Flat white lovers aren't drinking any less as a result of the Covid-19 crisis, but the pandemic will have impacts on the coffee market as consumers adapt their sources of caffeine, says Rabobank.
The agribusiness banker said closure of food service outlets and offices during Covid lockdowns had created "new habits", with households moving to online purchases and buying whole-bean coffee.
The bank also notes a trend towards stay-at-home premium coffees.
The upshot is that global coffee demand will drop by about 60 million kilograms this year, its says, with the industry coming under "significant pricing pressure" as price-sensitive consumers trade down and others move to brewing their own higher quality coffee at home.
Senior beverage analyst Jim Watson said the changes to the coffee market had been driven by three broad stages, including the "coffee stocking-up period" in early March, closure of on-premise coffee shops and now, the move into global economic recession.
The US-based analyst said stocking up had coincided with a move to "familiar, flagship brands" which in some cases had shown significant growth after years of decline. Some consumers were limited to larger supermarkets and wanted to minimise in-store shopping time so relied on brands to speed up shopping aisle decision-making.
The bank's "Covid-19 effects on coffee" report notes that the most significant impact of the pandemic would be from the shutdown of cafes, restaurants and other food service outlets.
"Long-term impacts from that will include the permanent closure of some specialty coffee shops, a shift to increased coffee purchases from larger retail coffee chains or quick-service restaurants, an expansion of contactless retail, greater diversification from the coffee industry into ecommerce and retail and growth of the ready-to-drink coffee category."
The report said the on-premise shut-down is also likely to act as a boost for at-home coffee brewing.
"Brewing at home is becoming a habit again, as people have more time at home and old machines are dusted off and new machines purchased."
"The biggest gainer over recent months has not been coffee pods, but whole-bean sales – likely a result of speciality coffee shop regulars moving their premium coffee consumption to the home."
Watson said, however, that he expected coffee shops to fare significantly better than bars and restaurants overall. "This is because they do a much greater share of business to-go and have better potential for drive-through formats and contactless retail."
Hans Pronk, owner of Auckland coffee roaster Merito Coffee, said online sales had shown good initial growth and that sales to suburban cafe clients had recovered really well on the strength of "stay at home" business.
He said that in his premium end of the market, there hadn't been an discernible shift in pricing yet.
Starbucks, one of the world's biggest coffee retailers, has re-opened all of its stores in China and about 90 per cent of those in the US. The chain, which has about 28,000 outlets worldwide, has 24 stores in NZ, all of which are open.
In its first-quarter report, the group said its overall sales were at about 60 per cent of comparable year-on-year sales for May. It had increased its 'active rewards' club business by 15 per cent for the last quarter.
In the medium term, Rabobank's Watson believes the industry will come under pricing pressure. "We may also see a barbell effect, as certain consumers under pressure trade down while those less impacted by the recession treat high-end coffee as an affordable luxury."
He said consumers could very well upgrade the quality of their coffee at home and spend less than at the coffee shop.
"For the coffee roaster, this might appear as premiumisation as the consumer is buying a more expensive brand, even as overall coffee expenditure goes down.
"So we estimate the overall trading down effect to be a bit more muted compared with previous recessions."