upgrade
The ‘black gold’ market is expanding its way into Taiwanese everyday life as the local’s appetite grow for high quality coffee, especially the fresh made brew. Currently fresh made coffee is one of the fastest growing coffee segment in Taiwan, leading the takeaway coffee market to double digit growth for two consecutive years. Even at home, consumers are also showing growing preference towards top class coffee, where traditional 3-in-1 can no longer tickle their taste buds, instead homemade coffee drinkers are upgrading to grounded coffee which are more rich in flavor in comparison to the 3-in-1 products.
What consumers want in a cup of good coffee: convenient on the ‘outside’, tasteful on the ‘inside’
Kantar Worldpanel Taiwan’s study showed, by end 2016, Taiwan’s takeaway coffee market has achieved double digit growth for three consecutive years. The growth can be attributed to the growing number of chained-brand and individual cafe, as well as the aggressive expansion of convenience stores (CVS). There is now over 10 thousand CVS in Taiwan, and while the stores provides a wide selection of coffee drinks including ready to drink and instant coffee, it is the fresh made coffee that is able to capture the caffeine-craving consumer’s need for both flavour and time-saving, making it the leading star for takeaway coffee’s phenomenal growth.
As Taiwan’s coffee drinkers become increasingly sophisticated, they are not just upgrading their preference for takeaway coffee, but also putting in more effort when brewing a cuppa at home. Over the past few years, Kantar Worldpanel Taiwan has observed home coffee drinkers evolving from 3-in-1 to black instant coffee, then further upgrade to the grounded coffee, demonstrating consumers growing preference for more refined coffee. While the market importance of 3-in-1 instant coffee has been on a downward slide for two years in a row, grounded coffee had been enjoying steady double digit growth, with 3 in every 10 households making a purchase of the grounded products with the year. In terms of product type, the convenient drip coffee bag is amongst the most preferred package type, but homemade coffee drinkers are not just in favour of products that speaks time-saving, coffee beans and powder are also growing in popularity.
What consumers want when purchasing coffee: a wider selection
In terms of retail channel performance, home coffee market leader Costco had been suffering from the channel strategy of its key coffee brand, Barista, where its decision to expand sales outside of Costco is not only affecting the coffee sales of the retail giant, but also Barista’s own sales performance. In contrary, the new rising star for home coffee market, PX Mart, have enjoyed healthy sales growth by expanding its existing coffee product offering. PX Mart placed their focus on imported brands, where by introducing products from all over the world, they are offering consumers the experience of worldwide coffee tasting, without having the make the trip themselves, ie. the delicate taste of the Japanese brands, the idol worship provided by the Korean brand, or the more unique Vietnamese flavour; this strategy is clearly hitting the right note with the consumers, as the retailer enjoyed their new found market importance of close to 20% share in the home coffee market.
When brands need to understand to achieve market growth: coffee delicacy
As the coffee drinkers become ever more sophisticated, it is important for the brands to understand that to achieve sales, quality of their product is not the only consideration, but also complicated culture that is involved when tasting the dark liquid. Enjoying a cup of coffee involves taste, time, place and lifestyle aesthetics, where different factor can mix and intertwine into various different style and characters, and this is important for the brands and retailers to keep in mind that when developing their sales plan, they will need to take into account factors other than taste and product quality in order to capture the growing coffee opportunity.