Decaffeinated Coffee Market to Reach US$ 14.83 Bn by 2031, Growing at 7.9% CAGR from 2021-2031

The global decaffeinated coffee market has witnessed significant growth from 2021 to 2031, driven by increasing consumer awareness of health and wellness, a surge in demand for organic and specialty coffee, and advancements in decaffeination processes. As consumers seek healthier beverage options without compromising on taste, decaffeinated coffee has emerged as a preferred choice.

Market Size and Growth

In 2021, the global decaffeinated coffee market was valued at approximately US$ 2.73 Bn. It is projected to reach USD 14.83 billion by 2031, growing at a CAGR of 7.9% during the forecast period. This growth is attributed to the rising demand for decaffeinated coffee across various regions and the expansion of product offerings by key market players.

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Market Segmentation

By Service Type
• Online Sales: The online distribution channel is rapidly growing, accounting for over 40% of decaffeinated coffee sales. E-commerce platforms offer convenience and a wide range of specialty brands, contributing to this growth.
• Offline Sales: Despite the rise of online channels, offline sales through supermarkets, grocery stores, and specialty coffee shops still dominate, with over 60% of global decaf coffee sales occurring through these channels.

By Sourcing Type
• Organic: There is a growing preference for organic decaffeinated coffee, driven by health-conscious consumers seeking chemical-free options.
• Conventional: While conventional decaf coffee remains prevalent, the market share is gradually shifting towards organic variants.

By Application
• Restaurant and Coffeehouse Services: Restaurants and coffeehouses are expanding their decaf offerings to cater to customer demand for non-caffeinated beverages.
• Personal Use: The personal use segment has grown significantly, especially during the COVID-19 pandemic, with consumers preparing decaf coffee at home using pods, capsules, and instant forms.
• Office Use: Offices are increasingly providing decaf coffee options to cater to employees seeking less potent beverages.

By Industry Vertical
• Foodservice: The foodservice segment accounts for the largest share of the global market, driven by the inclusion of decaf options in menus of restaurants and cafes.
• Retail/Household: The retail segment is anticipated to expand significantly due to the rising demand for healthier beverages among consumers.

By Region
• North America: Leading the market with a strong preference for organic and specialty decaf coffee.
• Europe: A key player with a focus on specialty and fair-trade decaf coffee offerings.
• Asia-Pacific: Experiencing rapid growth due to the increasing popularity of Western-style coffee culture.
• Middle East & Africa: Gradual growth fueled by rising disposable income and the expansion of international coffee chains.

Regional Analysis

North America
North America holds the largest share of the decaffeinated coffee market, with the United States and Canada accounting for over 40% of global decaf sales. The demand for organic, fair-trade, and Swiss Water Process decaf coffee has surged, with more than 35% of coffee consumers preferring chemical-free decaf options.

Europe
Europe remains a key player, with countries like Germany, France, Italy, and the UK driving demand. Over 50% of European consumers prefer specialty and fair-trade certified decaf coffee, supporting the growth of ethical coffee sourcing and organic coffee production.

Asia-Pacific
The Asia-Pacific decaffeinated coffee market is rapidly growing, fueled by the increasing popularity of Western-style coffee culture in countries like Japan, China, India, and South Korea. Japan leads the region in specialty and instant decaf coffee sales, with over 40% of Japanese consumers opting for low-caffeine alternatives.

Middle East & Africa
The Middle East & Africa decaffeinated coffee market is gradually expanding, with countries like the UAE, Saudi Arabia, and South Africa seeing increased demand. The hospitality sector and premium café chains have reported a 20% increase in decaf coffee sales, driven by health-conscious consumers and expatriate populations.

Market Drivers and Challenges

Drivers
• Health and Wellness Trends: Increasing consumer preference for healthier beverage options.
• Growing Demand for Organic and Specialty Coffee: Rise in the consumption of premium and organic decaf coffee varieties.
• Expanding Café Culture: Increased availability in cafes and restaurants worldwide.
• Innovations in Decaffeination Processes: Adoption of advanced techniques such as Swiss Water Process and CO2 method, which enhance flavor retention.

Challenges
• Higher Production Costs: The decaffeination process adds cost, making decaf coffee more expensive than regular coffee.
• Taste Perception Issues: Some consumers find decaffeinated coffee less flavorful.
• Limited Awareness in Emerging Markets: Lack of widespread consumer education about decaf coffee in developing regions.

Market Trends
• Rise in Organic and Fair-Trade Certified Coffee: Consumers are increasingly seeking ethically sourced and environmentally friendly coffee.
• Expansion of Ready-to-Drink (RTD) Decaf Coffee: Growth in convenience-based beverages is driving the RTD segment.
• Increased Online Retailing: E-commerce platforms are providing a boost to the sales of decaf coffee, making it more accessible to consumers globally.
• Innovation in Blends and Flavors: Brands are introducing a variety of decaf coffee flavors to attract new consumers.

Competitive Landscape
The decaffeinated coffee market is characterized by the presence of major global players as well as emerging specialty coffee brands. Key companies operating in this sector include:
• Nestle SA
• Keurig Dr Pepper Inc.
• The J.M. Smucker Company
• The Kraft Heinz Company
• Strauss Group Ltd.
• Tchibo Coffee International Ltd.
• Fresh Roasted Coffee LLC.
• Luigi Lavazza SPA
• Costa Limited
• Caribou Coffee Operating Company Inc.
• Tim Hortons
• Jacobs Douwe Egberts Pro
• Peet's Coffee
• Massimo Zanetti Beverage Group
• Illycaffè S.p.A.
• Caffè Nero
• Bewley's Tea & Coffee
• Alois Dallmayr KG
• Cameron's Coffee and Puroast Coffee Company

These companies are focusing on expanding their product portfolios, investing in sustainable sourcing, and adopting advanced decaffeination processes to strengthen their market position.

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Future Outlook

The decaffeinated coffee market is poised for continued growth, driven by health-conscious consumers, innovations in decaffeination technology, and the expansion of café culture globally. Emerging markets in Asia-Pacific and the Middle East & Africa present significant opportunities for market players to expand their presence. However, addressing challenges related to production costs and taste perception will be crucial for sustained growth.

Key Market Study Points
• The global decaffeinated coffee market is projected to grow at a CAGR of 7.9% from 2021 to 2031.
• North America and Europe are the leading markets, while Asia-Pacific is the fastest-growing region.
• Online sales channels are gaining prominence, accounting for over 40% of decaf coffee sales.
• Organic and specialty decaf coffee variants are driving market growth.
• Key players are focusing on product innovation and sustainable sourcing to gain a competitive edge.

Recent Developments
• In July 2024, Grind's specialty coffee was selected to be served on short-haul flights by British Airways, specifically from Gatwick and Heathrow. The company developed different product blends for the High Life Café initiative, including Decaf Black and ready-to-drink Iced Caramel Latte Can.

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