Our coffee is getting more expensive - this is how we can save

In the last decade, the coffee market has experienced a significant revolution: More and more consumers prefer to prepare coffee at home, and especially high-quality drinks such as cappuccino and espresso, which were previously considered the domain of coffee shops only.

Today, home coffee machines allow anyone to enjoy quality coffee, at the push of a button and without having to leave the house. The coffee machine revolution changes consumption patterns and reflects a broader trend of convenience, financial savings and a unique coffee experience.

The home revolution in coffee

Home coffee machines, especially espresso and cappuccino machines, are gradually taking a central place in the kitchens of the Israeli consumer. Many have discovered the convenience of making quality coffee at home, which allows saving time and money compared to frequent visits to coffee shops. The advanced devices enable the quick preparation of a variety of coffee types, including cappuccino, espresso and latte, with the push of a button.

At the same time, the coffee bean market continues to grow worldwide, with an annual consumption of over 10 billion kg of coffee. The Israeli consumer consumes about 3.7 kg of coffee per year, making Israel a heavy consumer compared to the rest of the world. With an average of 3-4 cups of coffee a day, Israelis drink between 1,100 and 1,400 cups of coffee per year per person.

Preference for cappuccino and espresso

Studies indicate that the most prominent trend in home coffee machines is the consumption of espresso-based drinks, especially cappuccino. The strong coffee combined with rich milk foam, like the one served in cafes, has become especially loved by the home consumer. In addition to the machines, also granulated instant coffee and black coffee (the well-known Turkish) maintain significant market shares in Israel. Elite's powdered instant coffee, despite the competition and innovation in the market, continues to be a popular and loyal product among consumers.

Home coffee machines - changes in consumption patterns

The success of the home coffee machines stems not only from the convenience but also from the variety of options and innovations they offer to consumers. The home coffee machine market can be divided into two main types: Capsule machines and self-grinding machines (Bean to Cup).

The capsule machines, which broke into the market with the Nespresso brand, made the coffee experience more accessible for the home consumer. Their main advantage is convenience: Each capsule contains an exact amount of ground and measured coffee, so that the preparation of the coffee is done with just one push of a button, without the need for an in-depth understanding of grinding or roasting. These machines make it possible to prepare different types of coffee - espresso, cappuccino, latte, and more, with minimal fuss and without the need for complex cleaning.

Along with the capsule machines, there are more sophisticated coffee machines that perform the entire preparation process - from grinding the beans to brewing the coffee. These machines allow the use of whole coffee beans, which are ground on the spot according to the user's preference, which allows customization of the grinding level and strength. These machines offer greater flexibility and are intended for professional coffee lovers, who wish to control every step of the preparation process. 

Home products - prices and consumption trends

Powdered instant coffee - Elite 200 grams:  

Elite instant coffee is considered the dominant product in the category, with almost complete control of the market. Its price is stable over the years, ranging from NIS 18.90 in chains such as Osher Ad and Rami Levy, and NIS 22.90 in neighborhood branches. In chains such as Super Pharm, the price can reach NIS 34.90, a difference of 85% from the lowest price on the market. This product is an integral part of the Israeli consumer's shopping basket, and it remains in demand even after the competition from other products on the market.

Granulated instant coffee - tasters choice 200 grams (Nestlé):  

The leading product in this category is Nestlé tasters choice instant coffee. The product maintains a large market share and relatively stable prices. Its price ranges from NIS 29.90 at Osher Ad and Rami Levy, and up to NIS 39.90 at Super Pharm, with a 60% increase in price since 2017. In most chains, the average price ranges from NIS 33.90 to NIS 36.90, and consumers continue to buy it with great loyalty.

Black coffee - Elite 200 grams:  

Elite black coffee, also known as Turkish coffee, is the dominant brand in the black coffee market in Israel. For years, it has maintained a large market share without real competition. The price ranges from NIS 14.90 to NIS 19.90, with an increase of less than 10% in recent years, which indicates stability in this product and the consumer's sensitivity to its price.

The capsule and espresso market 

The capsule market continues to expand in Israel, and especially in the coffee beans intended for coffee machines. Surveys show that every third house in Israel has a coffee machine, with an increase in the sale of automatic and manual machines for making professional coffee at home.

The Nespresso company led the revolution in this field with capsule-based coffee machines measured according to different varieties, flavors and strength levels. Nespresso has created a unique shopping experience, with dedicated stores that offer customers a luxurious coffee experience. Nespresso capsules are sold at prices ranging from NIS 2.30 to NIS 2.70 per capsule. 

Another brand from Nestlé that is on the supermarket shelves is the brand that carries the brand of the world's leading coffee shop chain, Starbucks coffee, the price of which varies between NIS 1.65-2.20 per capsule. With the development of the market, competing brands entered the market such as Elite espresso capsules (Strauss), whose price ranges from NIS 1.69 to NIS 1.99 per capsule, and in sales you can find them at a price of NIS 1.45, whose price has jumped by a gap of 45% in recent years according to the sample. 

The international brand from France Carrefour

The Carrefour brand penetrated the Israeli market last year with the launch of the Carrefour chain in Israel, offering capsules at prices ranging from NIS 0.50 to NIS 0.89 only, a move that caused a revolution in the coffee market in Israel and led to a significant price drop in the capsule market apart from the price of Elite's leading brand. 

How does the trend affect coffee shops?

With the increase in home consumption, it is evident that the coffee shops are forced to adapt to changes in the consumption structure. There are still many who prefer the experience of sitting in a coffee shop, but more and more consumers prefer to make coffee at home and save the costs of frequent visits. It is important to remember that coffee is not only a drink, but also a cultural experience. For many, the coffee shop is a place for a social or business meeting, and this aspect remains important even in the era of home coffee machines.

On the other hand, coffee shops are upgrading their coffee experience in order to attract customers and compete with the convenience of home coffee machines. We see a trend of incorporating more advanced coffee machines, unique and diverse coffee menus, and even selling coffee beans and capsules to an audience that wants to continue enjoying their coffee at home.

However, the supply of home coffee machines, as well as the drop in the prices of capsules and beans, creates intense competition in the market of coffee shops, which are forced to innovate and improve all the time.

Coffee prices in coffee shops have jumped significantly in recent years. With the entry of the Cofix chain into the market, which offered coffee for NIS 5, many coffee shops were forced to lower prices - even the Aroma chain, the leader in the independent coffee shop market in Israel, took adjustment steps. However, prices today vary depending on the type and size of the coffee.

The most common drink is cappuccino, followed by espresso, and in recent years there has been a significant jump in the demand for iced coffee. For example, a small cappuccino at Aroma will cost NIS 12, at Cafe Landwer the price is NIS 14, at Cafe Joe it will cost NIS 11. Despite the changes in coffee prices, the shopping and entertainment experience continues to be a major factor for consumers.

In addition, we are witnessing a developing trend - the coffee carts and the food trucks, which take us back in time. In the past, you could meet them in groves, parks, intersections, industrial areas and at the entrance to IDF bases, where they were known as "robbers". Today, this trend offers a selection of boutique pastries and quality coffee in almost every settlement, pastoral area, and even at road junctions - And the surprising thing is that the prices in these carts are sometimes even higher than the established cafes. 

Summary

The transition to home coffee consumption, especially espresso and cappuccino based drinks, is changing consumption patterns in the coffee market in Israel and around the world. However, the coffee shop experience continues to be a significant part of the Israeli consumer's leisure culture. The development of the capsule market and accessibility to home coffee machines is upgrading the coffee experience at home and leading to an increase in home consumption, but coffee shops manage to maintain a central place for those looking for a social experience and a different atmosphere.

In the near future, we are expected to see a combination of both worlds: Consumers who will continue to enjoy their coffee at home, but also from the coffee shops that offer a unique and personalized experience.

The price models and surveys are based on the data and advertising of the companies and the marketing chains and were processed using the Pricing and CHP systems. Comparison 2017/8 vs. September 2024. The survey was carried out by the Retail Research Institute.