Global Instant Coffee Market Gaining Pitch Due To Convenience and Constant Innovation

Instant coffee, also known as soluble coffee or coffee powder, is commercially prepared from roasted or grounded coffee beans either by spray drying or freeze drying after which it can be rehydrated. Although there is a preference for fresh coffee in higher income markets such as the US, instant coffee is rapidly gaining popularity all over the world primarily due to its convenience and eas

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e of preparation as compared to fresh coffee. Instant coffee has also penetrated the tea-drinking regions such as Asia, Central and Eastern Europe, United Kingdom, Middle East etc. According to IMARC Group, the instant coffee market reached a volume of 20.7 Million Bags in 2015, growing at a CAGR of 3.3% during 2008–2015. In terms of value, the market was worth US$ 9.4 Billion in 2015. The market is further estimated to reach a volume and value of 25.5 Million Bags and US$ 12.7 Billion by 2021 respectively.

Convenience and Constant Innovation to Drive the Demand

The main advantage instant coffee offers over fresh coffee is its convenience. Instant coffee can be easily prepared by consumers with minimum requirements for equipment. Constant innovation is another major factor to create new opportunities so as to gain more popularity among consumers and ensure a continuous demand for instant coffee globally. For instance, manufacturers come up with new ideas to develop and improve the quality, flavour and aroma so as to give the consumers an experience of a freshly brewed coffee. Many format innovations such as single-serve systems, which are convenient to carry and consume, are driving value growth in both developed and emerging markets.

Other factors such as growing urbanization, increasing disposable incomes, changing lifestyles, emerging café culture, premiumization and growing demand in emerging markets are helping the social trend of coffee consumption to further penetrate the lives of the existing as well as new consumers.

Middle East to Be the Fastest Growing Market in Asia

The world is divided over preference for either instant coffee or fresh coffee. As a result, coffee preferences vary from region to region. It has been observed that instant coffee has gained more popularity in countries where the consumption of coffee was previously, more or less, negligible. For instance, in Asia, Central and Eastern Europe, United Kingdom, Middle East etc., predominantly tea-drinking regions, instant coffee accounts for a much higher percentage of total coffee consumption than in countries where regular coffee drinking had a long history.

Currently, Europe including the CIS represents the largest market for instant coffee accounting for around 40% of the total market share. However, it has been found that the demand of instant coffee in Europe varies from region to region. In Western Europe, the instant coffee market is growing at 0-2% while in Central and Eastern Europe, this market is growing at 7-10%.

Asia represents the second largest market for instant coffee and currently accounts for 33% of the total market share. The Middle East represents the fastest growing market in this region with growth rates between 10-15%.

Highly Concentrated Market with Nescafe Dominating Global Share

Owing to the importance imparted to brands, the competitive landscape of the global coffee market (ground coffee and instant coffee) is highly concentrated in nature with five players currently accounting for around 45% of the total market. Nestle is the leading player in this market with 23% of the total market share. The instant coffee market is even more concentrated with Nestle having a monopolistic position and accounting for more than half of the total instant coffee market share.

About IMARC Group: IMARC Group is a leading market research and consulting company that offers management strategy and market research worldwide. The company has done multiple projects on the instant coffee industry, which has enabled the clients to successfully setup and expand their businesses. Some of the company’s offerings include: