1. Trends in coffee consumption Presentation to Asoexport Coffee Summit Cartagena, Colombia on 6 th Nov, 2015 Gerard Stapleton, LMC International, Oxford, UK www.lmc.co.uk www.lmc.co.uk

2. Outline Emerging vs. mature markets Soluble consumption Outlook

3. Emerging vs. mature markets

4. In recent years, consumption growth has been dominated by emerging markets

5. Growth has been strong in both coffee producing countries and non-coffee producing countries

6. This has reduced the importance of mature markets, although they are still the largest segment of consumption

7. Over 2.5 mn bags are being added to consumption each year (80% of this growth is in the emerging markets)

8. Rising incomes are driving this growth (along with a growing middle class and urbanisation)

9. but per capita consumption levels remain relatively low

10. Consumption growth tends to follow an “S” curve: slow start, rapid acceleration, stagnation Japan

11. Tastes are also important, high soluble consumption is linked to high per capita tea consumption.

12. Per capita consumption is higher in the coffee producing countries than other emerging markets. Producers have a “taste” for coffee.

13. Growth in emerging market demand has seen a large increase in robusta demand, both as a proportion of total consumption…

14. …and in absolute volumes. This is due to growing conillon use in Brazil (until recently…) and higher soluble consumption.

15. There is greater flexibility in terms of blend formation in the mature markets. Least flexibility in the coffee producing countries. EU-28

16. In Japan, blends have been relatively stable over the last three years

17. In the US, specialty coffee now accounts for over one third of total consumption, compared to less than 25% in 2010 (less than 10% in the late 1990’s)

18. The growth in US specialty consumption has sustained washed arabica imports…

19. … excluding specialty consumption, US mainstream blends are more flexible in their formation.

20. Over 25% of US households now own single-serve coffee brewers. According to the NCA most owners consume more cups per day than non- owners.

21. German consumption saturated, but espresso and single-serve capsules remain growth segments.

22. Italian R&G exports support strong growth in espresso-based consumption

23. Russian imports reflect consumption growth plus increased stocks…

24. … while Russian monthly total coffee imports fluctuating in 2015, no clear sign of slowdown yet.

25. Starbucks comparable stores sales growth accelerating in Americas region.

26. In Japan, recent consumption growth seen in R&G and soluble segments.

27. In Brazil, consumption growth has slowed in line with economic growth.

28. Soluble markets

29. Global soluble consumption growth over 3% per year between 2008 and 2013…

30. …with strongest growth seen in the emerging markets (notably in China, Africa and ASEAN)

31. Freeze-dried consumption growth over 5% per year between 2008 and 2013.

32. Outlook

33. Slightly higher global consumption growth (~1.9%) is expected in 2016, although this crucially depends on economic growth prospects.

34. Soluble consumption is expected to continue growing at 3% per year.

35. Our longer-term forecasts point to global consumption of ~180 mn bags by 2025/26.

36. Thank You www.lmc.co.uk

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