Coffee and Tea Capsules Market Growth: Europe Leads with 40% Share as Global Demand Surges to US$ 36.7Bn by 2031

The global Coffee and Tea Capsules Market was valued at US$ 23.5 billion in 2022 and is projected to reach US$ 36.7 billion by 2031, expanding at a CAGR of 5.7% during 2024-2031. This steady growth is driven by rising consumer demand for convenience, premium coffee and tea experiences, and the expanding adoption of single-serve brewing systems in both homes and offices.

The market maintains a strong competitive position, fueled by continuous innovation from major players introducing recyclable and compostable capsule lines, partnerships with luxury coffee brands, and advances in portion-control and flavor-preservation technologies. Increasing consumer focus on sustainability and quality is further pushing the market toward environmentally friendly capsule solutions and premium blends, reinforcing long-term growth potential.

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Coffee and Tea Capsules Market refers to the industry that produces and sells single-serve capsules designed for convenient, quick-brewing coffee and tea consumption at home, offices, and commercial settings.

Key Developments

United States
✅ September 2025: U.S. capsule manufacturers expanded production of compostable and biodegradable coffee pods to meet rising demand for sustainable single-serve beverages.

✅ July 2025: Major U.S. retailers reported strong growth in premium coffee capsule sales, driven by new single-origin and specialty espresso launches targeting home barista consumers.

✅ May 2025: Coffee machine brands in the U.S. partnered with roasters to introduce next-generation smart capsule brewing systems with automatic strength calibration and flavor optimization.

Japan
✅ August 2025: Japanese beverage companies launched new matcha and specialty tea capsules to cater to growing demand for high-quality home-brewed tea experiences.

✅ June 2025: Capsule manufacturers in Japan upgraded production lines to incorporate aroma-seal technologies that preserve freshness for premium coffee and tea blends.

✅ April 2025: Convenience-focused capsule systems gained traction as single-person households in Japan adopted compact brewing machines supporting both coffee and tea pods.

Mergers and Acquisitions

United States
✅ August 2025: A leading U.S. beverage company completed a strategic acquisition of a premium capsule coffee brand to strengthen its position in the fast-growing single-serve beverages market.

Japan
✅ June 2025: A Japan-based food and beverage manufacturer entered a partnership with a domestic appliance company to co-develop integrated capsule brewing systems for the home market.

Key Players:
Nestlé Australia Ltd. | Lavazza Australia Pty Limited | Jacobs Douwe Egberts Professional Australia | Vittoria Food & Beverage | Illy Australia | Tetley | Twinings North America, Inc. | Unilever Australia Supply Services Limited | The Red Espresso Company (Pty) Ltd.

Key Highlights :
• Nestlé Australia Ltd. - Holds 23.4% share of the coffee and tea capsules market, driven by strong performance of Nespresso and Dolce Gusto capsule systems across retail and premium home-brewing channels.

• Jacobs Douwe Egberts Professional Australia - Accounts for 18.6% market share, supported by robust office coffee solutions, compatible capsules, and HoReCa segment penetration.

• Lavazza Australia Pty Limited - Maintains 14.7% share, strengthened by premium espresso capsules, partnerships with hospitality chains, and expanding home-consumption demand.

• Vittoria Food & Beverage - Holds 12.1% market share, backed by high adoption of its espresso capsules in cafes, hotels, and Australian households.

• Illy Australia - Contributes 7.4% share, driven by premium Italian coffee capsules and growing brand loyalty in specialty-brew consumers.

• Twinings North America, Inc. - Holds 6.2% share through expanding tea capsule offerings and partnership-driven retail distribution.

• Unilever Australia Supply Services Limited - Maintains 5.3% share, supported by tea-based capsules under leading beverage brands.

• Tetley - Accounts for 4.8% market share, driven by strong demand for flavored tea and herbal infusion capsules.

• The Red Espresso Company (Pty) Ltd. - Holds 3.1% share, supported by niche rooibos-based espresso capsules gaining popularity in specialty beverage consumers.

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Market Drivers

• Growing consumer shift toward convenient, single-serve beverages is boosting adoption of coffee and tea capsules for home and office use.

• Rising demand for premium, specialty, and flavored blends is encouraging manufacturers to expand capsule-based product lines.

• Increasing penetration of capsule coffee machines in households, supported by affordability and compact designs, is accelerating market growth.

• Growth of e-commerce and subscription-based capsule delivery services is widening accessibility and recurring consumption.

• Expansion of sustainable and compostable capsule technologies is attracting environmentally conscious consumers and supporting brand differentiation.

Industry Developments
• October 2025 (Italy): Leading manufacturers launched fully compostable plant-based coffee and tea capsules to address sustainability concerns.

• August 2025 (US): Brands expanded their premium capsule ranges featuring single-origin, organic, and cold-brew compatible variants.

• June 2025 (Switzerland): Companies introduced next-generation aluminum-free capsules with enhanced aroma protection and longer shelf life.

• April 2025 (Japan): Beverage innovators developed capsule systems capable of brewing both hot and iced beverages, improving versatility for consumers.

Regional Insights
• Europe - US$ 10.2 billion (40% share): Growth is driven by "high household penetration of capsule coffee machines, strong preference for premium coffee culture, and widespread adoption of sustainable capsule solutions."

• North America - US$ 7.6 billion (30% share): Expansion is supported by "strong demand for convenient home-brewing systems, rise in specialty coffee consumption, and increasing popularity of capsule-based café-style beverages."

• Asia-Pacific - US$ 6.1 billion (24% share): Growth is fueled by "rapid urbanization, rising middle-class disposable income, and accelerating adoption of single-serve brewing systems in emerging markets."

• Latin America - US$ 1.1 billion (4% share): Demand is increasing due to "growing café culture, rising interest in premium capsule formats, and expanding retail distribution networks."

• Middle East & Africa - US$ 0.5 billion (2% share): Growth is supported by "increasing popularity of home espresso systems, expanding modern retail channels, and rising demand for convenient luxury beverages."

Key Segments

By Tea Capsules Type
Red tea capsules cater to consumers seeking bold flavors with high antioxidant content, making them popular in wellness-oriented segments. Green tea capsules remain widely preferred for their mild taste and well-known health benefits, supporting strong demand in daily consumption. Oolong tea capsules appeal to premium users who enjoy semi-fermented teas with complex aroma profiles. Black tea capsules dominate the category due to their strong flavor, broad global acceptance, and versatility across hot and iced brewing. Other tea capsule types include herbal blends, white tea, and specialty infusions designed for niche taste preferences.

By Coffee Capsule Type
Decaf capsules are growing steadily as more consumers choose caffeine-free options while still expecting rich flavor and aroma. Traditional coffee capsules lead the market, driven by strong demand for regular-strength espresso, lungo, and filter-style coffees that remain household favorites across capsule machine users.

By Material
Conventional plastic remains widely used due to its durability, compatibility with most capsule machines, and cost-effective manufacturing. Bio-plastic materials are gaining traction as brands and consumers move toward compostable and eco-friendly alternatives to reduce environmental impact. Fabric-based capsules serve specialty markets, offering enhanced aroma release and improved brew quality with breathable materials. Other materials include aluminum and hybrid compostable blends that combine sustainability with high-pressure brewing performance.

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