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SA COFFEE INDUSTRY LANDSCAPE REPORT COMPILED: FEBRUARY 2017

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SA COFFEE INDUSTRY LANDSCAPE REPORT

COMPILED: FEBRUARY 2017

REPORT OVERVIEW

For the Global Coffee Industry Section:

What are the current market dynamics (production, consumption, pricing) of the Global Coffee industry?

What are the Global Coffee industry trends, drivers, and restraints?

For the South African Coffee Industry Section:

What are the current market dynamics (importing, sustainability, consumption, pricing) of the SA Coffee

industry?

Who are the key manufacturing players and importers/roasters in the SA Coffee industry?

What are the South African industry trends, drivers and challenges?

For the South African Retail and Pricing Analysis Section:

Who are the key retail players (retail outlets, independents and supermarkets) in the SA Coffee industry?

What are the prices of Coffee (OOH, instant, ground, beans, capsules) across SA retail outlets?

In terms of South African Consumer Insights and Trends:

What are the latest consumer and consumption trends?

What are the Instant and Ground Coffee consumer profile trends (2011-2015)? Gender, Age, Life Stage,

LSM, Household Income, Home Language and Province.

SOME KEY QUESTIONS THE REPORT WILL HELP YOU TO ANSWER:

The South African Coffee Industry Landscape Report (137 pages) provides a dynamic synthesis of

industry research, examining the local and global Coffee industry from a uniquely holistic perspective, with

detailed insights into the entire value chain – from manufacturing and importing to sustainability, retailing,

pricing and consumption trends.

2

SCREENSHOTS FROM REPORT

137 page report filled with detailed charts, graphs, tables and insights

3

The coffee market ended 2015/16 in deficit for the

second consecutive year, but stocks accumulated in

2012/13 and 2013/14 have allowed the market to

remain well supplied.

According to the International Coffee Organization

(ICO), the deficit between production and

consumption in 2015/16 is -3.3 million 60kg bags as

shown below in the graph.

SAMPLE FROM REPORTGLOBAL INDUSTRY CONSUMPTION

In terms of exports, global coffee

consumption and the instant coffee

segment is growing at the rate of about

2.5%.

Between 2008 and 2016, past-day

consumption of gourmet coffee beverages in

the U.S. soared from 13% to 36% among 18

to 24-year-olds, and from 19% to 41% for

those aged 25-39.

For espresso-based beverages, there were

significant increases from 9% to 22% for the

18-24 age group and 8% to 29% for those

aged 25-39 in the U.S.

Although there is approximately a 2%

decline in total consumption in the U.S.,

consumers are continuing to increase

consumption in retail coffee shops, offices,

shared work-spaces and other out-of-home

environments.

4Source: Economic Times, Daily coffee news, ICO

145.5

147.0

149.4

151.3150.9

152.1

146.6

148.0

142

144

146

148

150

152

154

2012/2013 2013/2014 2014/2015 2015/2016

Mill

ion 6

0kg b

ags

WORLD COFFEE CONSUMPTION AND PRODUCTION: 2012-2016

Consumption Production

Image Source: Pexels’ Freepik

SAMPLE FROM REPORT MARKET D

SOUTH AFRICAN MARKET DYNAMICS AND TRENDS

There is a shift towards sugar

sweetened drinks as opposed to the

traditional black espresso.

“The trend we noticed is the rise in signature

sweetened drinks. Not too long ago, it

wasn’t uncommon that specialty cafes

weren’t carrying even milk and sugar. We

have found that our past signature drinks,

the Apple Betty and Espresso Julep, were a

big hit with our customers and well-received

in the coffee community.”- Amelia Evens,

retail general manager at Toby’s Estate.

Growing emphasis on cold and iced

beverages

Hot coffee has had the focus of innovation

during the past decade, with a huge number

of flavour innovations. However, in the last

couple of years, there has been a move

towards cold coffee drinks.

5Source: Ilovecoffee Image Source: Freepik; Mistobox

“People are finding new and better ways to brew

coffee without heat, and it’s exciting. The cold brew

craze of the last couple years is just the beginning,

and that’s why I wanted to get moving on my Draft

Latte — an iced latte with textured milk and cold

brewed coffee served from a tap. No heat involved.

With the response we’ve seen to the Draft Latte, I

guarantee we’re going to see a major shift in the

industry towards cold coffee drinks.”-Todd, CEO of

La Colombe.

6

Conceived in New York, designed in

Toronto and created in Cape Town. The

word “Coco” is synonymous with

luxury and “Safar” means journey in

many languages.

Coco Safar’s greatest passion is to create

the world’s finest couture coffee experience

and that starts with finding and blending top

quality specialty and auction lot coffee

beans. The curated beans are micro-

roasted in small batches for best quality and

ground to find perfection.

Coco Safar specializes in providing Third

Wave quality coffee and auction lot coffee

as a capsule experience (compatible with

Nespresso machines).

The Capsule Emporium collections offer a

wide selection of fine coffees curated and

blended from the finest specialty beans and

regions around the world through their City

Roast and Premium ranges.

Source:coco safar Image Source: coco safar

SAMPLE FROM REPORT SA COFFEE IMPORTERS / ROASTERS: COCO SAFAR

Their Coffee range includes:

City Roast Collection:

Ristretto

Espresso

Decaf Espresso

Allongé

Crop to Capsule Luxury

Collections:

The Vintage Collection

(Brazilian)

The Estate Collection

(African)

Their Espresso Bar is home to the world’s

first Spirit Idrocompresso machine -

commissioned by Coco Safar and hand-

built in Holland by the world’s leading

designer and maker of commercial

espresso machines, Kees van der Westen.

7

Latte Espresso Americano Cappuccino

R27.90R14.90

(Single)

R20.90

(Double)R21.90

R22.90 (Regular)

R29.90 (Grande)

R20.00 (Small)

R14.00

(Small)

R22.00

(Large)

R18.00 (Small) R20.00 (Small)

R26.00 (Medium) R24.00 (Medium) R26.00 (Medium)

R30.00 (Large) R28.00 (Large) R30.00 (Large)

R25.00R17.00

(Single)

R21.00

(Double)R20.00 R22.00

R24.00

R16.00

(Single)

R20.00

(Double)R22.00

R22.00 (Regular)

R28.00 (Mega)

R15.00 (Small)

R16 (Standard)

R15.00 (Small) R20.00 (Small)

R20.00 (Medium) R20.00 (Medium) R23.00 (Medium)

R25.00 (Large) R23.00 (Large) R27.00 (Large)

R18.00 (Small)

R11.50 (Standard)

R14.00 (Small) R17.00 (Small)

R21.00 (Standard) R17.00 (Standard) R20.00 (Standard)

SAMPLE FROM REPORT PRICING ANALYSIS: RETAIL OUTLETS

This pricing analysis was conducted at retail stores and supermarkets during w/c 6 February 2017.

8

SAMPLE FROM REPORT INSTANT VS. GROUND COFFEE CONSUMERS: LSM

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2011 2012 2013 2014 2015 2011 2012 2013 2014 2015

22% 20% 17% 17% 17%25%

18% 19% 16% 15%

16% 16%16% 14% 14%

14%17% 14%

12% 12%

22% 23%24% 24% 22%

17%17% 17%

19% 18%

12% 13% 14% 15% 15% 10%10% 11%

11% 14%

10% 10% 10% 10% 10%9%

9% 9% 11% 10%

11% 11% 12% 13% 13%11%

14% 16% 15% 16%

8% 7% 8% 8% 8% 14% 16% 15% 16% 15%

LSM profile of Instant Coffee Consumers vs. Ground Coffee Consumers: 2011-2015

LSM 10

LSM 9

LSM 8

LSM 7

LSM 6

LSM 5

LSM 1-4

In 2015, 17% of Instant Coffee consumers were living in LSM 1-4 households, a decrease from 22% in 2011.

Consumers living in LSM 7 households increased from 12% to 15% over the same period.

15% of Ground Coffee consumers were living in LSM 1-4 households in 2015, a significant decrease from 25% in

2011. Whilst consumers living in LSM 9 households had increased from 11% to 16% over the same period.

Instant Coffee Consumers Ground Coffee Consumers

Source: AMPS 2011A-2015A (Adult population 16+ years)

Sample Size: 24 427 (2011); 24 615 (2012); 24 824 (2013); 24 994 (2014); 25 078 (2015)

Based on weighted numbers

TABLE OF CONTENTS

1. Executive Summary (5 pages):

1.1 Global Industry Snapshot

1.2 South African Industry Snapshot

1.3 Industry Drivers and Restraints

1.4 SA Consumer Trends: Instant Coffee

1.5 SA Consumer Trends: Ground Coffee

2. Global Coffee Industry (12 pages):

2.1 Global Coffee Industry Overview

2.2 Global Coffee Industry Production: BREAKDOWN OF TOP COFFEE INDUSTRY PRODUCERS PRODUCTION (IN THOUSAND 60KG BAGS) FOR 2014/15 AND

2015/16; GLOBAL ARABICA AND ROBUSTA COFFEE PRODUCTION: 2012-2016 (Table and Graph)

2.3 Global Coffee Industry Consumption: WORLD COFFEE CONSUMPTION AND PRODUCTION 2012-2016 (Graph)

2.4 Global Coffee Industry Pricing: ICO COMPOSITE INDICATOR PRICES FOR JANUARY 2017 IN U.S CENTS/ LB; ICO COMPOSITE INDICATOR PRICES FOR

COFFEE: SEPTEMBER 2015-SEPTEMBER 2016 (Table and Graph)

2.5 Global Coffee Industry Trade: GLOBAL EXPORT STATISTICS FOR DIFFERENT COFFEE TYPES 2015-2016 TOTAL; GLOBAL EXPORTS AND IMPORTS

WORLDWIDE FROM 2002/2003 TO 2016/2017 (IN 1000 60 KG BAGS) (Table and Graph)

2.6 Key Global Coffee Markets: WORLD COFFEE CONSUMPTION: OCTOBER-SEPTEMBER 2015/16 (IN THOUSAND 60KG BAGS) (Graph)

2.7 Global Coffee Industry Trends

2.8 Global Coffee Industry Drivers

2.9 Global Coffee Industry Restraints

9

TABLE OF CONTENTS

3. South African Coffee Industry (38 pages):

3.1 South African Coffee Industry Overview (11 pages)

3.1.1 South African Coffee Industry Overview

3.1.2 South African Coffee Production

3.1.3 South African Coffee Consumption: SOUTH AFRICA’S COFFEE CONSUMPTION: OCTOBER 2012-SEPTEMBER 2016 (IN THOUSAND 60 KG BAGS) (Graph)

3.1.4 South African Coffee Imports: SOUTH AFRICA’S GREEN COFFEE IMPORTS BY YEAR: 2011-2016 (IN THOUSAND 60 KG BAGS) (Graph and Table)

3.1.5 South African Coffee Market Dynamics and Trends: STARBUCKS VS. SA AVERAGE: 2016 (SMALLEST SIZE COFFEE) (Graph and Table)

3.1.6 South African Coffee Market Drivers

3.1.7 South African Coffee Industry Challenges

3.2 South African Coffee Industry Sustainability (6 pages)

3.2.1 Sustainability in South Africa: Fairtrade

3.2.2 Sustainability in South Africa: Fairtrade: Coffee

3.2.3 Sustainability in South Africa: Rainforest Alliance

3.2.4 Sustainability in South Africa: Rainforest Alliance: Coffee

3.2.5 Sustainability in South Africa: UTZ

3.2.6 Sustainability in South Africa: UTZ: Coffee

10

TABLE OF CONTENTS

3. South African Coffee Industry continued (38 pages):

3.3 South African Coffee Manufacturing Overview (8 pages)

3.3.1 SA Coffee Manufacturers: AVI: Overview

3.3.2 SA Coffee Manufacturers: AVI: Brands

3.3.3 SA Coffee Manufacturers: Famous Brands: Overview

3.3.4 SA Coffee Manufacturers: Famous Brands: Brands

3.3.5 SA Coffee Manufacturers: Mondeléz International & JDE: Overview

3.3.6 SA Coffee Manufacturers: Mondeléz International & JDE: Brands

3.3.7 SA Coffee Manufacturers: Nestlé South Africa: Overview

3.3.8 SA Coffee Manufacturers: Nestlé South Africa: Brands

11

TABLE OF CONTENTS

12

3. South African Coffee Industry continued (38 pages):

3.4 South African Coffee Importing and Roaster Overview (13 pages)

3.4.1 SA Coffee Importers/ Roasters: Bean There

3.4.2 SA Coffee Importers/ Roasters: Chilla Coffee

3.4.3 SA Coffee Importers/ Roasters: Coco Safar

3.4.4 SA Coffee Importers/ Roasters: Foghound Interactive Coffee Company

3.4.5 SA Coffee Importers/ Roasters: Gourmet Coffee Roasters

3.4.6 SA Coffee Importers/ Roasters: Green Bean African Coffee Roastery

3.4.7 SA Coffee Importers/ Roasters: Mastertons

3.4.8 SA Coffee Importers/ Roasters: Quaffee

3.4.9 SA Coffee Importers/ Roasters: Ryo Coffee

3.4.10 SA Coffee Importers/ Roasters: Terbodore Coffee Roasters

3.4.11 SA Coffee Importers/ Roasters: Urban Grind

3.4.12 SA Coffee Importers/ Roasters: Other

TABLE OF CONTENTS

4. South African Coffee Retail Analysis (41 pages):

4.1 South African Coffee Retail Overview (31 pages)

4.1.1 Dulcé Café

4.1.2 Dunkin’ Donuts

4.1.3 Famous Brands: Europa

4.1.4 Famous Brands: Fego Caffé

4.1.5 Famous Brands: Mugg & Bean

4.1.6 Famous Brands: Vovo Telo

4.1.7 Famous Brands: Wimpy

4.1.8 Krispy Kreme Doughnuts

4.1.9 McDonald’s Corporate: McCafé

4.1.10 Peacock

4.1.11 The Seattle Coffee Company

4.1.12 Starbucks

4.1.13 Vida E Caffé

4.1.14 Wiesenhof Coffee Holdings

4.1.15 Wild Bean Café

4.1.16 Woolworths Café

4.1.17 SA Retail: Independent Coffee Outlets: SA’S TOP RATED INDEPENDENT OUTLETS (Table)

4.1.18 SA Retail: Independent, Online and Other Franchise Coffee Stores (Tables)

13

TABLE OF CONTENTS

4. South African Coffee Retail Analysis continued (41 pages):

4.1 South African Coffee Retail Overview (31 pages)

4.1.19 SA Retail Overview

4.1.20 SA Retailer: Checkers

4.1.21 SA Retailer: Massmart

4.1.22 SA Retailer: Pick n Pay

4.1.23 SA Retailer: Shoprite: SALES GROWTH PERCENTAGE FOR YEAR (2015) (Graph)

4.1.24 SA Retailer: Spar and Spar Southern Africa

4.1.25 SA Retailer: Woolworths: OPERATING PROFIT BY SEGMENT (RM): 2014-2016; WOOLWORTHS VS MARKET GROWTH (3mma) (Graphs)

14

TABLE OF CONTENTS

4. South African Coffee Retail Analysis (41 pages):

4.2 Coffee Pricing Analysis (10 pages) (conducted w/c 6 February 2017)

4.2.1 Retail Outlets: Dulcé Café; Dunkin Donuts, Europa, Fego Caffé, Krispy Kreme Doughnuts; McCafé; Mugg & Bean; Peacock,

Seattle Coffee Company; Starbucks Coffee; Vida E Caffé; Vovo Telo; Wiesenhof Coffee Holdings; Wild Bean Café; Wimpy,

Woolworths Café– Comparative Pricing of Latte, Espresso, Americano, and Cappuccino

4.2.2 Instant Coffee Brands: Douwe Egberts Pure Gold, Frisco, Jacobs Kronung, Koffiehuis, Nescafé Alta Rica; Nescafé Classic;

Nescafé Gold; Nescafé Ricoffy, Nescafé Ricoffy Decaf; Café Enrista Cappuccino; Café Enrista 3-in-1; Hug in a Mug; Nescafé

Cappuccino; Nescafé Ricoffy 3 in 1- Comparative Pricing at Checkers, Pick n Pay, Shoprite, Spar, Makro and Woolworths

4.2.3 Ground Coffee Brands: Douwe Egberts; House of Coffees, Illy, Importers Coffee, Kenna, Lavazza ORO Ground, Mugg & Bean;

Continental Espresso Ground Coffee, Illy Espresso, Woolworths Café Gold - Comparative Pricing at Checkers, Pick n Pay,

Shoprite, Spar, Makro and Woolworths

4.2.4 Coffee Capsule Brands: Cafféluxe; Importers Coffee Capsules; Nescafé Dolce Gusto; Mugg & Bean Coffee Columbia -

Comparative Pricing at Checkers, Pick n Pay, Spar and Makro

4.2.5 Imported Coffee Beans: Foghound Interactive Coffee, Green Bean African Coffee Roastery, Mastertons, RYO Coffee,

Terbodore Coffee Roasters

15

TABLE OF CONTENTS

5. South African Consumer Trends (16 pages):

5.1 South African Consumer Overview

5.2 Reasons for Increase in Local Coffee Consumption

5.2 AMPS Survey Methodology and Sample Design

5.3 AMPS Survey Questions Asked

5.4 Instant Coffee vs. Ground Coffee Consumers (Gender): 2011-2015 (Graph)

5.5 Instant Coffee vs. Ground Coffee Consumers (Age Group): 2011-2015 (Graph)

5.6 Instant Coffee vs. Ground Coffee Consumers (Lifestage): 2011-2015 (Graph)

5.7 Instant Coffee vs. Ground Coffee Consumers (LSM): 2011-2015 (Graph)

5.8 Instant Coffee vs. Ground Coffee Consumers (Race): 2011-2015 (Graph)

5.9 Instant Coffee vs. Ground Coffee Consumers (Home Language): 2011-2015 (Graph)

5.10 Instant Coffee vs. Ground Coffee Consumers (Province): 2011-2015 (Graph)

5.11 Instant Coffee vs. Ground Coffee Consumers (Household Income): 2011-2015 (Graph)

5.12 Frequency: Instant Coffee vs. Ground Coffee Consumers: 2011-2015 (Tables)

16

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