Market Reports

Green coffee in Russia

Since the introduction of single-serve coffee at the end of the 20th century, the coffee industry has largely been driven by innovations in existing products rather than the introduction of new ones. However, a health craze is seeing the rise of what could be the most novel coffee product of the 21st century – green coffee drinks. Prior to 2014, green coffee was not really commercially viable, accounting for only a small segment of the global market for specialty coffee. However in recent years the volume of its consumption has significantly increased in almost all regions of the world. A study conducted by analysts at the Russian Ministry of Agriculture and the Association of Tea and Coffee Producers of Russia, a public association that unites Russia’s leading tea and coffee producers, has found the product category gaining ground among emerging and established markets alike. According to Alexander Tkachev, Russia’s Ministry of Agriculture, in recent years the consumption of green coffee has significantly increased in Russia. This is largely due to the rise of the demand for healthy lifestyles among the local population. While in the past green coffee extract was mostly used in the production of dietary supplements, in recent years its usage has significantly expanded into mainstream drinks. Tkachev goes so far as the say that since the turn of the 21st century, green coffee has become one of the most promising segments for growth in the global specialty coffee market. Its popularity is continuing to grow as more and more consumers are becoming aware of its high level of functionality and distinctive taste. The great news for the coffee industry is that this drink’s popularity represents nothing but the potential for growth. Green coffee is not considered an alternative to traditional roasted coffee, so its growing popularity is not associated with the simultaneous decline of the demand for any traditional coffee segments. Numerous studies show that green coffee contains a high amount of chemical chlorogenic acid, which is said to have health benefits and is helpful in weight loss and diabetes. Currently the North American region remains the largest market for green coffee, which is mainly due to the high levels of obesity in the US and Canada. At present the US has the world’s highest obesity rate of around 37.5 per cent. Some research shows that green coffee can be considered an alternate solution to bariatric surgery to reduce the obesity rate. Analysts say that this association with weight loss will continue to be one of the main drivers for the further growth of the demand for green coffee in the North American region for the next several years. Although exact volumes of the consumption of green coffee are difficult to report, estimates by the Russian Association of Tea and Coffee Producers say that they could be in the range of 300,000 – 330,000 tonnes per year. The Russian Association of Tea and Coffee Producers calculates that the US and Canada currently account for about 30 per cent of total global sales of green coffee. Analysts predict that the volume of green coffee consumption in the US will continue to grow in the near future and is expected to reach 500,000 tonnes by 2020. In the meantime, in addition to North America, the demand for green coffee in recent years has also increased in the European region, mainly due to the increasing desire for products that promote and improve consumers’ health among the local population. The governments of the EU states support eco-friendly products, which has in turn resulted in a growing demand for green coffee market in this region. The UK leads the way in the EU in terms of green coffee consumption, although the country has always been positioned as one of the world’s largest tea drinking nations. Overall, the EU green coffee market is currently estimated at about 250,000 tonnes in volume and, according to predictions of the Russian Association of Tea and Coffee Producers, is expected to grow up to 400,000 tonnes by 2020, with an annual growth rate of 10 – 15 per cent.  The increasing popularity of green coffee has not gone unnoticed by some leading industry players. To date, such companies as Peet’s Coffee and Tea, Starbucks, Keurig Green Mountain, Nestlé, Proctor and Gamble and Tchibo have already announced their plans to expand into the global green coffee market through the launch of their solutions, based on a green coffee extract. For example, Starbucks plans to increase the volume of green beans that are processed at its coffee mill in China, which was commissioned by the company in 2012. At present the facility, which is located in the Chinese city of Pu’er, is jointly operated by the US company with the local Aini Coffee farm, while its processing capacities is estimated at 20,000 tonnes of green beans annually. In addition to the Chinese plant, the company plans to continue its expansion in the green coffee market through the investment of funds in the establishment of facilities for the growing and processing of green coffee beans, which will be located in different parts of the world. Starbucks recently announced plans to raise up to US$496 million for sustainability initiatives. Starbucks will use these funds in the implementation of sustainability projects, including the establishment of green coffee farms. A significant part of this sum will be provided to farmers who are involved in the production of responsibly grown coffee, including green coffee projects. The company already produces Starbucks Refreshers, which is a line of juice drinks based on green coffee extract. The company has plans to launch some pure green coffee solutions over the next several years. In the meantime, Swiss Nestlé is also aware of the growing popularity of green coffee, and is considering the expansion of the already existing line of products based on green coffee extract. As part of these plans, the company is currently considering the possibility of expanding its Nescafé Green Blend line, a range that uses instant coffee from unroasted green coffee beans. The company has positioned the drink as a perfect solution for weight loss, which also has a good taste and anti-ageing benefits. Nestlé says that this is mainly thanks to a high content of polyphenol antioxidants and other healthy ingredients. Currently Nestlé uses more than 800,000 tonnes of green coffee every year, which accounts for more than 10 per cent of the world’s overall supply. The company hopes that these volumes will increase during the next several years. GCR

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