PUBLISHER: Knowledge Sourcing Intelligence | PRODUCT CODE: 1256596
PUBLISHER: Knowledge Sourcing Intelligence | PRODUCT CODE: 1256596
Due to the rising coffee consumption in the country along with the increasing initiatives taken by the government to expand production, the market is expected to witness a surge during the projected period. Additionally, the 2022 Manila Coffee Festival, which officially opened in Intramuros in April 2022, brought together 5,000 coffee enthusiasts, farmers, and distributors in one location. Intramuros Administration chief Guiller Asido declared the launch a success, with 5,000 passes distributed on the first day. The event drew 32 exhibitors, including local coffee producers, young entrepreneurs, and small coffee firms. Hence, such initiatives are projected to contribute to the market's profitability in the future.
Furthermore, coffee retail brands such as UCC, Starbucks, and Coffee Bean & Tea Leaf have established themselves across the country. This provides further incentive for the industry to develop throughout the predicted period. Furthermore, with the growth of small and local coffee shops in the Philippines, the industry is expected to grow at a rapid rate in tandem with increased coffee consumption during the next five years.
The prime factor that is predicted to drive the growth of the Philippine instant coffee market is the growing trend of coffee consumption in addition to the increasing production initiatives taken by the government in the country. For instance, in October 2022, the Department of Agriculture (DA) announced a collaboration with Nestle Philippines to scale up the coffee business. The agreement is focused on expanding local production and enhancing the country's sufficiency level, which is presently at 15%. Nestle Philippines asked the DA to incorporate sustainability into coffee production while also collaborating closely with farmers to produce high-quality coffee beans.
Additionally, according to the Philippine Council for Agriculture and Fisheries, Robusta is the most farmed coffee variety in the nation, accounting for 76.5% of total output in 2020. Robusta is mostly used to make instant coffee. Furthermore, there are small and medium-sized coffee mills in the nation that produce roasted beans and ground coffee. According to the same source, Nestle Philippines, Inc. is the largest local manufacturer of soluble coffee, accounting for 80% of the instant coffee market. The Philippine Statistics Authority reports that the Philippines produced 60,044 metric tonnes of coffee in 2019. However, the country was only 32.40% self-sufficient in coffee production in 2019, leaving the country dependent on coffee imports. This demonstrates a high level of investment potential in the coffee business including instant. Therefore, with such an increase in the number of consumption and production, the instant coffee market in the country is anticipated to surge in the upcoming years.
The offline segment dominates the Philippines' instant coffee market; owing to the availability of greater storage space and a wider selection among a huge number of products contributing to the demand for retail growth under the offline segment. When making purchases, consumers prioritize convenience, and they frequently count on retailers to come up with creative solutions that will save them time and effort. This has led to an increase in sales of instant coffee options such as capsules, drip coffee bags, and takeaway orders within the coffee industry. Roasters and coffee shops are accommodating the needs of the younger generation as industry tastes and trends change.
As customers expect more convenience and flexibility, modern retail markets like supermarkets, food, and retail stores have grown in importance, particularly for those residing in urban areas of the Philippines. These modernized marketplaces have been set up near residential and commercial communities in both urban and rural locations. This is because contemporary retail marketplaces are typically more hygienic, spacious, and well-maintained. Retail stores also give customers more options, allowing consumers to purchase at one-stop shops since they easily offer all brands and their associated products in one location. The offline segment's expansion will also be fueled by the expanding retail chains and developing urbanization. To draw customers' attention, many businesses are providing product demonstrations at supermarkets and hypermarkets, which may help the industry to flourish.