Coffee market

The global coffee market size was valued at USD 127 billion in 2022 and is anticipated to witness a compound annual growth rate (CAGR) of 4.72% from 2023 to 2030. The coffee market is expected to witness a significant growth owing to the increasing demand for organically and sustainably cultivated whole-bean coffee. This is primarily due to its high antioxidant properties and health benefits. Furthermore, the market is also gaining popularity due to its rich taste and aroma. Several coffee companies are working hard to develop their products and promote them as healthy beverages. Additionally, increasing wealthy and millennial population, rising e-commerce retail sales, fortification of coffee with antioxidants, increasing health concerns about caffeine, and green coffee consumption in emerging countries are further propelling market growth.

Global Coffee Market: Regional Insights

Based on geography, the global coffee market is segmented into North America, Europe, Asia Pacific, Latin America, and Middle East & Africa.

Regionally, North America is expected to dominate the global coffee market over the forecast period owing to the high consumption of coffee in the region. Coffee is among the most consumed beverages across the country. For instance, as per a survey conducted by the National Coffee Association, more than 70% of the consumers prefer at-home coffee recipes. The rise in cafe culture, increasing disposable income, employee demography, and food service outlets are some of the major factors driving growth of the regional coffee market.

In Europe, the market of coffee is expanding rapidly. In particular, Germany, Italy, and Belgium offer very interesting opportunities for green coffee exporters. These countries have a mix of positive characteristics, including high volumes sourced directly from producing countries and a growing market for specialty coffees. European consumers are increasingly aware of the origin of their food and beverage products, so they want to know that they are buying fair-trade or organic coffee. In addition, they are willing to pay more for high-quality and specialty coffees, which is why opportunities in this segment are growing fast.

Figure 1. Global Coffee Market Share (%), By Region

Global Coffee Market Drivers:

Increasing working population uplifting the presence of coffee houses

Growing adoption of western culture due to globalization and increasing penetration of coffee brands are key factors expanding coffee chains worldwide. Recently, coffee shops have experienced strong growth as outlets gained popularity as hangout zones for family, friends, colleagues, and business associates, among others. Moreover, the emergence of premium stores from companies such as Starbucks Corporation, Coffee Day Enterprises Ltd, and Barista Coffee Co Ltd, among others increased adoption of coffee, thereby fueling the market growth.

Growing demand for certified coffee products to foster market growth

For instance, in November 2022, Nescafé Dolce Gusto launches Neo, the brand's next-generation coffee machines and pods. Neo combines high quality, cutting-edge technology, and sustainability to create the ultimate coffee shop-at-home experience. In a Nestlé first, Neo's new range of coffee pods are paper-based, home compostable, and use 70% less packaging (by weight) than current capsules.          

Global Coffee Market Opportunities:

Increasing focus of key players on introducing new product with innovative packaging is expected to serve major growth opportunities. For instance, in May 2020, Nespresso launched its first coffee capsules made using 80% recycled aluminum. These capsules were made from 95% recycled material earlier this year in March. Further, by the end of 2021, Nespresso targets to have all machines sold in this new packaging, which, in turn, will boost the market growth of coffee.

Growing popularity of ready-to-drink coffee is creating potential opportunities for key players. In September 2022, TH International Limited, the exclusive operator of Tim Hortons coffee shops in China ("Tims China"), announced the launch of two co-branded ready-to-drink (RTD) coffee products in partnership with Sinopec's Easy Joy, China's largest convenience store chain.

Global Coffee Market Trends:

Organic and fair-trade coffee is a growing trend

The rising popularity of organic and fair trade coffee is accelerating growth of the coffee market. The growing demand for certified products is mainly attributed to the increased consumer confidence, as these certified products are believed to be reliable and safe for use.

Coffee as a functional beverage

Growing demand for coffee as a functional beverage is expected to provide potential market opportunities. For instance, in August 2018, Starbucks introduced a plant-based, protein-blended cold-brew, in almond and cocoa flavors, delivering 12 grams and 10 grams of plant-based protein, respectively. The almond variant is prepared by blending the Starbucks cold-brew coffee with almond drink/milk, plant-based protein, almond butter, and a banana/date fruit blend.

Global Coffee Market Restraints:

Change in climatic conditions impacting coffee plantations

A 2011 study reported that the coffee berry borer, Hypothenemus hampei, appeared to be thriving under warm conditions. The pest, which probably originated in Central Africa, spread to all coffee-producing regions in the world, except China and Nepal. Notably, the damage in coffee beans is causing losses of more than USD 500 million per year.

Growing popularity of tea as healthier alternative drink

Growing awareness about the health benefits of tea, premiumization of tea, increasing on-the-go convenience trends with regard to ready-to-drink (RTD) tea, and demand for herbal tea are key factors boosting the market share of tea market.     However, growing adoption of western culture is expected to open new market avenue.

Figure 2. Global Coffee Market Share (%), By Segment

Global Coffee Market Segmentation:

The global coffee market report is segmented into product type, distribution channel, and geography

Based on product type, the market is segmented into Whole Bean, Ground Coffee, Instant Coffee, and Coffee Pods and Capsules. Out of which, Ground Coffee is expected to dominate the global market over the forecast period and this is attributed to the growing demand from medium income group due to its aroma and availability of quality brand. The ground coffee segment of the market studied was valued at USD 41.24 billion in 2022, and it is projected to reach USD 58.35 billion by 2030, registering a CAGR of 2.31% during the forecast period, 2023-2030.

Instant Coffee segment is also expected to witness significant growth in the near future. Convenience is the major factor driving growth of this segment.

Based on distribution channel, the market is segmented into On-trade and Off-trade. Off-trade is further segmented into Supermarkets/hypermarkets, Convenience Stores, Specialist Retailers, and Other Off-trade Channels. Out of which, Off-trade is expected to dominate the global market over the forecast period and this is attributed to the large retail space and availability of diversified product ranges at supermarkets/hypermarkets.

Convenience Stores segment is also expected to witness significant growth in the near future. This segment offer convenient and affordable cups of coffee for on-the- go customers. Moreover, convenience stores offers premium and branded coffee products, and thus, they attract high-income consumers.

Global Coffee Market: Key Developments

In September 2019, The Kraft Heinz Co. partnered with Diageo PLC’s Baileys brand to launch a line of non-alcoholic coffee products featuring the flavors of Bailey’s original Irish cream. The portfolio includes ready-to-drink ground coffee and K-cup formats.

In August 2018, Nestlé SA and Starbucks Corporation formed a partnership to market the company’s Consumer Packaged Goods and Foodservice products outside the company’s coffee shops.  The agreement covers Starbucks’ packaged coffee and tea brands, such as Starbucks®, Seattle’s Best Coffee®, Teavana TM/MC, and Starbucks- branded K-Cup® pods.

In May 2019, The Starbucks Corporation planned to grow its technological reach through a significant partnership with Microsoft. The partnership enlists the software giant’s Azure blockchain cloud services, in combination with other AI and IoT offerings, to bolster its bean-to-cup and other initiatives, in order to develop a more personal connection with its customers.

In October 2019, K-fee, the single-serve coffee brand from Germany, partnered with Starbucks Verismo and launched its premium coffee and espresso makers and pods in the US market.

In February The Starbucks Corporation announced a new partnership with the OTG hospitality group to operate its airport locations, just one week after HMS Host ended its exclusivity agreement. This partnership is aimed to make it easier to purchase a Venti Pike Place, through a combination of experiential concepts and innovative technology.

In February 2018, The J.M. Smucker Company launched a new line of premium coffees that may strengthen its position in the fastest-growing market segments and serve as a broad platform for future growth and innovation. The new line, 1850, draws on the rich heritage of The Folger Coffee Company.

In July 2020, The J.M. Smucker Company collaborated with IBM blockchain technology, which is implemented in its system to trace Colombian coffee beans directly back to its source, while enabling consumers to support coffee farmers through the platform.

In March 2021, The J.M. Smucker Company and JDE Peet’s made a strategic partnership, which may allow JDE Peet's to support the Smucker  Away  From  Home  liquid  coffee  business  with product  development,  production,  and  foodservice equipment innovation.

In November 2019, Luigi Lavazza SpA launched fully compostable coffee pods, with packaging and design by Path. The company aimed to replace its entire range of aluminum capsules with new eco- friendly ones, by the end of the year, without any price difference.

In May 2020, Yum China Holdings Inc. and the Lavazza Group entered a joint venture, to explore and develop the Lavazza coffee shop concept in China. As the first step, a new Lavazza Flagship Store in Shanghai, its first outside of Italy, opened its doors to customers.

In September 2019, Lavazza launched Tierra Bio-Organic in India, the first organic coffee to encapsulate in a cup, to be enjoyed at home.

Global Coffee Market: Key Companies Insights

The global coffee market is highly competitive. This is attributed to continuous launch of new technologies due to ongoing R &D and efforts by value chain participants. Moreover, key players are adopting various business growth strategies in order to expand their presence on regional as well as global basis. Some of the key players in the global coffee market are The Kraft Heinz Company, Starbucks Coffee Company, The J.M. Smucker Company, Luigi Lavazza SPA, Nestle SA, The Coca-Cola Company, JAB Holding Company, Tata Global Beverages, Tchibo GmbH, and Strauss Group Ltd

*Definition: Coffee is one of the most popular beverages in the world. It is enjoyed by people from all walks of life and has many health benefits. It is also a stimulant that gives the energy to carry out daily activities and helps improve the functioning of the brain, heart, and immune system.

Detailed Segmentation:

• Global Coffee Market, By Product Type
  • Whole Bean
  • Ground Coffee
  • Instant Coffee
  • Coffee Pods and Capsules
• Global Coffee Market, By Distribution Channel
  • On-trade
  • Off-trade
    • Supermarkets/hypermarkets
    • Convenience Stores
    • Specialist Retailers
    • Other Off-trade Channels
• Global Coffee Market, By Geography
  • North America
  • Europe
  • Asia Pacific
  • Latin America
  • Middle East & Africa