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

The global instant coffee market is highly consolidated. In 2016, the top five companies operating in the market, namely, Nestlé S.A., Starbucks Corp., Tata Global Beverages, Jacobs Douwe Egberts, and Unilever Plc. Together held a mammoth 90.0% share in it.

In the years ahead, the global market for instant coffee will likely see the competition heat up among existing players as they take the inorganic route of mergers, acquisitions, and partnerships to expand their geographical outreach and gain better visibility.

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A report by Transparency Market Research, forecasts the global market for instant coffee to expand at a CAGR of 4.8% from 2017 to 2025 to attain a value of US$42.5 bn by the end of 2025 from US$28.12 bn in 2016.

Depending upon retail channels, the global instant coffee market can be segmented into business-to-business (B2B), which is comprised of hotels and restaurants, among others, and retail – both online and physical stores. Among them, the retail stores have emerged as the most preferred distribution channel for sale of instant coffee. In the years ahead too, the retail segment will retain its leading position in driving sales. This is because of an array of instant coffees they have and the attractive offers and discounts they offer. Departmental stores, hypermarkets and supermarkets are segments in the retail segment stoking sales.

Geographically, the key regions in the global market for instant coffee are North America, Latin America, Western Europe, Rest of Europe, and the Middle East and Africa. Asia Pacific, in 2016, led the market with maximum share of about 36.0%. In the near future as well, the market in the region will continue to remain dominant on the back of soaring demand for instant coffee from India and China.

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Rising Urbanization Provides Tailwinds to Market

Instant coffee is quite a hit with people these days on account of rising urbanization and economic growth. This means people have more money on their hands to spend and also they are hard-pressed for time to prepare elaborate beverages. Hence, most opt for instant coffee whenever possible – be it to kick-start the day, to get a caffeine boost at work, or to quickly make something for guests at home. On account of the convenience they accord to consumers with regard to saving of preparation time, they have been seeing a constant upswing in demand.

Another factor serving to boost the market is the easy availability of instant coffee across different channels. “The relatively lower price of instant coffee compared to regular coffee is also adding to their demand to a great extent,” explains the lead analyst of the TMR report.

Shunning of Aerated Drinks by Health Conscious Consumers Benefits Demand for Instant Coffee

The shift in consumer preference from tea to coffee, especially in developing economies of India, China, Ukraine, and various Middle Eastern countries is boosting the instant coffee market significantly across the world. Besides, shunning of aerated drinks by the new crop of discerning consumers is helping market growth too. However, the growing concerns regarding the usage of acrylamide in instant coffee, which is injurious to human health is anticipated to hamper the growth of this market in the years to come.

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