Exploring the syrups & flavourings market in the coffee sector

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Exploring the syrups & flavourings market in the coffee sector

Over the last 15 years, we have seen the spread of flavoured coffee drinks made with syrups around the world. These have been popularised by major

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Over the last 15 years, we have seen the spread of flavoured coffee drinks made with syrups around the world. These have been popularised by major chains such as Starbucks, Tim Hortons, Dunkin’ Donuts, and others.

Syrups are used, very simply, to add an artificial flavour to a coffee beverage, often sweetening it in the process. The exact flavour can vary wildly, from caramel and vanilla to strawberry or even florals like lavender.

To learn more about where the syrup market has come from and why it’s grown so massively, I spoke with two professionals who work in it. They told me more about the sheer range available on the market, and how the use of syrups impacts the coffee industry in general. Read on to find out what they said.

monin syrups

An overview of the syrups market

According to the National Coffee Association’s 2020 National Coffee Data Trends Report, some 80% of US coffee consumers “customise” their beverages in some way. Of these, around 7% use syrups.

The global flavoured syrups market is expected to be worth some US $65.6 billion by 2025, growing on average by more than 5% a year. Within the market, there is an entire sub sector of syrups produced specifically for the coffee industry. This is known as the syrups-for-coffee segment.

Andrea Ramirez is a Consumer & Customer Market Insight Manager at Torani Syrups, a syrups manufacturer based in San Leandro, California. She says that syrups help to make coffee “approachable” for some consumers.

“They’re the item that lends indulgence and personalization to a drink, transforming it from a functional and routine beverage to one that’s a treat,” she explains.

Research shows that many people first start drinking coffee by trying it with milk or sugar, as this may be more palatable at a younger age.

“You just don’t see someone starting out and opting for a double espresso as their first coffee drink,” says Andrea. “There’s often a bit of sweetness, maybe some dairy.”

Tamara Tato is a Sales Manager for the Iberian market at Kerry Group, owner of the DaVinci line of gourmet syrups. She says that global coffee chains with highly customisable menus have naturally played a major role in making syrups more popular.

“They were responsible for showing the consumer new ways of consumption in a lot of cases,” Tamara explains.

Tamara says that the syrup category developed for coffees has been on the market for just over three decades. In that time, demand has steadily increased.

For example, DaVinci Gourmet was formed in 1989. Just 14 years later, in 2003, the Kerry Group spent US $62 million to acquire it.

Meanwhile, Andrea tells me that many supplier agreements with major commercial roasters have evolved to offer more than coffee. These partnerships can cover everything from equipment to training. In addition, Andrea notes that many have started to supply coffee syrups, too.

ice coffee

A history of syrups for coffee

Commercial syrups were first produced to flavour a range of cold beverages, such as Italian sodas and different types of cocktails.

The syrups-for-coffee segment, meanwhile, emerged at some point in the 1980s. Key to its emergence were efforts to develop a syrup with a specific consistency that would make it suitable for coffee.

According to Tamara, the first manufacturers needed to create a stable formula that meant it could be served “icy cold” or “steaming hot”.

Syrups developed for cocktails usually have a higher concentration of sugar to balance out the spirits. However, when it comes to coffee syrups, the recipes are usually lower in high-sugar ingredients, to ensure that it complements the flavour of the coffee.

Tamara explains that this is why the syrup should have a formula that ensures a stable consistency at high temperatures, as hot coffee-based drinks are generally served above 60°C.

The next key turning point came in 1994, when Starbucks began to offer its customers coffee beverages with added syrups. Back then, there were only four syrup options.

Fast forward more than 25 years, and Starbucks has dozens of flavours on offer through the course of the year, all of which are “naturally flavoured”.

torani coffee syrup

Growth in at-home syrup consumption

So while we know the out-of-home (OOH) syrups market has proliferated over the past couple of decades, what about at-home consumption?

At-home consumption has been growing steadily over the past few years thanks to the rise of ecommerce.

Looking at Starbucks again, it’s easy to see that it historically sold its syrups exclusively in physical stores. However, it switched to offering them on its web store in the early 21st century, before shutting down its ecommerce platform and selling through authorised marketplaces (such as Amazon and Walmart) in 2017.

Syrup manufacturers have also started to operate direct-to-consumer, too. For instance, French gourmet syrups brand Monin in particular made a notable push in its email marketing for both B2C and B2B audiences in the latter half of the 2010s.

However, Tamara notes that like many other similar market segments, the at-home coffee market saw an explosion during the Covid-19 pandemic.

Tamara says that the disruption caused by the pandemic pushed foodservice operators to innovate. Effectively, this meant that when consumers could no longer go to a coffee shop to have flavoured drinks, manufacturers instead offered syrups for consumers to use at home.

“The home market is much smaller than the OOH market,” Andrea explains. “However, at-home coffee syrups grew rapidly during the pandemic.”

She says that one of the contributing factors was the popularity of coffee related drinks on social media, which has acted as an accelerator for food and beverage trends in recent years.

coffee with syrup

Andrea says that in her experience, sweeter flavours such as caramel are principally popular in the US, which is a major consuming market. She explains that this is also the area where the greatest range of syrups is available.

She also notes that sweet syrups are prominent in other areas, such as the Philippines and Mexico.

Meanwhile, in Europe, she tells me that there are far fewer syrup flavours available, and those that are popular are less sugary. For syrups manufacturers, she says the UK, France, Germany, and the Nordics are all established markets, while Spain and Italy are seen as growing areas with a lot of potential.

Finally, she recognises that the Asia-Pacific is a prominent market for syrup manufacturers, especially South Korea and Vietnam.

“Those markets place a high value on innovation and novelty, so we see amazing things in beverage presentation and unique flavours,” she explains.

torani coffee syrups

Are syrups just for chains?

There’s clearly an association between large distributors, major coffee chains, and the use of coffee syrups. Starbucks, as mentioned before in this article, was an early advocate. But does this mean they’re “only” for chains?

Tamara tells me that “both global chains and independent operators play an important role” in the segment.

She explains that big chains drive scalability from a global perspective, while independent coffee shops promote innovation and new product development.

On the manufacturer side, most syrup brands operate predominantly as B2B suppliers, and don’t exclusively work with the coffee sector. Tamara explains that DaVinci Gourmet, as an example, only reaches the final customer through distributors.

“We collaborate with our customers providing a core syrups range,” she says. “After that, we support them with insights and expertise to advise on latest consumer trends, and how to capitalise on seasonal opportunities.”

Meanwhile, Andrea says Torani does not produce private label products, and says that roughly 85% of its product sales comprise the OOH market.

dunkin donuts pumpkin spice latte

What’s next for the segment?

According to Tamara, syrups for coffee will expand in the future by offering a more tailored range of flavours to each market.

She says: “For example, in Latin America, we have a huge universe of tropical fruits to explore. We recently launched the jabuticaba flavour to speak directly with Brazilian consumers.

“In markets where we are already present, I think there is more room to experiment,” she adds. “A line of syrups with smoked flavours could be a good example of that, for instance.”

According to both Tamara and Andrea, there is also a growing demand for natural and freshly prepared syrups made with real fruit.

In 2018, fruit-based syrups held the largest share of sales, comprising 35.3% of the syrup industry as a whole.

“Consumers are more and more concerned about the nutritional effects, in addition to the growing demand for traceability and transparency,” Andrea adds.

coffee with syrup

It’s clear that the syrups-for-coffee segment is growing at pace, with brands innovating across the sector. It’s still an emerging market, but one that is growing steadily and benefiting from the rising demand for at-home consumption.

“Anything designed for off-premises will likely keep growing,” Andrea concludes. “Those shifts in behaviour were taking place before the Covid-19 pandemic. It just accelerated them.”


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