Instant Coffee — An Insight into the Market Dynamics and Growth Factors

A very interesting side to the instant coffee market is the idea that it appeals more to those who are amateur at coffee drinking. Of course, the same can’t be generalized, but that’s true for most of the part. In fact, an article on Washington Post addresses the same — “In newer coffee-drinking regions, instant coffee is appealing because of its ability to satisfy the needs of new coffee drinkers and their evolving tastes.”

This is the best possible explanation for the fantastic growth of the instant coffee market in developing countries, especially India, where coffee culture is still taking shape. It must be noted, though, that the phrase “instant coffee” can be tricky — is it a single product or a collection of varieties, all of which are essentially instant in their brewing process? This is something that the experts have been trying to figure out.

Instant Coffee Market Overview

The instant coffee market is a sub-segment in the world of coffee, but even then, that has seen a good amount of growth as of late. It is worth USD 116,761.7 million currently, and the experts estimate that this will grow at a CAGR of 9.13% until 2025. 

There are several reasons for this surge, though — the biggest one being technological innovations in the last few years that have taken things to the next level and ensured better taste and quality in instant coffee products. It has been a great success for most beverage manufacturers to improve their relevance in the modern world.

However, it needs to be kept in mind that the instant coffee market is not restricted to one product type. It consists of both soluble and freeze-dried varieties, and all these are unique in their own ways. Take soluble, for example — it can be defined as powdered or granular coffee that dissolves instantly upon the addition of hot water. On the other hand, freeze-dried is usually seen in granules or cubes and is growing in prominence these days owing to the surge in single-serve products and their aptness in befitting the modern lifestyle.

Looking at the Three Most Crucial Factors for Defining Instant Coffee Market

Several factors come into play when talking about instant coffee’s success in India: 1) economy, 2) convenience, and 3) taste. But of all three, taste, it could be argued, is the least significant one. To explain this, we first need to define “taste”. For the sake of this conversation, let’s just say that taste is closely defined by instant coffee’s caffeine levels. And in the case of instant coffee, there are two types of caffeine levels — high and low. 

While instant coffee with low caffeine content does not have any special flavour, it is generally preferred over high caffeine content instant coffee since it offers a differentiated kind of “taste.” Nevertheless, the choice of the people can vary, and understandably so. The point is that there isn’t any concrete aspect that could generalize the idea of taste being the driver.

Somewhat similar can be said about the convenience factor. This is probably one of the most interesting parts of the instant coffee industry, and this is because it’s completely dependent on the country’s economic situation and its evolution over time. In India, for instance, the instant coffee industry has enjoyed an upsurge because of the still-developing economy, which gives way to the idea of convenience.

And considering the rise in income levels, people would prefer buying more instant coffee in lieu of traditional coffee since it’s easy and inexpensive and doesn’t require any kind of expertise. Most importantly, instant coffee is ready to drink. This is something that can’t be said about traditional coffee brewing. As it turns out, it’s a common practice for many people to take instant coffee on their way to work.

Instant Coffee Investment Opportunities for Businesses

For those who are willing to invest in this line of business, they need to keep some things in mind: 

—The instant coffee market is up-and-coming, and it will continue to witness growth for the next few years. The demand for instant coffee can be seen by examining their growth curve. Precise quantification is challenging to put forth; however, it is assured that the market value will consistently soar through the ranks.

—It’s challenging to tell who will have the best advantage going forward, but for now, it seems like the coffee and instant coffee industries are living in harmony. They are both contributing towards the growth of each other.

 —The market growth will remain directly proportional to the rise in incomes and the shift towards higher consumption of packaged food products. 

Summing Up

With India being one of the biggest producers and consumers of instant coffee, it can be expected that much of the growth in this sector will originate in this part of the world, thanks to the aforementioned factors.

The best investment opportunity for instant coffee manufacturers lies in the form of a fruitful partnership with or investment into existing instant coffee manufacturers from India. They will see a rise in demand because of their market situation, and they will likely be able to capitalize on it through collaborations and coalitions.