Issue link: http://read.dmtmag.com/i/581281
54 STiR tea & coffee industry international / Issue 5, 2015 (October/November) SOUTH +9.1% 19.4% GDE SP -4.2% 10.2% MG+ES+INT RJ +2.0% 19.6% EAST COAST -4.0% 6.9% INTERIOR SP +0.6% 16.3% MIDWEST +8.1% 8.9% IMP Valor Valor NORTHEAST +9.3% 18.7% GESTO brewer Três Corações ABIC commissioned Nielsen's to update their understanding of domestic consum- ers. This research, made in 2014, highlights several interesting facts: • Coffee is part of the daily routine in 98.2% of Brazilian homes where consumers drink coffee at least twice a day; • These consumers spend an average of $2 (R$7.80) per month on coffee and they purchase approximately 10.3 kilos of coffee per year; • Supermarkets are the biggest suppliers for these families and discounts and low prices are primary drivers for the majority of consumers; • Sustainability and traceability are not issues for most of Brazilian coffee drinkers; • 55% of people drink their coffee in cups and 20% drink their coffee in mugs; • While a majority prefers the traditional brewing method (paper or fabric filter), instant coffee wins more space in the market. • When talking about capsules the numbers are contrasting. Penetration of single- serve machines is 0.6% but these households spend an average $13 (R$53) per month on coffee. Among affluent households single-serve and electrical coffee machines are near the top of their wish list. "I brew coffee every day," said publisher and blogger, Monica Wagner. "I love when the delicious smell is in the house. It comforts me because it reminds of my mom's house. Later then, I usually have an espresso during the afternoon." Single-serve market Considering the country as a whole, single-serve and filter pods are not very popu- lar. Household penetration is less than 1% but consumption in capsules increased by 46.5% between 2012 and 2013. They are a big hit among the high and middle classes, where the buying power is greater. These consumers are open for new experiences as- sociated with glamour and exclusive products and brands. Nespresso (Nestlé's single- serve espresso brand and Nescafe Dulce Gusto) built an empire the past 10 years. Once technology patents expired, the company was forced to share the market with local and international manufacturers. Domestic Market Preferences Roasted and Ground Coffee 87.3% Instant Coffee 9.1% Cappuccino 2.2% Milk and Coffee (latte) 0.4% Capsules <1.0% **Source: Nielsen Scantrak Report TRES, Dolce Gusto, Delta Q, Illy, Saeco, Pilão Senseo, Krups, and Delong- hi are investing huge amounts of money in marketing rival products for the home. "The secret to making money in this market is not just having great coffee in the capsules. The key point is offer and distribute lots of machines that can extract the coffee. With no or few ma- chines in the market, no coffee is made," explains Eliana Relvas, the food engineer and coffee consultant for the supermar- ket Pão de Açúcar Group. Anticipating this demand, lots of small and medium coffee growers are investing in capsules. Usually they con- tract with private label manufacturers like Kaffa Café Brasil to roast and put their coffee in capsules compatible with Ne- spresso technology. How long will this continue? Nestlé is always seeking ways to get an exclusive technology to prevent the competition from supplying coffee for use in their machines. For this specific market–pods and single-serve–the state of São Paulo and South region have great potential to grow in a short term, even if the country is fac- ing a technical recession. Capsule Growth by Brazilian State (2014) Source: Nielsen Scantrack | ABIC The capsules segment presents the highest growth by value. The northeast, south, and coastal region including Rio de Janeiro are the fastest growing areas. Photo courtesy Três Corações Group