Instant Coffee Market: Competition Expected to Heat up Due to Mergers and Acquisitions

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Instant coffee has gained significant popularity among consumers in the recent times. Thanks to the convenience it provides to the consumers in terms of time and preparation, its demand has been rocketing across the world, reflecting substantially on the global instant coffee market. The easy availability of instant coffee across various channels has been contributing considerably to its rising popularity. The relatively lower price compared to regular coffee is also adding to its demand to a great extent. In 2016, the overall market stood at US$28.12 bn.

Boosted by the surge in the uptake of coffee, especially over tea, across various regions, the opportunity in this market is likely to rise at a CAGR of 4.80% from 2017 to 2025 and reach US$42.5 bn by the end of 2025. The increasing awareness regarding the harmful effects of aerated drinks is also expected to shift the preference of consumers towards coffee, which subsequently, is anticipated to propel the worldwide market for instant coffee in the near future.

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Retail Stores to Continue being Primary Distribution Channel for Instant Coffee

B2B, such as hotels and restaurants, and retail stores, both online and offline, are the primary distribution channels utilized by instant coffee vendors. Retail stores sold a comparatively high amount of instant coffee than B2B channel in 2016. The availability of a wide range of instant coffee and attractive offers and discounts directly from the vendors have prompted consumers to buy from retails stores and this trend is likely to remain so over the forthcoming years. Departmental stores and hypermarkets and supermarkets are the main retail stores, where instant coffee is available for offline sales.

Asia Pacific to Retain Dominance in Global Instant Coffee Market

Geographically, the global instant coffee market has been categorized into Latin America, North America, Asia Pacific, the Middle East and Africa, Western Europe, and the Rest of the Europe. With a share of 35.7%, Asia Pacific dominated the overall market in 2016 and is expected to remain on top over the next few years. The rising interest of consumers for instant coffee in China and India has been driving the market for instant coffee in Asia Pacific. Although tea is culturally more significant in this region, the easy preparation method of instant coffee is stimulating its uptake here, aiding the market extensively.

Among others, the demand for instant coffee is particularly high in the Rest of Europe. Countries, such as Poland, Russia, and Bulgaria, exhibit a considerably high demand rate, which is estimated to continue to rise in the years to come, retaining the second position in the global instant coffee market. North America, on the other hand, is expected to experience a decline in the demand for instant coffee in the near future because of a greater preference for filter coffee. The new line of machines and capsules that pours cold carbonated drinks, being the latest trend in North America, also indicates a bumpy ride for the market for instant coffee in this region over the coming years.

The global market for instant coffee is highly consolidated. Nestlé S.A., Starbucks Corp., Jacobs Douwe Egberts, Unilever Plc., and Tata Global Beverages are the leading vendors of instant coffee across the world. The other prominent players in this market are Strauss Group Ltd., Matthew Algie & Co. Ltd., The  Kraft Heinz Co., Tchibo coffee, and Keurig Green Mountain.

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