By Ruelle Albert D. Castro
Market research firm Euromonitor said the specialty coffee market shrank to $322.1 million in the Philippines from a peak of $480.8 million in 2009.
It is, however, expected to grow a compounded 10.2 percent by 2025 to be a $590.9 million industry.
“This was primarily due to the introduction of various pandemic containment measures such as the mandated temporary closures of foodservice establishments including specialist coffee shops,” it said, as cited in the market study included in The Figaro Group Inc.’s P1.77 billion initial public offering prospectus.
“The closure of specialist coffee shops affected both dine-in sales and takeaway sales, channelling many to consider going online. Since specialty coffee is typically consumed on premise upon fresh preparation together with other food items, many coffee drinkers turned to other alternatives such as brewing coffee at home, instant coffee or ready-to-drink coffee from retail channels,” Euromonitor said.
It pointed outthatthe government imposed a series of measures to curb the spread of the coronavirus, including lockdowns, dining-in restrictions and capacity limitation which crippled the operations of specialist coffee shops substantially.
To mitigate the impact of the measures introduced, Euromonitor said specialist coffee shops started to promote takeaway and online advance ordering for pick-up or delivery options to make it more convenient for customers and encourage off-premises consumption.
“Smaller businesses without the financial capability or resources to develop their own e-commerce business leverage third party food delivery platforms such as FoodPanda or GrabFood. Even though there are substantial costs charged by these platforms, they serve as a new channel of sales and help specialist coffee shops reach out to a wider customer base by promoting their businesses and products,” it said.
According to Euromonitor, the improving disposable income spurred consumers’ higher appreciation and increasing awareness for coffee from various origins, brewing methods and flavor profiles.
“Many consumers have also showed their willingness to pay for specialty coffee beans, hence shifting demand from cheaper, low-quality coffee products, such as instant coffee, to freshly prepared specialty coffee. This further rejuvenates the evergreen demand for specialist coffee shops in the Philippines and is likely to sustain in the forecast period,” it said.
As coffee drinkers become increasingly more sophisticated, many are often willing to go out of the way to travel to their favorite café to enjoy their cup of freshly brewed coffee, Euromonitor noted.
Their higher disposable income allows them to afford higher-quality food and drinks and they are demanding such products as part of their modern lifestyles, it said.
“Traditionally, the middle-class population is concentrated in urban areas, so specialist coffee shop brands often open new outlets in the larger cities to cater to the growing demand. Specialist coffee shop players are also expanding outside of Metro Manila to seize the untapped opportunities as well as to enjoy lower rents,” Euromonitor said.
It added thatthe pandemic disrupted the traditional workplace culture as companies require employees to work from home instead of reporting to office. Thus, an increasingly number of Filipinos are moving back to their hometowns in secondary cities and provinces.
“This is expected to spur the growth of specialist coffee shops in cities outside of Metro Manila in the forecast period,” Euromonitor said.
