In 2018, food and beverage, e-commerce grocery, sales reached 4.75 billion US dollars on Amazon. It is the fastest growing segment for online retailers. According to Edge by Ascential, the most popular category within food/beverages, with a total sales of 140 million dollars, was ‘coffee’.
Jacob Porter, director of global marketing of Edge by Escential said: “Since the very beginning, coffee has been at the top of Amazon’s food chain. Not only does it sell much more than any other single product type in the grocery group, but it continues to grow by 40%-plus annually.”
It is expected that the online selling of groceries will reach 100 billion dollars by 2025. Amazon will maintain its position as market leader, and coffee is going to continue being a significant subcategory in this growth.
E-commerce grocery: coffee
The top three coffee-sellers on Amazon are Starbucks ($16.8 million), Keurig Dr. Pepper ($12.6 million) and Nestlé ($11.2 million). To join the game, Amazon has created a private label of coffee pads, “Solimo”. The label rose quickly after the launch, with approximately $60,000 in sales per week.
Youngevity International, a company trying to become a leader in online coffee retail, announced that its brand ‘CLR Roasters’ will start selling Café La Rica espresso and Josie’s Java House coffee. Amazon will handle the logistics, order fulfilment and customer support for this new company. The company is expecting to sell over 41 million pounds of coffee every year. This would generate an approximate revenue of 250 million dollars from 2019-2023.
Not only major players, but small businesses are profiting from the successful environment as well. Consumers frequently visit Amazon in order to discover new coffee brands with different roasting techniques, tasting notes and sourcing methods.
Amazon is the primary destination for coffee-related searches, according to OneSpace’s search data. These searches accounted for more than 60% of the search volume across top retailers. For example, in 2017, Death Wish Coffee generated 50% of its sales via Amazon.
Consumer spending (online as well as offline) made a significant jump due to the newly emerging idea of premium coffee being available everywhere. According to Michael Schaefer, Euromonitor global lead, food & beverage, most important product ideas and major trends come from coffee shops. By upselling (via online retailers such as Amazon) and online subscription services, coffee shops are establishing brand loyalty.
Schaefer said: “Successful coffee players will combine discovery, experience, long-term purchasing and rapid product innovation, all across a wide range of distribution points.”