Coffee economics

Coffee as a functional food

With all the attention now being given to so-called functional foods – those foods that have an additional health benefit or other desirable effect on the consumer – it was only a matter of time before the coffee industry started to get involved in this growing market. Asian coffee producers have been adding ginseng to instant coffee for a number of years to offer additional benefits of improving blood circulation, mood, and memory. Now coffee producers outside Asia are adding magnesium, protein, and additional caffeine to coffee. These functional coffees can leverage the growing number of consumers worldwide who lead busy lifestyles with inadequate sleep and little time for meals and want a quick energy boost and an easy way to improve their health. By boosting functionality and emphasising the mental and athletic performance properties of coffee, coffee producers seek to trade up consumers from standard coffee and RTD (ready-to-drink) coffee products, as well as to attract users of energy drinks, meal replacement products, and sports protein products. Instant coffee and RTD coffee products with a fortified or functional claim outperformed their standard counterparts at a global level over the 2010-2015 period and are projected to continue doing so over the 2015-2020 period. More coffee producers are expected to enter the functional coffee arena and contribute to continued growth by meeting consumers’ desires for energy plus additional benefits, such as protein, athletic performance, and mental clarity.  Functional instant coffee set to continue growing in Asia Pacific
The Asia Pacific is the biggest region for sales of fortified/functional instant coffee with US$271 million in retail value sales in 2015, with a CAGR (compound annual growth rate) of 12 per cent over the 2010-2015 period. Among the earliest functional/fortified coffees were instant coffee mixes of coffee, sugar and non-dairy creamer enhanced with ginseng. Asian coffee producers combined the convenience and energy boost of instant coffee with ginseng, a herb used in traditional Chinese and Korean Asian medicine. The four-in-one instant coffee mix with ginseng in single-serve sachets became popular in many Asian countries as urbanisation and long work hours created a demand for products offering energy and mood enhancement in an easy to prepare beverage. The market for functional instant coffees expanded to include products with weight-loss claims as well. Functional instant coffee remains popular in many Asian countries despite the availability of other caffeinated alternatives, such as energy drinks and carbonates.   Functional coffee expands beyond Asia
Coffee makers outside Asia are going beyond ginseng to offer the benefits of Ayurvedic medicine, dietary supplements, energy drinks, and green tea in a coffee product. As coffee is consumed on a daily basis, it is an ideal product to enhance with herbs, minerals, and vitamins because consumers do not need to change their routines to obtain the health benefits of functional coffee. Coffee’s rich flavour can also stand up to the taste notes of other ingredients that may have a bitter taste profile. Colombia’s Zrii Rise’s Zrii Café Soluble con Amalaki combines instant coffee with amalaki, a sour fruit. In India, amalaki (Indian gooseberry or amla), is used in Ayurvedic medicine and is known for its high vitamin C content. In Spain, Nestlé España SA’s Nescafé Vitalissimo adds magnesium to the traditional Nescafé formula and is oriented to adult consumers over 40 as a way to reduce fatigue and increase vitality. UK’s TrueStart Coffee markets its instant coffee as a performance enhancer for professional and recreational athletes by promising exactly 95 milligrams of caffeine per single-serve sachet, so that athletes are reassured that they will get the optimal amount of caffeine for athletic performance. By using no additives, TrueStart is aimed at athletes who are looking for a “clean” caffeine boost minus the sweeteners and artificial ingredients and sweeteners found in traditional energy drinks and caffeinated dietary supplements. US-based Nuzee Inc offers different functional varieties that address cognitive function (Focus), stress reduction (Escape), and weight-loss (Lean) in both Keurig-compatible coffee pods and in single-serve Drip Cup paper pouches. Its Escape variety contains L-Theanine, an amino acid found in green tea leaves that may help to reduce stress levels. Coffee producers competing with energy drinks
Energy drinks have grown from US$16.9 billion in retail value sales in 2010 to US$30.2 billion in 2015 by offering consumers the promise of an energy boost to power through a work day or study session. Coffee producers would like to attract some of the consumers of energy drinks. One way is by adding additional caffeine. US-based Trilliant Food and Nutrition’s Study Fuel Coffee coffee pods are geared towards college students who need to stay up late to study by offering twice the caffeine content of standard coffee, with 170 milligrams of caffeine. Another way to offer more of an energy boost is to add ingredients such as B-vitamins, guarana, and ginseng that are found in traditional energy drinks. After witnessing Monster Beverages’ successful 2007 launch of Java Monster RTD coffee in the US, Starbucks launched Starbucks Doubleshot Energy in 2008 and followed in March 2015 with a Doubleshot Coffee & Protein variety featuring 20 grams of protein per 325 millilitre can. Consumer receptivity to functional RTD coffees has been strong in the US, with retail value sales of Starbucks Doubleshot growing by 35 per cent in 2015, compared to the 20 per cent growth rate of the total RTD coffee category. More RTD coffee companies are expected to launch high-protein varieties to position their products as a functional indulgence with the milk providing creaminess and protein. High Brew Coffee announced a March 2017 launch date for its new High Brew Creamy Cappuccino and Protein featuring 12 grams of protein and 3 grams of fibre per 236 millilitre can.
Coffee as breakfast replacement?
The recent introduction of protein-enhanced RTD coffees ties into the increase in busy lifestyles that have reduced the number of breakfasts consumed at home. Instead, consumers are visiting fast food restaurants or turning to snack bars, RTD meal replacement products, or sports shakes to obtain their morning nutrition. Coffee and RTD coffee could potentially grab a share of the breakfast market if they offer products that offer satiety and a feeling of fullness along with protein and vitamins. In the US, technology executive Dave Asprey’s posting of his Bulletproof Coffee recipe on his blog in 2009 has helped to popularise the idea of coffee as a functional breakfast beverage among affluent, health-conscious consumers. The use of low-toxin coffee beans; grass-fed, unsalted butter; and medium-chain triglyceride (MCT) oil found in coconut oil is claimed to reduce cravings, promote weight loss by triggering ketosis, and improve cognitive function when consumed instead of breakfast. The latest coffee product designed to replace a traditional breakfast is Soylent Coffiest, introduced in the US in August 2016 by Rosa Labs. Soylent Coffiest extends the original Soylent meal replacement product into breakfast by allowing affluent, time-pressed consumers to obtain 150 milligrams of caffeine from coffee and 20 grams of protein from soy protein isolate and other ingredients. Future of functionality in coffee
Sales of coffees marketed as functional are expected to continue growing strongly in the 2015-2020 period as more coffee producers are expected to enter the functional coffee arena to address the growing desire for energy among busy consumers. Both functional instant coffee and functional RTD coffees are projected to do well as they offer a temporary burst of energy to consumers as well as additional benefits of mood enhancement or cognitive function. Producers of functional coffee are likely to increase highlighting coffee’s caffeine content to target certain consumer groups and to better compete against other functional drinks, such as energy drinks and sports drinks. RTD coffee producers specifically are expected to boost their protein levels to better compete against meal replacement products and serve as a breakfast replacement or afternoon snack. Virginia Lee is a Senior Beverages Analyst at Euromonitor International, for further insights follow her on Twitter at @VirginiaALee. GCR

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