Growing Brazilian coffee culture poised to drive price increases, reports Mintel

MIntel: trend to gourmet coffee in Brazil fueling prices

MIntel: trend to gourmet coffee in Brazil fueling prices

Brazilians have a taste for premium coffee, with a quarter (25%) of Brazilian coffee users claiming they prefer premium over regular brands of coffee, according to new research from Mintel.

And it seems social strata is also no barrier for a taste of the more extravagant, as 29% of A/B consumers say they prefer premium, so too do 23% in classes C1/C2 and D/E. Today, five in six (84%) Brazilian consumers report drinking coffee, with three in five (60%) drinking coffee daily, which combined with the large population, makes Brazil the second largest market for coffee in the world (with a Mintel estimated consumption of 1,230,000 tons of coffee in 2012) coming only behind the US (the largest coffee market with a Mintel estimated consumption of 1,454,000 tons in the same year). 

However, market volume for coffee in Brazil is growing faster than that of the US year on year, and highlighting its importance, is set to take the number one spot for consumption from the US in the next few years. While the Brazilian coffee market posted 3.9% growth in 2012 against 5.4% in the US, Mintel estimates both countries to reach an equal estimated growth of 4.4% in 2016. While Brazilians have one of the highest per capita volume consumption rates in the world (6.31kg per head compared to 4.62kg per head in the US and 2.77kg in the UK in 2012) Mintel’s research highlights that they actually spend very little on coffee ($18.17 per head in Brazil compared to $30.79 in the US in 2012) indicating coffee has, to date, been seen as a cheap commodity, something Mintel anticipates changing. 

Jonny Forsyth, global drinks analyst at Mintel, said: “As Brazilians get more demanding about their coffee, the country’s better quality Arabica beans will increasingly be used to service its burgeoning domestic market, rather than merely sent overseas. The global supply of the best quality Arabica beans is hugely dependent on Brazil, and by reducing supply at a time of huge, and still rising global demand, this could force a sharp rise in global coffee bean prices down the line.”

An increase in coffee shops in Brazil is driving demand for specialty or gourmet coffee, as cafes are often where consumers make their first contact with premium and specialty coffees. Indeed, nearly a third (32%) of Brazilian consumers who say they prefer premium coffee over regular brands consume it at a coffee shop, compared to 30% at a bar or bakery, 27% at a restaurant and 25% at home. While consumers who use coffeehouses are more drawn to premium coffee, they are also more open to experimentation as 38% of those who drink in coffee house claim `I like to try new brands of coffee other than those I usually buy.’ 

Lucas Marangoni, senior drinks analyst at Mintel, said: “While Brazil has traditionally supplied the world with high-quality coffee beans, it is now beginning to envision new customers: Brazilians themselves. Coffee shops represent one of the main drivers of changing attitudes towards premium coffee as many consumers have been influenced by what they have tried there. As a result, many consumers have been prompted to expand their usual coffee drinking habits by an increasing range of premium options available to them while there, which has changed what they look for in a coffee in the future.” 

Contrary to the normal attributes of the category, with coffee in general having higher penetration among older consumers (93% of consumers 55+ claim they consume coffee, compared to 74% aged between 16-24-years-old), the usage of higher value-added coffee is higher amongst younger consumers and decreases amongst older age groups. For example, 12% of young consumers (16-24-year-olds) say they consume chilled specialty coffee, compared to 5% of 45-54-year-olds. Overall, 7% of consumers claim they drink this type of coffee. 

“Considering that the long-term future of the category depends on the younger age groups of today, it is essential that the market successfully engages them now, with a view to long-term gains. Products tailored to their tastes, such as mixing coffee with other ingredients and preferences, represents the key avenue for introducing young people to the category. However, given the limited demand for such products in Brazil today, restricted to the higher socio-economic groups, the launch of ready-to-drink (RTD) products in general should still be treated with some caution,” said Marangoni.