SINGAPORE: There has been evidence of a tea-drinking culture in Asia since the beginning of recorded history, but a new study suggests that coffee is making rapid gains as consumer tastes evolve.

Three out of the five fastest growing retail coffee markets are now in Asia, according to research firm Mintel, which also noted that the boom in Asia's coffee market is being driven by a surge in innovation.

Mintel reported that Indonesia is currently the fastest growing packaged retail coffee market with a compound annual growth rate (CAGR) of 19.6% over the past five years. India had a CAGR of 15.1% over the same period, while it was 14.9% in Vietnam.

Overall, the global coffee market is continuing to grow steadily, the report added, with retail volume expected to grow 2.7% in 2016 following a 2.5% rise in 2015.

While Asian markets now make up the majority of the world's fastest growing coffee markets – Turkey (17.5%) and Chile (12.9%) round out the top five – European markets, as well as Australia, are among the slowest.

"The global coffee industry continues to experience healthy growth, driven by Asian markets in particular," said Jonny Forsyth, Global Drinks Analyst at Mintel.

"Asia has far more growth potential as traditionally tea drinking consumers are converted slowly but surely into coffee drinkers," he added.

"In 2016, there was also an increasing number of coffee launches which blurred the boundaries between coffee and tea. A tea-drinking culture is the biggest barrier to coffee in Asia, and tea-coffee hybrids can be used to tempt consumers."

The Mintel report also revealed that Asia Pacific is leading the way for launches of ready-to-drink cold coffee. In 2016, these products made up 29% of all coffee launches in the region, compared with just 10% in Europe.

In addition, coffee mixes accounted for 16% of all retail coffee launches in Asia last year, up from 12% in 2014, although instant coffee continued to dominate with 42% of the total.

"As emerging market consumers develop their taste for coffee, innovation is stepping up a notch as drinkers trade up from instant to fresher-tasting coffee," Forsyth said.

"However, despite increased premiumisation in the global coffee market, the most commodified form of coffee – soluble coffee granules – remains a hugely important segment, especially in Asia. As consumers trade up from instant coffee, pod and capsule sales will increase."

Data sourced from Mintel; additional content by Warc staff