The premiumisation of tea and coffee has aided industry revenue growth.
Melbourne, Australia (PRWEB) August 03, 2014
Strong demand and the rapid premiumisation of tea and coffee products has driven revenue growth in the Tea and Coffee Manufacturing industry over the past five years. Industry revenue is forecast to rise by an annualized 4.4% over the five years through 2014-15. This strong growth includes a rise of 2.5% in 2014-15 to total $2.3 billion. Australia's coffee culture has supported demand for industry products over the past five years, with particularly strong growth at the higher price points. Similar trends have been evident across the industry's tea segments, with consumers willing to spend more for an enhanced product offering. IBISWorld industry analyst Stephen Gargano states “manufacturers have worked to meet consumer demand by offering a raft of new premium products across the industry in an effort to attract premium prices.” This trend is expected to continue over the next five years.
The industry has benefited from the introduction of new products and technologies over the past five years. Coffee in the home has been revolutionized by the widespread adoption of coffee capsule systems. These systems have greatly improved convenience for consumers who wish to have cafe-style coffee at home. These products carry much higher prices per coffee than typical ground or instant coffee, allowing manufacturers to use less coffee to achieve greater margins. The adoption of coffee capsules and the wider use of fresh coffee have been boosted by falling appliance costs, with most consumers able to purchase coffee machines for a relatively low cost.
According to Gargano, “industry profitability has risen over the past five years, benefiting from the move towards premium products and away from cheaper traditional teas and instant coffee.” Industry revenue is expected to continue its growth pattern over the next five years. However, strong competition and a rising number of businesses are expected to restrain growth to a degree. As companies expand their product range, price competition is expected to limit revenue and profit. Despite pressure on profit, resilient demand, forecast decreases in world coffee prices over much of the period and strict cost controls are expected to ensure that both revenue and profit remain strong.
The Tea and Coffee Manufacturing industry displays a medium level of market share concentration. Aside from the industry's major players, a large number of smaller firms, service niche, and local markets, particularly in the coffee beans and grounds and loose-leaf tea product segments. Market share concentration has decreased over the past five years due to fragmentation within the industry. The industry’s major players include Nestle Australia Ltd, DE Holding Australia Pty Ltd, Cantarella Holdings Pty Ltd, and Unilever Australia (Holdings) Pty Ltd.
For more information, visit IBISWorld’s Tea and Coffee Manufacturing report in Australia industry page.
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IBISWorld Industry Report Key Topics
Firms in this industry primarily process and manufacture tea and coffee from tea leaves and coffee beans. Industry firms are engaged in the production of loose-leaf tea, tea bags, fresh coffee, and instant coffee.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Basis of Competition
Barriers to Entry
Technology & Systems
Regulation & Policy
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