Coffee Industry

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An Analysis of the Coffee Service industry in Metro Manila…

Abstract this study focuses on the unique coffee drinking culture, the specialty coffee industry, and the behavioral patterns of coffee drinkers. Coffee drinking in specialty coffee shops is compared with coffee drinking behavior at home, in school or in the office. the results are based on two consumer surveys, each involving three hundred respondents. One survey was conducted among current in-store coffee shop customers and the other among consumers aged sixteen to thirty, randomly picked among store/mall visitors, residential subdivisions and offices.

Coffee drinking, both in-home/office/school, and casual outside coffee drinking in Metro Manila has turned out to be as common a practice as dining. this is illustrated by the proliferation of coffee shops all around the metropolis and its outskirts, and the increased sales of instant coffee variants. More and more people are learning to appreciate coffee drinking not just as an “after dining” practice or a morning ritual, but as part of an emerging lifestyle. Coffee has become a convenient and easily available drink. increased sales of both instant coffee and coffee beans, and the proliferation of coffee shops have contributed to the growth in coffee sales in both retail and foodservice outlets. Retail sales of coffee increased by 6% in volume in 2005 and more than 13% in value over 2004. this growth in the coffee industry is remarkable considering major economic downturns and political unrest.

John Gokongwei School of Management



the participants in the local coffee industry are now more competitive players, each battling for its own share of the market. table 1 illustrates coffee brand shares from years 2002-2005, with Nescafe taking a huge lead through the years. table 1. Coffee Brand Shares 2002 20051 (% retail value rsp) Brand Nescafé Great taste taster’s Choice Maxwell House Kaffe de Oro blend 45 Gourmet’s Culinary Exchange Others total

Nestlé Philippines inc Universal Robina Corp Nestlé Philippines inc Kraft Foods (Philippines) inc. General Milling Corp Universal Robina Corp Gourmet Farms inc Culinary Exchange, the

91.8 2.5 3.2 1.6 0.2 0.1 0.1 0.1 0.5 100.0

91.0 3.0 3.3 1.7 0.3 0.2 0.1 0.1 0.4 100.0

90.6 3.6 2.7 1.9 0.3 0.1 0.1 0.1 0.6 100.0

90.9 3.4 2.6 1.9 0.3 0.2 0.1 0.1 0.6 100.0

Coffee specialty shops on the other hand, are dominated by Starbucks, Seattle’s best, Figaro, Gloria Jean’s and Coffee bean & tea Leaf. All these coffee shops continue to mushroom all around the metropolis. the distribution of these outlets in terms of branches across the different areas in Metro Manila can be found in the Appendix. the coffee category, both in-home and casual outside drinking, seems to be exhibiting a steady growth, however, the total coffee category in the Philippines is struggling to keep on a stable track. “A study conducted by the research group AC Nielsen showed an alarming decline in coffee sales of 13% for the months of January to April 2006, compared to the same period in 2003 for the total coffee category. this figure validates a downtrend in annual coffee consumption of Filipinos over the years. the only consolation for this downtrend is the increase in sales observed in the coffee mixes and out-of-home segments due to changing consumer behavior towards coffee.” (the Philippine Star, business As Usual, June 5, 2006) Source: trade press (Philippine business Review, the Malaya, the Manila bulletin, Philippine daily inquirer), company research, trade interviews, Euromonitor international estimates 1


Loyola Schools Review Vol. VI

An Analysis of the Coffee Service industry in Metro Manila…

this out-of-home coffee drinking practice, and the consumer behavioral patterns behind this...
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