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

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

The Instant Coffee Market is projected to record a CAGR of 5.28% over the next five years.

The middle-class population in developing countries has a huge demand for in-home coffee consumption. Convenience in food habits and coffee consumption, in particular, gravitates consumers toward instant coffee. The versatility of the product to different consumer tastes and preferences, as well as its adaptability to be distributed through a wide range of distribution channels to aid in-home consumption, has been supporting this market growth. Major players like Nestle, Starbucks, and Unilever are launching coffee machines for a better in-home coffee experience. For instance, in November 2022, Nescafe Dolce Gusto launched Neo, the brand's next-generation coffee machines and pods. The coffee pods are paper-based and biodegradable.

Coffee is used for many daily purposes like improving energy levels, providing essential nutrients, increasing microbiome diversity, helping in reducing fat, and many more. Some people are addicted to coffee and require coffee to stay awake at work. Because of the hectic work culture, instant coffee-making machines are also available in offices, hospitals, and colleges. Because of the trend of on-the-go food, consumers prefer their coffee to be easy to carry. This is why major players are innovating sustainable and good-quality containers for coffee.

The companies are taking initiatives to protect the environment using sustainable packaging materials. For instance, in September 2021, Blue Bottle coffee, a Nestle brand, announced its commitment to achieving carbon neutrality by 2024. This includes the reduction of the emission of greenhouse gases due to products and packaging. Thus, the market is expected to grow over the long term owing to the on-the-go trend of food, high e-commerce sales, and the requirement for convenience of people.

The increased focus on unique, authentic flavors and various functional properties of coffee has aided in the premiumization of the instant coffee market. Multinational players and local craft brands are putting more emphasis on designing authentic flavors for instant coffee. Flavors that meet localized taste preferences are increasingly being adopted by companies. There is a steady demand for flavored coffees in the United States. From the supply point of view, companies are increasingly focusing on procuring coffee ingredients to help consumers simmer up the brew that is just right for them.

Thus, flavored coffee is expected to gain prominence in the market during the forecast period. The companies are expanding their portfolios by forming mergers and acquisitions with other global brands to innovate and explore new product categories. The major players are launching the products in new regions and cities. For instance, in July 2021, Nestle and Starbucks announced to launch of RTD coffee beverages in Southeast Asia, Oceania, and Latin America.

Asia-Pacific is set for robust market growth over the forecast period. Many countries in the Asia-Pacific region have been traditional consumers of tea. However, the increased penetration of instant coffee in markets such as India has boosted the overall sales of the coffee category. Also, coffee has become a part of the culture in Mainland China. China provides a strong opportunity for the major instant coffee retailers, as the country has witnessed a shift in preferences, citing millennial consumption patterns. Japan is the fifth-largest importer of coffee and coffee products.

As per the International Coffee Organization, in 2020-21, Japan imported 6,751 bags ( in thousand 60 kg bags) of green coffee beans. Similar to imports, Japan consumed 7,479 bags (in thousand 60 kg bags) in 2021. Coffee is popular among Australians as well. Consumers in the country have a wide variety of preferences for the coffee they consume. The companies are expanding their footprints in the market with new and innovative product launches to strengthen their regional presence.

The instant coffee market is consolidated, with the top international players holding a significant share of the global market. Nestle SA is one of the leaders in the instant coffee market with its brand, Nescafe. In many regions across the world, all other brands together occupy a significant market share, which is equal to or slightly less than Nescafe. Key players operating the instant coffee market include Nestle SA, Starbucks Corporation, Kraft Foods Inc., Tata Consumer Products Ltd, and Unilever PLC. These companies are actively investing in online distribution channels, targeting consumers who seek convenience. Thus, the key players are embarking on forming strategic partnerships with online portals, as one of their key strategies is to achieve consolidation and cater to the demands of consumers across various demographics.

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