Ukraine between growth and black market

KIEV – The coffee market in Ukraine has been developing, and its capacity is increasing every year. Coffee consumption grew dramatically between 2000 and 2010 with an average annual rate of consumption of +23%, reaching +28% in 2012 (49.6 thousand tons of coffee and its substitutes), but due to political situation in the following years, the market has faced a reduction of its growth.

Before the political crisis and the conflict with Russia, its big neighbour was the main importer of coffee to Ukraine – about 20%. Now the leading role belongs to Germany with 14.4% and other large importers are Italy (12.7%), Poland (12.7%) and Vietnam (8,9%).

According to Euromonitor, local currency devaluation, economic and geopolitical instability, and declining consumer purchasing power have contributed to a rise in black market sales share within coffee in Ukraine. The growth of the black market is a great threat to official distributors of coffee brands, considering that above 75% of the Ukrainian market is presented by large multinational corporations and about 68% of the Ukrainian coffee market is retail sales.

According to Dataresearch, the most popular product on the Ukrainian market is instant coffee, preferred by 60/62% of consumers. Considering the total coffee consumption in the country, the Out of Home market is estimated to be 30%, split in 67% Ho.Re.Ca. and 33% Office.

Despite the crisis, according to experts, Ukrainian market is supposed to reduce its imports in the coming years to prefer local brands, because of the local currency devaluation and for the good quality of some local producers, but also for the geopolitical situation in the country and the rising wave of patriotism that may impact in the choice of consumers for domestic products.

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