FASHION | Staff Reporter, Japan

Coffee dominates Japan's hot drinks sector

Vending machines and café chains are bringing continued growth for coffee demand.

Coffee consumption is quickly becoming ingrained in the lifestyle of Japanese urban customer, as the country's hot drinks sector is tipped to grow from $19.6b (JPY2.1t) in 2019 to $26.6b (JPY2.5t) by 2024, recording a compound annual growth rate (CAGR) of 3.6%, according to GlobalData.

Its report revealed that hot coffee was the largest in the sector with value sales of $13.4b (JPY1.4t) in 2019 and volume sales of 339 million kilogramme in the same year. The sector is also tipped to register the fastest value and volume growth category with 3.9% and 2% CAGRs during 2019-2024.

“Consumers’ keen eye for convenience has well been capitalized companies through installation of vending machines in myriad locations, as well as by café chains. This has improved quick pick-up spots in addition to offering place to hangout, thus offering continued growth in demand for coffee,” GlobalData's consumer analyst Anchal Bisht commented.

Meanwhile, an ongoing health and wellness trend has been encouraging consumers to seek out products with health benefits, resulting in rising penchant for green tea in the market.

“In addition, health conscious consumers have become more demanding in relation to transparency in ingredient formulation and claims such as FOSHU certification, which is likely to drive innovations in the market,” Anchal said.

The value share of Japan in the global hot drinks sector is projected to increase from 9.6% in 2019 to 9.9% by 2024. However, the country’s share at regional level is expected to fall from 24.3% in 2019 to 22.8% by 2024.

In terms of distribution channels, on-trade transactions accounted for 34.3% share of the overall hot drinks sales in 2019. Hot coffee and hot tea categories held higher share of on-trade sales compared to other hot drinks.

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