Coffee Pods and Capsules Market - Growth, Trends, and Forecasts (2023 - 2028)

Coffee Pods and Capsules Market - Growth, Trends, and Forecasts (2023 - 2028)

The coffee pods and capsules market is projected to record a CAGR of 7.72% over the next five years.

The quality, efficiency, and diverse choices offered in a single serving of coffee are responsible for the growth of the coffee pods and capsules market. Consumers are also willing to purchase coffee machines to recreate the cafe-style experience at home. This trend has boosted the demand for coffee pods and capsules. As coffee is the most consumed beverage, the high demand for coffee is the primary reason for the growth of the pods and capsules market. One of the major factors responsible for the rising popularity of coffee pods among consumers is their one-time use and disposable features. These days, the market players are making efforts to make environment-friendly and biodegradable coffee capsules. For instance, in November 2022, a Nestle brand Nespresso launched compostable coffee capsules made from paper. The capsules are compatible with Nespresso coffee machines.

The coffee pods and capsules market is growing owing to the rise in demand for ready-to-drink coffee beverages. People have very busy lives these days because of urbanization and industrialization. Therefore, they need quick refreshments and easy-to-make coffee. Coffee pods and capsules save time and give good quality coffee within few minutes. The market players like Nestle are inventing new technologies for homemade coffees. For instance, in November 2022, Nestle brand Nescafe Dolce Gusto launched Neo, the brand's next-generation coffee machines and pods. The coffee pods are paper-based and home compostable.

Coffee capsules have gained high acceptance among consumers in recent years due to the growing demand for instant non-alcoholic drinks. Coffee producers choose coffee capsules due to their suitability, comfort of use, and wide diversity of coffee products and machinery. The proliferation of premium coffee shops, such as Starbucks, has stimulated consumers’ appetite for high-end, fresh-brewed coffee, thus boosting the demand for coffee capsules. Brands like Nespresso and Nescafe Dolce Gusto play a significant role in the capsule market. Other single-serve brands associated with technology that contribute to the growing value/volume share ratio include Keurig, the JacobsDouweEgberts, Tassimo, and Senseo, all of which are owned by JAB. Evolving packaging technologies and the ability to compete with exotic or sophisticated brands resulted in the growth of coffee capsules.

The European market witnessed a rising demand for specialty coffee and single-serve methods in the past few years. Among all, Germany and France are the regional leaders in the market. With the rising market value for coffee pods and capsules, several private-label players are entering other markets in the region, which may drive the European market over the forecast period. However, the environmental concerns related to the packaging of coffee pods and capsules are hindering the market's growth in the region.​ Thus, to tackle this issue, several new entrants are innovating sustainable packing solutions. For instance, in September 2022, Cafe Royal invented a coffee pod in the shape of a ball. This ball is coated in a thin shell made of a vegetable layer, which is 100% compostable. The product is a true zero waste for capsules.

The coffee pods and capsules market is largely dominated by Tim Hortons, Nestlé (Nespresso), and JAB Holding Company, with a strong global presence of their brands like Nespresso, Keurig, Tassimo, Senseo, and Dolce Gusto. Other key players, such as Dunkin' Brands and Starbucks Corporation, also hold a prominent share of the overall market currently. However, high product innovations, the launch of limited edition coffee pods, large distribution networks, and better supply chains have resulted in high consolidation of the coffee pods and capsules market, with Nestle (Nespresso and Dolce Gusto) and JAB Holdings (Senseo, Tassimo, and Keurig) holding the maximum share in the overall market.

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