Are we overestimating the size of the market for high-end specialty coffees?

coffee taster sampling high-end specialty coffees
  • The global specialty coffee market is expected to grow by almost $40 billion over the next five years
  • Coffees scoring above 90 points make up a minuscule amount of the specialty coffee segment
  • As we discuss scaling, we must consider how big the market for these high-end coffees actually is

THERE IS no denying the remarkable growth of specialty coffee. But as the sector becomes more commercialised, it could be argued that the market for more exclusive, ultra-high-quality coffee lots is smaller than many people actually think.

Many would define high-end specialty coffees as those scoring above 90 out of the 100-point scale, which are sometimes referred to as Presidential Award coffees. Often sold through auctions, these coffees can achieve prices anywhere between $50 per pound to over $1000 per pound.

Research estimates that the global specialty coffee shop market is expected to grow by almost $40 billion over the next five years. Key drivers for this growth are increased consumption, rapid urbanisation, changing consumer lifestyles, and the increasing popularity of specialty coffee among Gen Z and young millennials.

Yet, there is a distinction to be made between the bulk of specialty coffees and extremely high-scoring coffees that can sell for hair-raising prices.

“The term ‘specialty coffee’ was coined to distinguish the coffees that are worthy of appreciation from commodity coffee,” says Harry Lo, the manager at Knockbox Coffee Company in Hong Kong. “However, high-end coffees are not only of superior quality, but they also are rare and limited in supply.”

For most people, the journey into specialty coffee doesn’t begin with an ultra-high-scoring coffee. The sector has largely grown from the bottom up as more people gradually discover and appreciate a better cup of coffee.

This begs the question: is the industry overestimating the size of the market for high-end specialty coffees and the role they have to play in pushing the sector forwards?

the market for high-end specialty coffees could be overstated

Raising specialty coffee’s profile

As these high-end coffees account for such a small volume of the specialty coffee market, their sales volume naturally remains small in comparison to the bulk of coffees in the sector.

However, for some, their prestige in the industry contributes a value to the specialty coffee sector that is less tangible than sheer sales volume.

“Young people in Hong Kong love to follow trends,” Harry says. “And the trend is to seek something unique, rare, and worthy of discussion.

“From barista competition live streams to stories about farmers from across the world, people can stay up to date with the latest news in coffee. Plus, the rise in e-commerce in the industry means that consumers are able to taste high-end coffees from across the world – exclusive coffees are now more exposed than ever.”

For example, the Cup of Excellence debuted in the late 1990s. It now takes place in several countries across the world, with the winning coffees being sold through online auctions. Competitions such as the World Barista Championship also provide a platform to showcase these extremely high-scoring specialty coffees, and demonstrate the new heights being reached in the industry.

For roasters, rare or exclusive coffees might not be the most valuable in terms of sales volume, but they can be powerful as a marketing tool. For instance, buying an ultra-high-quality lot can communicate a reputation for experimentation within the sector. This can then attract more buyers on a general scale – many of whom won’t actually purchase (or be able to purchase) these extremely high-quality coffees.

high-end specialty coffees are a marketing tool

Scaling high-end coffees

There is a growing body of evidence that the fourth wave of coffee can be characterised by the commercialisation of the specialty coffee sector. 

For example, the growth of specialty coffee capsules and higher-quality instant coffee shows that more brands are ready to embrace convenience.

This is how specialty coffee roasters grow and scale – not by selling small volumes of ultra-high-quality coffees, but rather by improving quality at scale.

“Selling high-end specialty coffees cup by cup is not the key to scaling up a brand,” Harry says. “Because of the high price, mark up for those incredibly expensive lots are typically moderate and are hardly profitable at all.”

However, as RTD cans and cold coffee drive growth in the sector, Harry does see an opportunity for high-scoring coffees to drive innovation within the segment specifically.

“I think a better way to market high-end coffees is through spinning the product so it is attractive to a broader audience,” Harry says. “For instance, CoE auctioned lots in bottled cold brew, a canned carbonic macerated Yirgacheffe that hits a supermarket shelf, or even a 90-point Panama Gesha capsule.”

It’s easy to see that we are overestimating the market for these ultra-high-scoring coffees. But what is more important to realise is that this doesn’t make these coffees irrelevant. In many cases, their value goes beyond sales volume.

For many roasters, they are key to a marketing strategy which will showcase how specialty coffee can innovate and experiment. And for better or worse, that will continue to be the case – even as specialty coffee focuses on other areas for growth.