The Louis Dreyfus Company Asia (LDC) has formed a joint venture (JV) with Zephyr Japan, a speciality coffee retailer, to offer premium coffees to Japanese consumers. By 2025, the worldwide speciality coffee market is estimated to reach $83 billion, with Asia providing substantial prospects.
In keeping with global trends embracing premiumization and experimentation with unique flavours, coffee firms in this region are focusing on supplying tailored, taste-based coffees to local consumers.
Ben Clarkson, LDC’s global head of coffee, says, “This cooperation with Zephyr Japan is LDC’s first venture in Japan, a fast-growing market for speciality coffees.”
“It’s also another great step forwards for our speciality business expansion, putting LDC in a better position to enhance premium coffee flows into Japan and East Asian markets.”
This is the latest phase in LDC’s relationship with Instanta, a worldwide private label coffee firm with intentions to build and run a freeze-dried instant coffee plant in Vietnam’s Binh Duong province.
According to Innova Market Insights, iced coffee accounts for a considerable portion of coffee consumption in Japan.
“By combining Zephyr Japan’s strong market knowledge and LDC’s expertise in sourcing top-quality, sustainably produced coffee beans, we will further extend our presence in Asia and enter the key consumer market for speciality coffees, which is Japan,” says Ross Hawkins, LDC’s global head of coffee partnerships.
“Both firms’ knowledge and talents will complement each other,” says Kurato Hashimoto, founder of Zephyr Japan. “This strategic alliance will provide significant potential for mutual expansion while addressing Japanese consumers’ demands and expectations.”
Concerns over the world coffee supply recently grew as Vietnam, a major producer of robusta — the bitter-tasting bean used in instant coffee and some espresso blends – struggled to cope with the economic downturn caused by the COVID-19 lockdown measures.
Trends in Japanese coffee
According to Innova Market Insights, iced coffee accounts for a considerable portion of coffee consumption in Japan. In 2019, the local market accounted for 30% of all iced coffee launches in Asia.
In 2019, Japan dominated with a 74% share of the Asian iced coffee sales value.
Stagnant sales values from 2015 to 2019 appear to imply a mature market, but the 8.5 percent NPD CAGR appears to indicate efforts to sustain interest in a fashion-conscious market, according to the market researcher.
Demand for speciality coffee, as well as on-the-go styles and indulgent formulations, has been increasing in Japan. Coffee was given a fizzy twist in some local launches and sold as a healthier alternative to soft drinks.
In accordance with the food-as-medicine trend, ayurvedic ingredients, functional mushrooms, and other botanical superfoods are prominently featured in coffee launches.
Free of lactose and sugar choices, products made with environmentally derived components, local favourites (coffee jelly and Sapporo coffee), artsy packaging appealing to younger generations, and defined origin blends are all popular positionings (particularly Brazilian).
In Japan, both caramel and strawberry have been mentioned as popular flavours for iced coffee launches.
Global coffee themes that are gaining traction
Functional blends with healthy botanical components like as lion’s mane extract, ginseng, olive leaf powder, and other superfoods are among the coffee trends on the market this year, according to Innova Market Insights data.
Vitamin-enriched and Ayurvedic dishes, such as coffees flavoured with turmeric and cardamom, are attracting significant consumer demand for functional pick-me-ups, in keeping with the food-as-medicine trend.
Orbit Coffee launched a new offering that included Maca root for mental clarity as well as fructose and dextrose, which are rapid carbs that provide energy quickly. Slow carbohydrates such as maltodextrin and isomaltulose are also used to extend the energy boost for a longer time.