Global Instant Coffee Market Driving by Prominence of Café Culture

Coffee has been a leisure drink for a vast population across the world but visiting a coffee shop for every single cup is not always feasible. Consequently, the concept of instant coffee was developed and the market for the same has evolved over the years. As per the projections of a recent business and commerce study by Transparency Market Research (TMR), the demand in the global instant coffee market will expand at a CAGR of 4.80% during the forecast period of 2017 to 2025. The TMR report has evaluated that the opportunities in the instant coffee market, across the world, were worth US$28.12 bn in 2016, and estimate it to add up to a valuation of US$42.50 bn by 2022.

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Which factors are driving or restraining the instant coffee market?

Increasing disposable income among the urban population, mushrooming corporate enterprises across various emerging economies, prominence of café culture as a mode of social gatherings, optimal alternative for time-pressed consumers, and growth in the demand for Robusta coffee are some of the key factors driving the global instant coffee market. In addition to that, trends such as the advent of flavored instant coffee, growing competition among the leading vendors to increase their production capacity, and shifting preference of consumers from tea to coffee are expected to define new opportunities for the vendors operating in the global instant coffee market. That being said, availability of alternative drinks such as non-alcoholic beer and juices, reliance of populations in developed countries on fresh coffee, and volatile price of green coffee beans are obstructing this market from attaining its true potential.

Which market segments are showing greater potential?

Based on distribution channel, the TMR report segments the global instant coffee market into business to business (B2B) including hotel, restaurant, and others, and retail, which is further sub-segmented into online and offline including departmental stores, hyper and super market, and others. Among these, the retail continues to be the most preferred distribution segment, as these outlets can manage and sell high among of instant coffee in comparison to B2B channels. Their ability to provide wide range of products and gain discount offers directly from vendors are some of the others factors that will ensure this segment will remain most profitable throughout the forecast period. Based on packaging type, the market has been bifurcated into sachets and jars.

Which regions must the top vendors concentrate for profits?

Asia Pacific has emerged as most lucrative region for the companies functioning in the instant coffee market. The region constituted a demand share of 35.7% in 2016 and is expected to remain most profitable throughout the forecast period, which would be a reflection of rising interest of consumers for instant coffee in India and China. While tea continues to be the most preferred leisure drink in these country, the popularity of coffee is steadily catch up among the vast population, particularly those living in urban cities.

What is the nature of competitive landscape?

The global instant coffee market is highly consolidated, with top five players, viz. Starbucks Corp., Nestlé S.A., Jacobs Douwe Egberts, Tata Global Beverages, and Unilever Plc, accounting for 90% of the overall shares in 2016. In the near future, instant coffee market is likely to witness significant increase in competition, fueled by rising involvement in mergers, partnerships, and collaborations, which is helping these companies to expand their geographical presence and strengthen their distribution network. The market leaders are also expected to concentrate on production volume to meet the escalating demand.