Instant Coffee & the Problem with Single-Sector Marketing

Smithsonian.com’s K. Annie Smith recently published a fascinating post on the improving market share of traditional instant or ready-to-drink (RTD) coffee. In the United States, those brands haven’t fared well recently; the rise of Starbucks and the specialty coffee trend have shifted consumer tastes in a more high-end direction, and capsule coffee brewers have captured more of the convenience market. Yet instant coffee’s market share has been growing by seven to ten percent each year and is projected to grow further. Why? Smith explains:

Who is buying this stuff? China.

The country that historically drank about two cups of coffee per year per person is now the fourth-largest global market for ready to drink (RTD) coffee in terms of volume. The reason? Convenience. A 2012 poll found that 70 percent of Chinese workers said they were overworked and more than 40 percent stated they had less leisure time than previous years. Plus, most new buyers are used to boiling water to make tea, often owning just a teapot and not the appliances needed to make a fresh pot of coffee.

In short, instant coffee is a gateway for coffee in regions of the world that tend to favor tea. This growth in the coffee sector worldwide is good news for anyone in the industry, from instant manufacturers to specialty roasters. As coffee’s market penetration grows worldwide, consumers’ taste for the bean will grow to encompass a variety of grades and types, opening up opportunities for specialty producers.

For marketers, this reality illustrates the dangers of fixating too narrowly on one trend within a sector (or on a single sector). Specialty coffee may be the dominant trend in North America, with instant coffee appearing to be a vanishing segment, but in emerging markets the situation is reversed. Similarly, a product might be off-trend in one area but might have another strength that will result in a much larger market share. Food products are among the most complex products on the market, and consumers make their purchasing decisions based on a complex and shifting array of factors.

That should be encouraging; there’s nearly always a fruitful angle for your marketing, but it also means your thinking needs to be multi-faceted. You can’t base your strategic decisions on a single trend or a narrow understanding of the market, lest you miss an opportunity (due to what we call “single-sector marketing”). At MarketPlace, we take a comprehensive view of the food industry, allowing us to develop your brand and products with an eye on long-term strategy. Get in touch today—we’d love to help you uncover hidden trends to strengthen your business.