Saturday, April 7, 2018

Coffee: New Consumer Preferences Driving Value

Technology plays a key role in the transformation of a coffee bean into a cup of brew. The WIPR 2017 maps patent data in the sector, finding that innovation across the supply chain increases in activities closer to consumers. This includes the processing of beans and the final distribution of coffee products, such as the coffee capsules found in many homes and offices.

Brand reputation and image allow firms to differentiate their offering from those of their rivals and play an important role in all coffee market segments, including soluble and roasted coffee sold in grocery stores, as well as espresso-based coffee products sold in retail coffeehouses.

Shifting consumer preferences have progressively transformed the global coffee value chain, moving from consumption in the home, then in coffeehouses and now to a new generation of discerning consumers who are interested in their coffee product’s back story, willing to pay premium prices.
Prices commanded in this so-called “third wave” market segment can exceed those in “first wave” consumption by more than four times, with coffee farmers’ incomes tripling. While still small in size, this fast-growing market segment offers new opportunities for greater participation in the global value chain by developing economies. In particular, information on the origin and variety of the coffee beans, how they were farmed and processed, and farmers’ compensation become integral to selling coffee.

Responding to the shifting consumer preferences, coffee growers and even countries are investing in efforts to move beyond generic coffee, adopting their own branding strategies.

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