Market Trends of South America Coffee Industry
This section covers the major market trends shaping the South America Coffee Market according to our research experts:
Increasing Spending Power Augmenting the Growth for Specialty Coffee
Increasing global exposure, western culture, and penetration of established coffee giants like Starbucks, Nestle, and JDE Peet's are anticipated to be the key factors that drive the expansion of coffee chains, especially in the South American region. Brazil is one of the top exporters of coffee. According to the World Bank in 2021, over the last five years, Brazil's economic stability and higher wages favored the ascension of more than 20 million people from the lower social classes to the middle classes. The per capita income increased from USD 6814.9 in 2020 to USD 7518.8 in 2021, and the new middle classes have already begun to influence consumption patterns.
Recently, coffee consumption witnessed tremendous growth as outlets gained popularity as hangout zones for friends, family, colleagues, and business associates, among others. Consumers in Argentina are inclined toward an improved quality of coffee and specialty coffee drinks as they continue to be exposed to a growing number of specialist coffee shops in the country. The Argentina coffee market is unique and lucrative, offering exciting business opportunities for new players and space for continued development and consolidation. According to a survey by USDA Foreign Agricultural Service in 2021, on average, coffee consumption in the country is recorded at a kilo of coffee per person per year, which is equivalent to one cup of coffee every two days.
Supermarket/Hypermarket Holds A Prominent Share
Owing to the large retail space and the availability of diversified product ranges across various brands like Starbucks, Nestle, and JDE Peet's, hypermarkets/supermarkets remained to be the most preferred point of sales for coffee. The wide product visibility at supermarkets/hypermarkets further boosts the consumer base, leading to escalated sales. The acts, such as business expansion and the rising number of hypermarkets and supermarkets, add to the sales of these retail formats and significantly contribute to the market. For instance, in March 2021, Carrefour SA bought Walmart Inc.'s former Brazil unit to cement its position as the country's largest supermarket operator.
The growing market share of the segment has increased the demand for purchasing products in bulk, as customers want to make fewer trips to the store and receive more value for their money, which, in turn, has also increased the sales of coffee across the world. In order to supplement their sales in this segment, key consumer brands, such as Nescafe, Bru, Folgers, and Jacobs, are progressively distributing their products through this channel. Some of the leading supermarket chains across South America are Walmart, Carrefour, Tesco, and Costco among others. Some of the major factors responsible for the growth of this segment are the growing retail industry, the establishment of numerous retail outlets, the availability of a wider range of products, discounted prices, and excellent shopping experiences.
