Global Specialty Coffee Market By Product Type (Whole-Bean, Ground Coffee, Instant Coffee, Coffee Pods), By Beans (Arabica, Robusta, Excelsa, and Liberia) By Grades (80-84.99, 85-89.99, and 90-100) By End-User (Residential and Commercial), By Distribution Channels (Supermarkets/Hypermarkets, Convenience Stores, Online Platforms), By Region and Companies - Industry Segment Outlook, Market Assessment, Competition Scenario, Trends, and Forecast 2023-2032.

Report Overview

In 2022, the Global Specialty Coffee Market was valued at USD 27.0 Billion, and is expected to reach USD 80.1 Billion in 2032 from 2023 to 2032, this market is estimated to register a CAGR of 11.8%.

Specialty Coffee is a beverage in which superior-quality coffee beans are used. They are slightly different from regular coffee because they are grown in suitable soil at different altitudes at a specific time of the year. In recent years, the specialty coffee market has grown significantly due to the rise in agro-tourism.

Moreover, several individuals have shifted to coffee beverages, and soft drinks have gradually lost popularity. Specialty coffee offers various flavors, aromas, and tastes. Therefore, the demand for high-quality coffee is increasing among individuals. Consumers in various regions prefer specialty coffee over other beverages, which is attributed to the fact that the market will likely continue to evolve and grow globally.

Actual Numbers Might Vary in the final report

Key Takeaways

• Specialty Coffee Market Overview: The global specialty coffee market had a valuation of USD 27.0 Billion in 2022 and is projected to reach USD 80.1 Billion by 2032, experiencing a remarkable CAGR of 11.8% between 2023 and 2032.
• Factors Driving Growth: The increasing consumer demand for high-quality, ethically sourced, and unique coffee experiences is a significant driver for the specialty coffee market. Consumers are becoming more discerning about their coffee choices, valuing factors like origin, flavor profile, and sustainable production methods.
• Product Type Analysis: Instant coffee holds a dominant position in the market due to its perceived health benefits and low-calorie content.
• Bean Analysis: In terms of coffee bean types, the market is categorized into Arabica, Robusta, Excelsa, Liberia, and other beans. Within these variants, Arabica beans constitute the majority of the market share, accounting for 60% of the global revenue.
• Grade Analysis: The market was led by the 85-89.99 grade segment, capturing the largest market share at 39.12%, primarily attributed to the enticing coffee fragrance.
• End-User Analysis: The rise in demand for commercial coffee shops is credited to the easy accessibility of specialty coffee offering a wide range of flavors.
• Distribution Channel Analysis: In terms of distribution channels, the worldwide market is categorized into supermarkets/hypermarkets, convenience stores, online platforms, and other distribution channels. Among these, online platforms secured the largest share of revenue, accounting for 32.4% in the year 2022.
• Market Dynamics: The specialty coffee market is propelled by factors such as evolving consumer preferences, a growing culture of coffee appreciation, the influence of the third-wave coffee movement, and an increasing focus on sustainability throughout the coffee supply chain.
• Challenges: Challenges in the specialty coffee market include price volatility due to changing weather patterns affecting coffee crops, ensuring consistent quality across different batches, and competition from well-established traditional coffee brands.
• Opportunities: Opportunities for growth in the specialty coffee market include expanding into emerging markets, leveraging e-commerce for wider reach and accessibility, educating consumers about specialty coffee, and fostering direct relationships with coffee growers for a transparent and sustainable supply chain.
• Trends: Emerging trends in the specialty coffee market encompass innovative brewing techniques, single-origin and direct trade offerings, cold brew and nitro coffee popularity, and the rise of specialty coffee subscriptions and tasting experiences.
• Regional Analysis: Europe was the leading market shareholder, encompassing 30% of the overall coffee market in 2022. There are multiple reasons explaining Europe’s status as a major consumer of specialty coffee.
• Key Players: Leading companies in the specialty coffee market are focusing on enhancing product quality, establishing direct trade relationships with coffee producers, exploring unique flavor profiles, and investing in sustainable sourcing practices to maintain a competitive edge.

Market Scope

Product Type Analysis

Instant Coffee Dominates the Market Because it is Healthier and Has Low Calories.

Based on product type, the specialty coffee market is segmented into instant coffee, ground coffee, whole beans, single-cup, blends, and other product types. Almost 50% of the world’s population prefers instant coffee. As such, it holds the majority of the revenue share among others. Instant coffee is a healthy, low-calorie beverage with several health benefits.

Changing lifestyle and appreciation of taste has led to the production of instant coffee. Ground Coffee is the second most popular among consumers. It is readily available in any supermarket or convenience store and can be grind at home with an electric or hand grinder.

In addition, freshly ground coffee is packed with antioxidants, essential for optimal health as they prevent toxins from oxidizing cells. Therefore, it is found in a survey conducted by the National Coffee Association that around 30-40% of the global population consumes coffee every day. This growth is expected to continue in the upcoming years.

Bean Analysis

Arabica Beans Make Up To 60% Of The World Coffee Market Because Of Their Superior Taste And Less Caffeine Content.

Based on beans, the market is segmented into Arabica, Robusta, Excelsa, Liberia, And Other Beans. Among these beans, Arabica beans hold the largest revenue share of 60% in the global market. Owing to their smoother and sweeter flavor, consumers prefer Arabica beans more than other bean types. Arabica beans offer better flavor and superior taste as arabica trees flourish at higher altitudes, typically between 3,000 and 6,000 feet.

At these elevations, hot days and cool nights hold back the growth of coffee cherries.  Arabica coffee is sweetened and has a more pronounced acidity, with a broader range of flavors that can be tasted in the cup. All countries where Arabica is grown are between the Tropic of Capricorn and the Tropic of Cancer.

After arabica, the second largest share is taken by Robusta beans. Robusta coffee is nutty, dark chocolatey, and bold. In addition, consumption of Robusta can help decrease the risk of liver cancer and type 2 diabetes. It has a strong taste and can be used to flavor desserts. These beans contain twice the amount of caffeine than arabica; hence, individuals more focused on fitness and health prefer it.

Grade Analysis

The 85-89.99 Grade Segment Dominated the Market With The Largest Market Share Of 39.12% Due To The Coffee Fragrance.

Based on grade, the global specialty coffee market is segmented into 80-84.99, 85-89.99, and 90-100. The 85-89.99 grade segment held the largest market share in 2022. A coffee grade helps buyers and sellers worldwide align their expectations.  Specialty coffee scores 80 points or above on the 100-point scale the Specialty Coffee Association uses.

Coffee scoring 90–100 is graded Outstanding, coffee that scores 85–89.99 is graded Excellent, while coffee scoring 80–84.99 is graded Very Well/Very Good are points scaled by SCAA (Specialty Coffee Association of America). To qualify as a specialty coffee, the beans must be graded by certified coffee tasters.

End-User Analysis

Owing to Easy Access to Specialty Coffee with Variety Of Flavours Is Attributed to the Increase in Demand for Commercial Coffee Shops

Based on end-users, the specialty coffee market is further divided into residential and commercial. Among these, the commercial segment holds the largest market share of 67%. This dominance is attributed to commercial establishments, which often have access to high-end brewing equipment and trained professionals.

This allows them to provide a diverse range of coffee offerings and brews that might be challenging to reproduce at home. Moreover, higher quality coffee and increased knowledge of coffee have managed a rise in demand for specialty coffee. According to statistics, individuals over 18 years of age prefer drinking coffee every day.

Hence, increased consumption of specialty coffee is one of the major factors driving the industry’s growth. The international expansion of specialty coffee shops has impacted consumer’s lifestyles, as several individuals prefer commercial coffee products. Hence, the commercial segment often holds the largest market share in the global market for specialty coffee.

Distribution Channel Analysis

Availability of Diverse Range Of Products On Online Platforms Expected to Boost the Sales Of Specialty Coffee

Based on distribution channels, the global market is segmented into supermarkets/hypermarkets, convenience stores, online platforms, and other distribution channels. Among these, online platforms held the majority of revenue share, with 32.4% in 2022.

The shift in consumer preference toward online channels is due to the convenience of purchasing the product. Moreover, online stores often provide high discounts, a diverse range of products on a single platform, easy payment methods, on-door delivery, etc. Additionally, online retailers often carry specialty coffees with different flavors and brands.

Moreover, convenience stores are the second leading distribution channel in the market. These are often located in easily accessible areas, such as neighborhoods or near workplaces, making it simple for consumers to pick up their preferred specialty coffee on the go.

In addition, convenience stores occasionally offer in-store tasting or sampling events, which allow customers to try specialty coffee before committing to a purchase. This can lead to increased interest and sales of specialty coffee products.

Key Market Segments

By Product Type

• Whole-Bean
• Ground Coffee
• Instant Coffee
• Coffee Pods
• Other Product Types

By Beans

• Arabica
• Robusta
• Excelsa
• Liberia
• Other Beans

By Grades

• 80-84.99
• 85-89.99
• 90-100

By End User

• Residential
• Commercial

By Distribution Channels

• Supermarket/Hypermarket
• Convenience Stores
• Online Platforms
• Other Distribution Channels

Drivers

The Rise In Population Growth Led To Rising Consumption of Coffee and The Flourishing of Specialty Coffee Shops.

With the population growth, there’s been a notable increase in coffee consumption. This growing global demand is boosting the specialty coffee industry. Coffee ranks the second most traded commodity after oil. The demand for specialty coffee varieties has increased because consumers seek a more distinctive and satisfying coffee experience.

According to a report by the National Coffee Association, around 60 percent of adult Americans drink specialty coffee every day. The increasing number of food outlets and coffee shops has varied tastes and preferences for different types of fresh coffee, leading to the emergence of coffee shops, specialty coffee shops, and quick-service restaurants.

The coffee production industry is dominating the market and growing faster, which leads to opening of more specialty coffee shops and stores that will benefit the coffee industry. Moreover, the specialty coffee market is dynamic, influenced by consumer preferences, global trends, and the continuous pursuit of quality.

Restraints

Dealing  With Climate Change And Fluctuating Costs Of Coffee Beans Hindering The Growth Of Specialty Coffee Market

The harvest season of specialty coffee and single-origin cultivars is affected by climate change. These changes also make the prices of specific varieties more volatile and unpredictable. At the same time, climate change is also changing the quality of coffee. Intermittent rain and heavy rainfall during harvesting and drying can harm coffee and lead to fungal contamination of coffee beans during storage.

Regarding the drying process, intermittent rains can cause reheating, which leads to the decomposition of soluble compounds in the seeds. These compounds affect the flavor and aromatic qualities of coffee beans. This factor may affect the product’s prices, which may hamper the market’s growth.

The fluctuating cost of coffee beans is one of the biggest challenges for the specialty coffee market. Further, the accumulation in the cost of raw materials raises the price and decreases manufacturers’ profit margins. Moreover, growing competition between the players results in them functioning on low-profit margins despite the rising raw materials prices.

Large producers of coffee, such as South America, Brazil, and Columbia, produce mild coffee, which demands significant expenses.

Opportunity

Increased Consumer Demand and Partnerships With Local Businesses Present Lucrative Opportunities for The Specialty Coffee Market

The specialty coffee market has witnessed remarkable growth over the years, which is expected to continue. This market is growing rapidly, and as the lifestyle changes, consumers are becoming more interested in high-quality coffee. They are willing to pay premium prices for it, creating an opportunity for specialty coffee businesses.

These businesses often provide collaborations and joint promotions to expand their customer base. The demand for specialty coffee has grown significantly in recent years due to changing consumer preferences and a focus on sustainability. In addition, given its high quality, specialty coffee often commands a higher market price than commodity coffee. This has led to better economic outcomes for farmers who can produce it, though the process is more labor and knowledge-intensive.

Trends

Ready-to-drink Coffee Is Getting Popular Because It Saves Time And Is The Perfect Substitute For Energy Drinks.

Ready-to-drink (RTD) coffee has become increasingly popular due to its time-saving convenience and ability to substitute energy drinks. These RTDs are pre-mixed, brewed, and available in various flavors. The popularity of cafe culture has brought Ready-to-drink coffee to center stage in the global market.

Compared with dry coffee products, ready-to-drink coffee is instantly ready for consumption; with busy schedules and busy lifestyles, the popularity of RTD has grown. Similar to energy drinks, RTD coffee provides a caffeine boost. For those who prefer the taste and profile of coffee over traditional energy drinks, RTD coffee becomes an attractive alternative. Therefore this category has gained significant popularity in recent years.

Regional Analysis

Europe Holds Region Accounted Significant Share of the Global Specialty Coffee Market

Europe held the largest market share, with 30% of the total coffee market in 2022. There are several reasons behind the European region as a significant consumer of Specialty coffee. Europe has a large market for coffee and offers interesting opportunities to suppliers worldwide. Europe will always remain attractive for coffee exporters, and Europe’s growing specialty coffee market provides large, interesting opportunities. Germany is one of the coffee-producing countries in the world.

Eastern Europe accounted for 6.5% of green coffee exports in Europe in 2020. Consumption at specialized coffee shops serving primarily high-quality coffee is increasing in Western Europe. Asia Pacific is expected to grow fast as the adoption of modern lifestyle and rapid urbanization have increased interest in Western coffee culture, including specialty coffee consumption.

Key Regions and Countries

• North America
  • The US
  • Canada
• Europe
  • Germany
  • France
  • The UK
  • Spain
  • Italy
  • Russia & CIS
  • Rest of Europe
• APAC
  • China
  • Japan
  • South Korea
  • India
  • ASEAN
  • Rest of APAC
• Latin America
  • Brazil
  • Mexico
  • The rest of Latin America
• Middle East & Africa
  • GCC
  • South Africa
  • Rest of MEA

Key Players Analysis

Commercial chains, especially well-established ones, have significant marketing and branding strategies in place. This visibility and consistent customer experience drive more traffic and sales. Key Players in the market include Starbucks Coffee Company, McDonald’s, Caribou Coffee Company, etc., which are improving their level of service; the companies emphasize the quality and freshness of their products.

These market players are investing in product innovation, and product and service innovation is necessary to stay competitive and attract customers successfully.

Market Key Players

With the presence of several key players across the globe, the specialty coffee markets are fragmented. New key players are subject to intense competition from leading market players, particularly those with strong brand recognition and high distribution networks.

As evident, The key players are now concentrating on implementing strategies such as adopting new technology, product innovations, mergers and acquisitions, joint ventures, alliances, and partnerships to improve their market position in the global specialty coffee industry.

• Starbucks Coffee Company
• McDonald’s
• Caribou Coffee Company
• Costa Coffee
• Barista Coffee Company Limited
• Blue Bottle Coffee, Inc.
• Strauss Group ltd
• Eight O’Clock Coffee Company
• Coffee Day Enterprises Limited
• JAB Holding Company
• Don Francisco Coffee
• M Smucker Company
• Other Key Players

Recent Developments

• In August 2023: Onyx Coffee Lab Announces Product Launch Of Extractions, A Premium, Full-Flavor Specialty Coffee Concentrate. This shelf-stable coffee extract sets a new standard of convenience while maintaining flavor and quality.
• In June 2023, Kum & Go launched a specialty coffee brand across 300 stores across 13 states in The US. This expansion follows the brand’s initial launch in select locations in January 2022.

Report Scope