Consumer Taste of Coffee Grows in Thailand, as The Burgeoning Market Reaches New Heights

Published 2023년 1월 21일

The taste for coffee is rapidly increasing amongst Thai consumers, urged on by the growing demographic of young professionals and the millennial generation in the country. Over the past decade, coffee consumption in the country has doubled from 700K bags to 1.4 million bags, a 100% rise over the last ten years alone. Despite the value of the tea market remaining high, tea’s strong hold over the hot drinks market is weakening due to the rise in the coffee market’s total revenue, currently estimated to be around USD 3.185 billion and expected to reach USD 3.794 billion by the end of 2023. The instant coffee market alone is valued at USD 2.175 billion, 72% of the Thai coffee market, and could increase significantly by 70% to USD 3.69 billion in 2023. The burgeoning coffee market in Thailand presents an opportunity for leading coffee producers in the region, such as Vietnam, Malaysia, and Laos.

The taste for coffee is rapidly increasing amongst Thai consumers, urged on by the growing demographic of young professionals and the millennial generation in the country. The millennials make up about 30% of the Thai population. In addition, traditional tea drinkers in Northern Thailand are getting their palates more accustomed to the richness of arabica coffee while in the South, the refreshing taste of Robusta coffee beans seems to have taken hold. Over the past decade, coffee consumption in the country has doubled from 700K bags to 1.4 million bags, a 100% rise over the last ten years alone. Experts also predict that consumption in 2023 will surpass the 0.61 kilograms per person per annum reported in 2018, a record that signified 20-year growth of over 770%.

The hot drinks market in Thailand, which includes tea, coffee, and hot chocolate, is currently worth USD 9.47 billion. Tea is the leading product in this category, worth USD 5.65 billion, owing to the growing popularity of the beverage in the country. Buddhist monks in Thailand have recently been allowed to drink hot drinks (without milk), which seem to have taken hold among the general Buddhist population.

Despite the value of the tea market remaining high, tea’s strong hold over the hot drinks market is weakening due to the rise in the coffee market’s total revenue, currently estimated to be around USD 3.185 billion and expected to reach USD 3.794 billion by the end of 2023. Between 2023 and 2025, revenue in the coffee segment is expected to increase at a CAGR of 8.59%. This growth would be considerably more than the tea segment, which is estimated to rise at a CAGR of 2.91% in the same period.

Source: Statista

On the back of this growth, the Southeast Asian country has witnessed a rise in coffee shops and specialty coffees. In Chiang Mai, a city known as the coffee capital of Thailand, trends such as coffee vending machines and robot baristas have taken hold, local inventions including dirty coffee: a glass of cold milk topped off with a shot of espresso, and espresso yen: a blend of coffee, milk and condensed milk, are gaining popularity. Despite the rise in specialty coffee, instant coffee remains the most popular coffee option in the country. The instant coffee market alone is valued at USD 2.175 billion, 72% of the Thai coffee market, and could increase significantly by 70% to USD 3.69 billion in 2023. Tridge forecasts that this figure could rise to between USD 4.5 billion and USD 5 billion by 2025.

The burgeoning coffee market in Thailand presents an opportunity for leading coffee producers in the region, such as Vietnam, Malaysia, and Laos. Vietnam, the leading global producer of Robusta, used in the production of instant coffee, could capitalise on this market, which is forecast to grow at a CAGR of 8.62 between 2023 and 2025.