The
global instant coffee market is highly consolidated. In 2016, the top
five companies operating in the market, namely, Nestlé S.A.,
Starbucks Corp., Tata Global Beverages, Jacobs Douwe Egberts, and
Unilever Plc. Together held a mammoth 90.0% share in it.
In
the years ahead, the global market for instant coffee will likely see
the competition heat up among existing players as they take the
inorganic route of mergers, acquisitions, and partnerships to expand
their geographical outreach and gain better visibility.
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A
report by Transparency Market Research, forecasts the global market
for instant coffee to expand at a CAGR of 4.8% from 2017 to 2025 to
attain a value of US$42.5 bn by the end of 2025 from US$28.12 bn in
2016.
Depending
upon retail channels, the global instant coffee market can be
segmented into business-to-business (B2B), which is comprised of
hotels and restaurants, among others, and retail – both online and
physical stores. Among them, the retail stores have emerged as the
most preferred distribution channel for sale of instant coffee. In
the years ahead too, the retail segment will retain its leading
position in driving sales. This is because of an array of instant
coffees they have and the attractive offers and discounts they offer.
Departmental stores, hypermarkets and supermarkets are segments in
the retail segment stoking sales.
Geographically,
the key regions in the global market for instant coffee are North
America, Latin America, Western Europe, Rest of Europe, and the
Middle East and Africa. Asia Pacific, in 2016, led the market with
maximum share of about 36.0%. In the near future as well, the market
in the region will continue to remain dominant on the back of soaring
demand for instant
coffee from India and China.
Rising
Urbanization Provides Tailwinds to Market
Instant
coffee is quite a hit with people these days on account of rising
urbanization and economic growth. This means people have more money
on their hands to spend and also they are hard-pressed for time to
prepare elaborate beverages. Hence, most opt for instant coffee
whenever possible – be it to kick-start the day, to get a caffeine
boost at work, or to quickly make something for guests at home. On
account of the convenience they accord to consumers with regard to
saving of preparation time, they have been seeing a constant upswing
in demand.
Another
factor serving to boost the market is the easy availability of
instant coffee across different channels. “The relatively lower
price of instant coffee compared to regular coffee is also adding to
their demand to a great extent,” explains the lead analyst of the
TMR report.
Shunning
of Aerated Drinks by Health Conscious Consumers Benefits Demand for
Instant Coffee
The
shift in consumer preference from tea to coffee, especially in
developing economies of India, China, Ukraine, and various Middle
Eastern countries is boosting the instant coffee market significantly
across the world. Besides, shunning of aerated drinks by the new crop
of discerning consumers is helping market growth too. However, the
growing concerns regarding the usage of acrylamide in instant coffee,
which is injurious to human health is anticipated to hamper the
growth of this market in the years to come.
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