Coffee, Tea & Spices Wholesaling in the UK Industry Market Research Report Now Updated by IBISWorld

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The Coffee, Tea & Spices Wholesaling industry has had a bittersweet run. Although it has benefited from distributing inexpensive grocery staples in a financially distressed climate, it has also had to contend with increasing incidences of wholesale bypass. In the five years through 2012-13, industry revenue is expected to decline by 1.5% per annum. The future for the industry, like most of the economy, looks much brighter. Over the next five years, the industry is expected to rebound to growth, underpinned by the global financial recovery and a shift towards premium and high-margin products. Tea consumption will be largely driven by its perception of being a healthy beverage offering a variety of benefits. The increased availability of a wider range of coffee flavours in traditional supermarket and grocery stores will stimulate demand and raise awareness of the gourmet and specialty segment. Cocoa and spices consumption is also forecast to grow, particularly in the food-service and out-of-home markets. However, a risk to growth is the expected threat from supermarkets bypassing wholesalers given their buying power and industry clout. For these reasons, industry research firm IBISWorld has updated its report on the Coffee, Tea & Spices Wholesaling industry.

IBISWorld Market Research

IBISWorld Market Research

Wholesale bypass keeps the industry on its toes

The Coffee, Tea & Spices Wholesaling industry has had a bittersweet run. According to IBISWorld industry analyst Nick Sallmann, “although it has benefited from distributing inexpensive grocery staples in a financially distressed climate, it has also had to contend with increasing incidences of wholesale bypass”. The domestic consumption landscape is robust as Britain is the world's second-largest consumer of tea and the largest drinker of instant coffee in Europe. The United Kingdom houses some of the world's largest cocoa buyers and a strong multi-ethnic population. Producer-driven initiatives such as the fair-trade and organic movements have resulted in margins growing over the past five years, but were partially offset by profit erosion due to wholesale bypass. In the five years through 2012-13, industry revenue is expected to decline by 1.5% per annum. In 2012-13, industry revenue is expected to decline by 0.6% to £1.74 billion.

The future for the industry, like most of the economy, looks much brighter. Sallmann adds, “over the next five years, the industry is expected to rebound, underpinned by the global financial recovery and a shift towards premium and high-margin products”. Tea consumption will be largely driven by its perception of being a healthy beverage offering a variety of benefits. It is a rich source of well-known antioxidants such as vitamins C and E, which are expected to help lower the risk of heart disease, stroke and cancer. The increased availability of a wider range of coffee flavours in traditional supermarket and grocery stores will stimulate demand and raise awareness of the gourmet and specialty segment. Cocoa and spices consumption is also forecast to grow, particularly in the food-service and out-of-home markets. However, a risk to growth is the expected threat from supermarkets bypassing wholesalers given their buying power and industry clout. In the five years through 2017-18, revenue is forecast to increase.

The Coffee, Tea & Spices Wholesaling industry is subject to a high level of market share concentration, with the top four players expected to account for just over 71% of the market. Both the tea and coffee segments are dominated by multinational players that fiercely compete for market share and have well-established brand portfolios. They also have access to capital resources to invest in expensive brand promotion and advertising initiatives that aim to harness the power of their brands and create customer loyalty. Furthermore, given that the major players operate across various facets of the grocery industries, they often have the resources and capital muscle to bypass wholesalers and deal directly with retailers. Private label sales account for a small share of the market, with some of the major players also producing supermarket brands. Brand loyalty is an important factor for consumers when they make purchasing decisions. Major companies include Tata Global Beverages, Nestle UK, Kraft Foods and Unilever.

For more information on the Coffee, Tea & Spices Wholesaling industry, including latest industry trends, statistics, analysis and market share information, purchase the full report from IBISWorld, the nation’s largest publisher of industry research.

IBISWorld industry Report Key Topics

This industry wholesales coffee, tea, cocoa and spices. Companies purchase processed coffee, tea, cocoa and spices from various producers and sell them to retailers such as supermarkets, grocery stores, food-service firms and other institutional customers. Wholesalers perform no additional processing beyond repackaging; instead they focus on storage and distribution of products.
Industry Performance
Executive Summary
Key External Drivers
Current Performance
Industry Outlook
Industry Life Cycle
Products & Markets
Supply Chain
Products & Services
Major Markets
Globalisation & Trade
Business Locations
Competitive Landscape
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
Major Companies
Operating Conditions
Capital Intensity
Key Statistics
Industry Data
Annual Change
Key Ratios

About IBISWorld
Recognised as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on many UK industries. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in London, IBISWorld serves a range of business, professional service and government organisations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.co.uk or call (020) 3008 6568.

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