Premium makeover of instant coffee in APAC

Ready to drink (RTD) or instant coffee remains a promising category especially in Asia Pacific. In this region, data and analytics company, GlobalData sees a record CAGR of 6.1% from USD14.7 billion in 2019 to USD19.8 billion by 2024.

Iced/ready-to-drink (RTD) coffee drinks will remain strong especially in developing countries such as Vietnam, the Philippines and India. In Australia, a pending sugar tax, should it take effect, will make room for low-calorie variants.

Shagun Sachdeva, Consumer Insights Analyst at GlobalData, says: “Asia has increasingly been looked upon as a promising market for the instant coffee category over the past few years, as the consumption continues to rise across the region. Coffee culture has surged in Asia, especially among the traditional tea nations such as India and China, coupled with rising wealth, rapid urbanization and significant retail momentum leading to surge in investments in the category.

“Not just in the APAC, global investment in RTD coffee has increased as producers target time-pressed consumers as well as younger coffee drinkers who enjoy the format’s taste, refreshment, and sensory & indulgence.”

Companies are scrambling for larger share of instant coffee segment and offering more options to resonate with consumers and meet their rising demand for instant coffee. Recently, Nestlé and Starbucks collaborated to launch Starbucks premium instant (soluble) coffee in more than 40 markets globally.

Nestlé, under its brand Boost, has also announced its plan to debut into the chilled coffee sector with two iced coffee variants. Last year, Coca-Cola acquired Costa Coffee to make its way into projected US$34.2bn retail hot drinks market in China and boost Coca-Cola RTD brands such as Honest Coffee.

In India, instant coffee was the largest segment in the hot coffee category in 2018. The instant coffee segment is set to reach USD895.2m in 2023 at a CAGR of 9.4% between 2018 and 2023. With rapid urbanisation, eroding traditional consumption practices, development of retail and foodservice channels, and expanding range of premium coffees, competition in the instant coffee category is expected to intensify further as new players look to take advantage of the category’s growth. Last year, ITC had test launched an instant coffee brand Sunbean Beaten Caffe.

Sachdeva concludes: “Going forward, we will see the instant coffee receiving more of premium makeover. While consumers are having a renewed focus on brewing methods, manufacturers are all set to meet consumers’ demand with transparency in supply chain and fair trade practices. We can expect more interesting and innovative product launches this year under the instant coffee category.”