The double-digit volume growth over four consecutive years, largely due to the emergence of the ubiquitous pod coffee machine, saw coffee machines gain the high penetration level of 44% households, according to a recent report on the coffee maker category by Euromonitor Australia. However, this boom came to a close in 2014.
Meanwhile, GFK’s latest data on the $145m market for Total Hot Beverage Makers reveals a fall by -0.2% in units Jan-Aug15 compared to Jan-Aug14, validating Euromonitor’s assessment. Nonetheless, this was offset by an increase of +10 % in value Jan-Aug15, compared to the same period last year.
Pods still drive entry level
The pod/capsule machines have extended the appeal of coffee machines to lower income households, whereas espresso machines remained as the coffee machine format of choice for more affluent households, according to the Euromonitor report.
“With sub-A$100 pod coffee models being sold in Australia’s two largest supermarket chains, Woolworths and Coles, it was difficult to increase the accessibility of coffee machines to Australian consumers any further, with the result that volume sales of pod coffee machines declined by 25% in 2014. Since this is 25% off the 2013 peak of 733,000 pod coffee machines, it still represents volume sales of 549,000 units,” the report stated.
Although standard coffee machines declined in both value and volume, Euromonitor believes that this is likely to only be temporary.
“Standard coffee machines in circulation are likely to reach the end of their lifecycle towards the end of the forecast period, resulting in a replacement market. Whilst consumers are highly likely to replace their coffee machines, it is not guaranteed that they will replace them with a standard model. The convenience offered by pod coffee machines, may lead to existing owners of coffee machines switching to the former.
“Some optimistic manufacturers of standard coffee machines believe that consumers who purchased a pod coffee machine during the report review period, will trade up to a standard coffee machine when it is time to replace their machine over the forecast period. Given the convenience of pod coffee machines however, this is far from certain, with the trend being equally likely to go in the other direction,” the report said.
As a result, Euromonitor expects pod coffee machines to return to volume growth over the forecast period, with a replacement market becoming more important and with a volume CAGR of 7%. Standard coffee machines on the other hand, will experience a marginally slower volume CAGR of 5%.