The European coffee market comprises businesses that engage in the production, trading, retail and distribution of coffee products and related machinery. Players in this industry offer coffee beans, ground blends, capsules, (non-)professional coffee machines, roasting equipment and related coffee services. As such, we segmented the European market into: (i) production - coffee products, (ii) production - coffee machines, (iii) B2C, (iv) trading and (v) services.

The European market is considered fragmented across all segments. Herein, the production segment has been subject to multiple consolidation waves in the last decade. Industry experts (interviews by Gain.pro) expect consolidation to persist, however, at a slower pace. Consolidation tends to be heavily pursued by industry incumbents (e.g. Nestlé, JDE Peet’s, Acomo, Lavazza Group) to strengthen their competitive positioning through broader product offerings (e.g. brands). With rising interest rates, cash-negative businesses will be taken over by more profitable peers. Additionally, B2C players (i.e. retailers, coffee shop franchises) demonstrated the greatest growth trajectory, mostly on the back of rapid international expansion.

Sponsor-led interest has been limited with ~32% of identified assets being backed by financial sponsors (March 2023). Private equity investors are primarily detracted by competition from established mega-conglomerates controlling the majority of the market (e.g. Nestlé, JDE Peet’s). However, the industry offers ample consolidation opportunities due to the large pool of small- to medium-sized players.

ESG topics play a significant role in the coffee market. The primary environmental issues revolve around the use of harmful products during the cultivation of coffee and CO2 emissions from roasting and transporting coffee. Reversely, the coffee market is significantly impacted by climate change, limiting the viable cultivation area and increasing variance in harvest yields. From a social perspective, ethical sourcing of coffee beans is at the top of mind for incumbents, with child labour and the lacking impact of the fair-trade label as the main points. An executive interviewed by Gain.pro expects that in the near future, the supply chain will be fully traceable to ensure ethical sourcing.