A report produced by the ICO has concluded that although coffee has been increasing in popularity in Russia over the last two decades, the potential for further growth seems “limited.”
“The main drivers of demand are innovations such as single-serve machines and higher quality roasted coffee, which are starting to cannibalise the overwhelming market share of instant coffee,” the report said. “However, these trends are generally dependent on having a pool of relatively affluent consumers with disposable income, which is subject to continued economic growth.”
Coffee consumption, particularly in emerging markets such as Russia, is affected by economic growth, which in Russia is heavily dependent on oil prices. The World Bank has recently released projections for real GDP growth in Russia for 2015, 2016 and 2017 of -2.7, +0.7 and +2.5 per cent respectively. This could have significant consequences for the continued growth of the domestic coffee sector.
“Furthermore,” said the report, “Rusteacoffee has reported that coffee will continue developing, but will generally only be accessible to a limited segment of the population, and as such will struggle to show any significant increases in consumption. The history of tea drinking, and its engrained status in the Russian culture, also presents a barrier to further growth in the coffee sector. While coffee is expected to continue becoming more popular, it is likely that this may be limited to niche segments such as coffee pods and out-of-home consumption.