Identifying Challenges and Opportunities for the Instant Coffee Market

What are the strengths and weaknesses of instant coffee?

1. One of the main strengths of instant coffee is its convenience. It can be easily made with just hot water, making it accessible to anyone almost anywhere. Additionally, instant coffee has a large consumer base in many major markets, including non-coffee drinking regions.
2. Instant coffee’s affordability relative to roast and ground coffee is another of its strengths. This makes it a popular choice in many markets, including developing markets, where it is widely accessible.
3. Instant coffee, like ground coffee, has been linked with numerous health benefits. Instant coffee contains high levels of antioxidants, and various studies have shown that it may improve brain function; boost metabolism; reduce the risk of diseases like diabetes, Alzheimer’s, and Parkinson’s; enhance liver and mental health; and even promote longevity.

Instant coffee does also have some downsides that should be taken into consideration.

1. The global market for instant coffee is concentrated, with the top five brands holding almost half of the total market share. Due to the limited differentiation among their products and low switching costs, there is intense competition among these players.
2. Manufacturers also need to achieve economies of scale to generate significant profitability. In addition, the prices of raw materials, which account for a significant share of production costs, are subject to fluctuations due to various factors, such as unforeseeable weather conditions, increased global demand, and droughts. This makes coffee prices volatile from year to year.
3. The production of instant coffee also requires a significant investment of resources, such as production plants and distribution channels. While the industry trend indicates an increasing demand for instant coffee, such investments also carry a significant amount of risks.

What future opportunities and challenges could be addressed?

Instant coffee presents several opportunities for growth in the market and with our team of experts at Sucafina Instant, we can make sure your strategy takes full advantage of the following:

1. Despite the cost-of-living crisis, there is a growing demand for premium instant coffee as consumers treat themselves to affordable luxuries including flavored coffees and varieties such as cappuccino, mocha, French vanilla, and organic instant coffee. This trend towards value-added products tends to fetch higher margins, allowing manufacturers to increase their profitability.
2. There is a growing demand for instant coffee in emerging markets such as the Middle East, Eastern Europe, and APAC, where increasing incomes, urbanization, and changing food habits are driving robust consumption in both the retail and institutional segments. As the global instant coffee market achieved a volume of approximately 1,563 million kilograms in 2022, with a CAGR of 3.24% from 2017 to 2022 (according to IMARC Group), the rate of growth is stronger in countries that consume less instant coffee – like the Middle East and Eastern Europe, for example, which are considered the fastest-growing markets for instant coffee on a global scale.

Furthermore, according to IMARC Group, the Asia-Pacific instant coffee market is currently the second largest globally. Between 2017 and 2022, the volume of the instant coffee market in this region grew at a CAGR of 3.63% and reached 534 million kg in 2022. The market's growth in the region is largely attributed to advances in food technology and the trend towards product premiumization and convenience. We at Sucafina Instant have established an office in Vietnam to cater to APAC region customers with a wide variety of instant coffee blends and packaging. Below graph depicts Asia Pacific instant coffee market consumption in millions kg (2017 - 2022).

      3. There is growing popularity of single-serve and convenient packs, which are more portable and easier to     consume, driving growth in both developed and emerging markets.

     4. As consumers become increasingly aware of the impact of their choices on the environment, instant coffee  manufacturers may want to consider implementing more sustainable practices to mitigate the effects of climate  change and ensure a steady supply of high-quality coffee beans for their products. It’s also worth noting that   instant coffee has a lower carbon footprint.

As for threats, instant coffee does face several challenges that need to be considered as they might serve as a window to further opportunities.

1. Competition from premium alternatives in developed regions like North America and Western Europe – where instant coffee is sometimes viewed as inferior to freshly brewed coffee due to its lower cost and drying process. In addition, the popularity of coffee pod machines has made it easier for consumers to brew fresh coffee at home, leading to a decline in instant coffee sales.
2. The increasing popularity of coffee shops in major markets is also a major threat to the global instant coffee market. Coffee shops offer consumers freshly brewed coffee, innovative products, and a social space to gather with friends and family, which has negatively affected the demand for instant coffee.
3. Foreign exchange instabilities pose a risk for both instant coffee exporters and importers. Some regions rely on imports for their coffee supply, so they are vulnerable to fluctuations in foreign exchange rates.

We at Sucafina Instant can help you realize an instant coffee strategy that best fits your market. We have an expert team located across the globe who can offer you best overall portfolio of qualities, range, innovation, commercial advantage, and sustainability. Our model and expertise in the instant coffee can mitigate all threats and weaknesses as we use our coffee know-how, market insights, and logistics expertise to deliver the best overall approach for your business and the environment. We offer a wide variety of instant coffee products in bulk or finished goods formats, including sustainably sourced and certified options and with packaging formats that include plastic-free and recyclable containers in many shapes and size. We are near to your market as our offices are across the globe, waiting for your call!