Many retailers have inundated the market with private-label coffee and tea products
New York, NY (PRWEB) March 22, 2015
Over the past five years, the Coffee and Tea Production industry has fared well, thanks to many consumers valuing the taste and versatility of tea and coffee blends. According to the Coffee Association of Canada's Canadian Coffee Drinking Study in 2013 (latest data available), Canadians consume about 3.2 cups of coffee per day on average, stimulating industry revenue. Furthermore, more consumers have valued coffee and tea products made with input commodities, such as coffee beans and tea leaves, that are derived ethically from coffee bean or tea leaf plantations. As a result of many Canadians willingness to pay a premium for fair trade and organic products, industry revenue has risen over the past five years.
Nevertheless, the Coffee and Tea Production industry has still contended with many challenges. “For example, as more chain retailers and mass merchandisers have characterized the retail sector, coffee and tea producers have grappled with retailers using their large-scale operations as leverage to secure low-cost prices for industry products,” IBISWorld Economic Analyst Sarah Turk says in the updated report. Further exacerbating this trend, many retailers have inundated the market with private-label coffee and tea products while using in-store promotional activity to develop a strong customer base, which has intensified competition for industry operators. However, as consumers have valued coffee and tea products with high quality and consistency, the industry has benefited from more consumers purchasing specialized blends, compared with low-cost tea and coffee products sold in bulk. During the five years to 2015, industry revenue is anticipated to grow. In 2015, revenue is expected to slightly contract, which can be attributed to volatile input commodities prices, with coffee bean prices skyrocketing in 2014, resulting in manufacturers being slow to reflect raw material prices in their product pricing. However, profit is expected to, as some producers have developed a market niche, such as offering a product portfolio of free trade and organic coffee and tea.
During the five years to 2020, industry revenue is forecast to grow. “The industry will benefit from more coffee and tea aficionados, such as consumers who are interested in the health merits of tea and who purchase specialty tea infused with additional fruit flavours,” Turk says in the report.
For more information, visit IBISWorld’s Coffee & Tea Production in Canada industry report page.
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IBISWorld industry Report Key Topics
This industry primarily roasts and packages imported coffee beans, as well as blends and packages tea. They may also produce coffee extracts or concentrates, including instant or freeze-dried varieties. Establishments that primarily bottle or can iced coffee and tea, as well as ready-to-drink tea, are excluded from the industry.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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