Revenue down for decaf coffee – but is it just a temporary issue?

“Death before decaf”: not an uncommon sentiment among many in the coffee industry. It’s hard, however, to deny the immense popularity of decaffeinated coffee. By 2030, the global decaf market will be worth US $28.86 billion – growth largely driven by health-conscious millennials looking to reduce their caffeine intake.

But recently, there have been noticeable declines in revenue for some of the biggest decaf coffee manufacturers. And while there could be many reasons for this, it’s important to ask whether people are still drinking as much decaf coffee.

To find out more, I spoke to Clara Malmros, Business Development at Decadent Decaf Coffee Co. – read on for more of her insight.

Breaking down decaf

The earliest decaffeination process dates back to the turn of the 21st century, when German merchant Ludwig Roselius boiled coffee in salt water and then flushed it with benzene (which was quickly found to be carcinogenic).

Since then, the industry has established several food safe ways to remove caffeine from green coffee. These include:

The Swiss Water Process, which is one of the safest and most natural ways to strip caffeine from beans

The Mountain Water Process, which is similar to the above method, but involves changing different variables (such as water flow, temperature, and pressure)

Carbon dioxide method, where manufacturers soak green coffee in liquid CO2

The sugarcane method, which involves applying a natural ethyl acetate extract to green coffee

Given that Roselius’ rudimentary decaffeination process clearly wasn’t in line with current health and safety standards, some people still unfairly perceive decaf coffee to be harmful to their health. Alongside these often false claims, there are also negative connotations attached to decaf – particularly regarding quality and flavour.

However, many specialty coffee roasters (and even competitors) are working to change these perceptions. As part of a general push to source higher-quality coffee, it’s clear that decaf options are getting better and better, too.

In turn, demand for decaf has been growing over the past few years – especially during and following the pandemic when at-home coffee consumption rose sharply. For instance, according to data from Mintel, one in five coffee drinkers in the UK opted for decaf in 2021.

With more people brewing coffee at home, coffee drinkers naturally started to become more aware of their caffeine intake and saw decaf as a more viable and dependable option.

So is decaf coffee becoming less popular?

Although the global decaf market is predicted to grow over the next seven years, recent data shows that some of the bigger decaffeinated coffee manufacturers are experiencing declines in revenue. But is this necessarily related to a fall in consumer sales?

Well, not exactly. Canadian company Swiss Water, as one example, reported a 29% drop in 2023 Q3 revenue on 8 November. In a press release, the company stated:

“The decrease is the result of the expected period of reduced sales volume due to capacity limitations caused by the exit from the Burnaby site prior to the completion of the second production line at Delta. This was partially offset by increased volume demand from customers in the first quarter. In addition, green coffee prices were materially lower when compared to the same periods in 2022.”

Considering these circumstances, it’s likely that falling revenue is not permanent.

“We believe recent revenue decline is temporary, and that there are still great opportunities to grow the decaf market as more people need or want to manage their caffeine intake,” Clara says.

She adds, however, that there is still room for improvement.

“I think that the quality of decaf coffee just isn’t good enough right now,” she explains. “We recently did some market research and purchased a wide range of big brands’ decaf options, and found that many just didn’t taste great.”

Ultimately, Clara believes that roasters should be more accountable for maintaining quality.

“Generally speaking, what the coffee industry needs to do is put more effort into roasting great decaf coffee,” she tells me. “It shouldn’t be an afterthought, and serious coffee roasters shouldn’t be roasting the cheapest beans they can find.”

Low-caf varieties: are they really a solution?

Despite falls in revenue for large decaf manufacturers, it’s evident that consumer sales remain strong. But at the same time, we’ve also seen naturally low-caf varieties like Laurina and AC1 emerge in recent years.

While these varieties pose a potential solution to drinking higher-quality coffee while also reducing caffeine intake, the market for them remains very small. And with farmers unable to scale production anytime soon for a number of reasons (including their low caffeine levels), these varieties can’t yet compete with the decaf market.

“In general, the coffee industry as a whole needs to embrace decaf more,” Clara believes. “Less ‘death before decaf’ and more ‘cheers to great coffee without caffeine’ – similar to the rise of the no or low-alcohol movement.

“We are seeing a range of high-quality Swiss Water Decaf coffees available, and we expect that this will pique the interest of people who might not have explored decaf coffees before,” she adds. “We also think there is great market potential for half-caf and naturally low-caf varieties.”

Decaf has and always will be popular. With many consumers wanting to manage their caffeine intake for a number of reasons, demand will continue to stabilise or grow further.

At the same time, further research on how producers can grow naturally low-caf coffee is essential for the global industry to unlock the true market potential of these varieties.

Enjoyed this? Then read our article on how decaf coffee is made.

Perfect Daily Grind

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