Instant coffee, also called as soluble coffee. It is available in the form of crystals, and powder. Instant coffee is coffee powder that is produced from coffee beans that have been brewed at a higher Coffee-to-Water ratio compared to regular coffee. Instant coffee is produced using two methods such as spray drying and freeze-drying. In the spray drying method, a spray device is used for drying the coffee extract. The device transfers hot air into the container and converts the product into fine powder. In the freeze drying method, the coffee extract is frozen at around -40 degree Celsius and then the ice particles are treated separately in evaporation and drying chambers to produce instant coffee flakes.
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Despite the dominance of fresh coffee in the coffee industry, instant coffee is quickly becoming popular all over the world. Transportation of instant coffee is cheaper, as it has lower shipping weight and volume than beans or ground coffee. Moreover, instant coffee offers convenience in preparation, which increases its demand among the urban consumers.
Among packaging type, the jars segment is expected to witness significant market share in the global instant coffee market. In 2018, the segment accounted for 33.2% share in the global instant coffee market in terms of revenue. This was majorly attributed to high consumption of coffee in the Asia Pacific region. Therefore, significant growth in consumption of coffee due to increasing population is expected to boost the instant coffee market during the forecast period.
Among regions, in 2018, Europe held dominant position in the global instant coffee market, in terms of revenue share. This was owing to increasing consumption of instant coffee in the region. Asia Pacific is expected to record fastest growth in the market over the forecast period. Growing demand for instant coffee in China and India is majorly supporting the regional growth of the market.
Asia-Pacific market is expected to record the fastest growth during the forecast period, witnessing highest CAGR among all. Growing demand for instant coffee in China and India is majorly supporting the regional growth of the market. For instance, according to the United States Department of Agriculture (USDA), the export of soluble coffee (instant coffee) in India had increased from 1,667 thousand 60 kg bags during 2013-2014 to 1,833 thousand 60 kg bags during 2016-2017. In 2017, Starbucks announced to purchase more than 1300 stores in China, in a deal worth US$ 1.30 Bn, in order to cater the growing demand for coffee. Further, according to the International Coffee Organization (ICO), in 2015, the instant coffee had contributed approximately 99% and 98% in the total retail sales of Chinese coffee market by volume and value respectively. Thereby, growing coffee market in China, is supporting the overall growth of instant coffee market as well.
In 2016, Europe held the significant market share in the global instant coffee market. This is majorly attributed to the high consumption of coffee in the region. According to the International Coffee Organization (ICO), Europe recorded the highest consumption of coffee among all the regions during 2013 to 2017 and the total coffee consumption had increased from 50,179 thousand 60 kg bags during 2013-2014 to 51,693 thousand 60 kg bags in 2016-2017. Further, according to the CBI Ministry of Foreign Affairs, in Europe approximately 74 percent consumers prefer instant coffee over fresh coffee and in 2015, 2.5 Million Tons of coffee had consumed in European Union alone. However, due to the less coffee production in the region, Europe majorly depends on the imports, in order to cater the high demands for coffee. For instance, in 2016, Europe had imported 3.4 million tons of green coffee beans and the volume of imports had raised with an annual average rate of 1.6 percent between 2012 and 2016, according to the CBI Ministry of Foreign Affairs. Further, the instant green coffee is gaining popularity, owing to its various health benefits as it contains less caffeine, helps fastening weight loss and improve heart health.
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Key Players and Business Strategies:
The major companies operating in this market include Keurig Green Mountain Inc., Alpine Start Inc., Starbucks Corp, Nestle S.A., Tata Global Beverages Ltd., Unilever Plc, Tchibo Coffee International Ltd, Luigi Lavazza S.p.A., The J.M. Smucker Company and Strauss Holdings Ltd.
Frequent mergers and acquisitions, strategic collaborations and product innovation, are the key strategies adopted by these players. For instance in 2013, Nestle S.A. had launched its new instant coffee for hotels, restaurants and cafes in UK, under the brand name, Nescafe Azera. Further, Tata Coffee Limited, a subsidiary of Tata Global Beverages Ltd, in 2017, had announced to set up an instant coffee plant in Vietnam with a capacity of 5,000 metric tons per annum, in order to cater the growing demand for instant coffee and to strengthen the company’s business in Asia Pacific region.
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