Although fresh coffee dominates the overall coffee industry, instant coffee continues to gain share, thanks in large to its appeal amongst new coffee drinkers. The convenience, versatility, and branded experience of instant coffee make it an attractive consumer product in emerging coffee markets, while in established markets, instant coffee seeks to shed its commodity image to sustain consumer interest.
The convenience, versatility of flavour and format, and branded experience provided by instant coffee enable it to be positioned as a premium hot drink option, particularly for new coffee drinkers in predominantly lower income tea- drinking markets.
In higher income markets, convenient fresh coffee options, like fresh ground coffee pods, are taking share away from instant coffee, because they are perceived to offer better quality and flavour.
The easy preparation of instant coffee, as well as its ability to be tailored to local taste preferences, has made it the coffee of choice in most markets in Asia Pacific, where coffee consumption is still low.
Retail sales growth for instant coffee in the two largest markets – Russia and Japan – is showing signs of slowing down, as consumers are increasingly interested in fresh coffee options.
Instant coffee has the most consolidated competitive landscape of all hot drinks, due to the importance of brand to the consumer experience. Nestlé is the overwhelming leader, holding a 42% retail value share in 2013.
Opportunities for instant coffee to gain more popularity among new consumers, as well as reclaim those exiting the category, lies in continued innovation, both in terms of developing new flavours and improving quality.
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