The coffee and tea market in Poland continues to grow. Although Poles are still keeping a close eye on their wallets when shopping, premium and functional products are becoming more important. The changing preferences of consumers, who are balancing quality against price, remain a challenge for manufacturers. ‘According to industry analyses, the value of the hot drinks market in Poland currently exceeds PLN 12 billion,’ says Dr Sylwia Mokrysz from the Coffee and Tea Market Research Institute.

• Poland is one of the largest tea markets in Europe, and according to experts, the category itself is growing faster in value than in volume.
• Prices in shops are increasingly influenced by global factors. These range from the weather in producing countries to transport costs, energy prices and exchange rates.
• ‘In the case of coffee and tea, the impact of global factors is very strong, as these are raw materials which are mainly produced in tropical countries and their prices are determined on international markets,’ explains Prof. Łukasz Wróblewski from the University of Economics in Katowice in an interview with Portal Spożywczy.
• Experts emphasise that private labels are growing in popularity, but branded manufacturers continue to drive innovation and the development of new market segments.

Despite the pressure, the coffee and tea market in Poland is growing

Coffee and tea are extremely popular drinks in Poland. Over 80 per cent of adult Poles drink coffee, and similar figures are recorded for tea.

     ‘The coffee and tea market in Poland remains stable and continues to grow in terms of value, despite the cost pressures which have been observed in recent years. According to industry analyses, the value of the hot drinks market in Poland currently exceeds PLN 12 billion, primarily comprising coffee and tea, which are among the most important categories in the food retail sector,’ says Dr Sylwia Mokrysz from the Coffee and Tea Market Research Institute.

Coffee accounts for the largest share of these figures, but tea remains one of the most frequently purchased categories. At the same time, Poland is one of the largest tea markets in Europe.

     ‘In recent years, tea has been growing slightly faster in value than in volume, which is due to the increasing popularity of premium products, functional teas and a greater variety of products, among other things. The market is increasingly seeing blends with added superfoods, teas inspired by Asian traditions and wellness-oriented infusions, for example,’ adds Sylwia Mokrysz.

The tea market is determined by the weather

Weather conditions in producing countries such as Brazil, Vietnam, India and Kenya, the logistical situation of global trade and transport costs are just some of the factors shaping the coffee and tea market.

     ‘In the case of coffee and tea, the impact of global factors is very strong, as these are raw materials which are mainly produced in tropical countries and their prices are determined on international markets. (…) On top of that, currency exchange rates, energy prices and packaging costs have also clearly increased in recent years,’ explains Prof. Łukasz Wróblewski from the University of Economics in Katowice and the Coffee and Tea Market Research Institute.

Are Polish consumers price-sensitive?

The rising prices of many products, including coffee and tea, are significantly impacting Poles’ purchasing decisions. Although experts speak of high price sensitivity, they also point to a growing interest in higher-quality products.

     ‘More and more people are willing to pay more for a higher-quality product with a more interesting flavour profile or better-sourced raw materials,’ says Prof. Grzegorz Maciejewski from the University of Economics in Katowice.

At the same time, some customers are seeking bargains and promotions, and are turning to more economical brands.

Consumer preferences and habits are also changing. Product quality, its origin and the provenance of the raw materials are becoming increasingly important.

     ‘In the coffee category, coffee beans, alternative brewing methods and home coffee machines are growing in popularity. In the tea category, the segment of functional products, herbal infusions and blends that support a healthy lifestyle, like teas with added ginger, turmeric or adaptogens, are becoming more popular. There has also been a noticeable increase in curiosity about flavours, with consumers becoming more open to products inspired by various culinary traditions from around the world,’ adds Prof. Maciejewski.

Expectations of the in-store offering are also rising among consumers. This trend is most evident in the retail sector, where the number of tea variants is steadily increasing.

     ‘Over the past year, the number of unique product variants in this category has increased by around 16 per cent year-on-year, showing that retail chains are expanding their range and trying to meet growing demand for variety,’ adds the expert.

He also mentions that there has recently been significant volatility in raw material prices, particularly in the coffee market, driven by factors such as weather-related issues in South America and Asia.

     ‘These changes usually feed through to retail prices with a delay, as many producers operate based on long-term contracts. In practice, this means that even minor fluctuations in global supply can have a noticeable impact on shop prices across Europe, explains Prof. Łukasz Wróblewski.

     ‘From a retail perspective, the structure of the offer and the way the category is managed in shops will also be important. Analyses of shelf space show that while the largest companies occupy a significant portion of retail space, the five largest manufacturers account for less than half of the total shelf space. This means that the category remains competitive and diverse, with room in the market for both major players and smaller manufacturers, as well as new product segments,’ concludes Prof. Łukasz Wróblewski.

Are private labels pushing out other manufacturers?

The growing importance of private labels in the retail sector has been a topic of discussion for several years. The same goes for coffee and tea.

     ‘Own-brand products from retail chains are becoming increasingly important in this category, particularly in the economy segment. In recent years, their presence on shop shelves has grown significantly. Analyses of shelf space show that the number of private-label products has risen by over a quarter, and they already account for more than a quarter of all products available on the shelf,’ says Dr Sylwia Mokrysz.

These changes are due to various factors, including, but not limited to, greater price sensitivity among consumers and retail chains’ strategies to develop their own products. However, this does not mean that branded manufacturers are losing their place completely.

     ‘(…) they continue to play a key role in building category value, introducing new products and developing premium segments. They are responsible for many innovations, such as new flavour blends, functional products and the development of teas inspired by different cultures around the world. In practice, the market is developing more along the lines of both segments coexisting rather than in a scenario where manufacturers’ brands are displaced by private labels,’ adds the expert.

What does the future hold for the coffee and tea market?

Given the ever-growing popularity of coffee and tea, experts predict that this market will continue to expand. They see the greatest potential in segments related to quality, variety and new taste experiences.

     In the coffee sector, the market for coffee beans, premium coffees and products for home coffee machines is expanding. In the tea category, functional products, loose-leaf teas and blends inspired by different cultures around the world, such as matcha, oolong and Ayurvedic blends, are becoming increasingly popular. We are also seeing new beverage segments emerging alongside classic tea. One example is the growing popularity of yerba mate products, which until recently were mainly found in niche markets,’ says Dr Sylwia Mokrysz.

In the coming months, global factors, including the supply situation in producing countries, will mainly shape this market. Energy, transport and packaging costs will also be important factors.