U.S. Instant Coffee Market Size, Share & COVID-19 Impact Analysis, By Type (Liquid and Soluble/Powder), By Distribution Channel (HoReCa and Retail [Supermarkets/Hypermarkets, Specialty Stores, Convenience Store, and Online Retail]), 2023-2030

The U.S. instant coffee market size was valued at USD 5.78 billion in 2022 and is expected to grow from USD 6.01 billion in 2023 to USD 8.06 billion in 2030, exhibiting a CAGR of 4.28% during the forecast period.

Instant coffee can be prepared using two processes, spray dried and freeze dried. Thus, it does not need to be filtered and is made to dissolve in water or milk, providing convenience to consumers. The U.S. is one of the leading coffee-consuming countries globally.  This higher consumption of coffee in the country is owing to its culture, which has a significant influence over the consumption of beverages. The U.S. citizens are work-obsessed and inclined to consume coffee on the go, while working, or during socializing. Thus making it the most preferred beverage in the country. For instance, as per the National Coffee Association of America survey in 2021, around 58% of Americans preferred coffee as their most preferred beverage daily.

The by-type market segment includes liquid and soluble/powder, from which coffee powder or soluble coffee has a higher share in the market. However, liquid is said to have a higher growth rate during the forecast period owing to the rapid product development. In the U.S., liquid and soluble/powdered coffee products are distributed through HoReCa and several retail channels, including supermarkets/hypermarkets, specialty stores, convenience stores, and online retail, from which the online retail segment has shown significant growth owing to the rising technological advancement by leading e-commerce platforms.

COVID-19 IMPACT

COVID-19 Pandemic had a Negligible Impact on the Market Owing to the Sudden Spike in Demand for Coffee in Retail Sales Channels

A sudden spike was recorded in retail sales owing to an increase in at-home consumption of coffee as governments implemented stringent regulations and lockdowns globally, which resulted in individuals being stuck at home. Furthermore, as the U.S. has a higher consumption rate, the country saw a sudden spike in demand for coffee in retail stores as consumers started stockpiling, which raised the demand for liquid and soluble coffee products in the retail segment, especially in the hypermarkets/supermarkets. In addition, there was a rising fear of lockdown as the government announced several new restrictions on social gatherings to curb the rapid spread of the virus. Thus, channels, such as supermarkets/hypermarkets, convenience stores, and online retail saw a rising demand for coffee products, including liquid and powdered.

However, these sudden restrictions and regulations imposed by the government to curb the spread of the virus severely impacted the HoReCa channel as the restaurants and cafés that have a significant share in coffee consumption were closed.

Later, with the development of online food delivery services, the HoReCa segment started to see positive growth in the fourth quarter of 2020. In addition, the sudden rise in demand and restrictions caused by closed borders resulted in several supply chain constraints that caused a bottleneck in the supply chain.

LATEST TRENDS

Rising Demand for Specialty Coffee in the U.S. is Prominent Trend  

The rising demand for specialty coffee is one of the significant trends in the U.S. instant coffee market. Several factors contributing to the growing interest include changing consumer tastes and preferences and the influence of millennials and Gen Z, who strongly prefer coffee. Some of the latest trends in the U.S. specialty coffee market include the growing number of coffee shops, ready-to-drink specialty coffee, cold brew, and nitro-infused coffee. Furthermore, as per the Specialty Coffee Association, most specialty coffee is consumed away from home in the country, where the Starbucks Corporation has a significant share. In addition, the increasing demand for specialty coffees is an opportunity for sellers in the market.

According to the National Coffee Association 2023, 52% of U.S. consumers aged 18 or above reported drinking specialty coffee. This increased to 62% for those aged between 25 and 39. Thus, as per the data, there has been a rising demand for specialty coffee in the U.S. market.

DRIVING FACTORS

Rising Coffee Consumption in the U.S. to Boost the Market Growth

The U.S. is one of the largest consuming markets for coffee. According to the International Coffee Organization, the U.S. is the second largest coffee-consuming country and has grown significantly in years. The steady increase in coffee consumption is due to changing lifestyles, technological development, and premium product range advancement. 

Increasingly busy lifestyles and long working hours make American coffee chains more popular with customers who enjoy coffee on the go. Thus, consumers in the U.S. are more inclined toward products that provide convenience and save time, giving soluble coffee an edge in the coffee market. In addition, American consumers demand premium products that emphasize quality. Therefore, they are attracted to high-end coffee drinks, significantly contributing to sales growth.

Digital technology, safety measures, and machine-based food processing units will play an essential role in coffee production in the coming years. This factor is expected to continue driving domestic market growth during the projected period.

Convenience and Affordability of Instant Coffee across Different Channels to Drive Market Growth

Soluble or liquid has been in steady demand for decades due to its affordability and convenience. Several major coffee companies have invested here in recent years, hoping to capture market share. For instance, in January 2021, Boomi launched a new instant coffee line in the U.S. under Araku Boomi Instant Coffee to promise coffee lovers a unique aroma and flavor. This type of coffee is produced without artificial substances or additives, which is 100% Pure. This new expansion helped the company to increase its presence and provide products to U.S. customers.

Soluble coffee is available in different packaging, such as jars, pouches, sachets, and others. The packaging varies according to the types of products, which may attract the customer to its product portfolio. Furthermore, soluble coffee products are more reasonable and convenient for preparing coffee. For instance, according to the Waka Coffee & Tea Company, soluble coffee is more affordable than other types of coffee, such as ground coffee. It is light and compact, meaning the packaging does not need to be too sturdy. It is also smaller overall, resulting in the use of less material. Thus, the packaging costs (as well as shipping costs) of soluble coffee are much lower than those of ground coffee.

RESTRAINING FACTORS

Availability of Variety of Coffee May Hamper Market Growth of Instant Coffee

The coffee market includes several coffee beverages, including drip coffee, brewed coffee, espresso-based coffee drinks, soluble coffee, ready-to-drink coffee, and others made using roasted coffee beans, ground coffee, coffee pods, and solube coffee. The U.S. consumers prefer coffee on the go, which significantly influences coffee beverage consumption by the HoReCa segment. Furthermore, the HoReCa segment is particularly inclined toward espresso-based coffee drinks, thus restraining the U.S. instant coffee market growth in the HoReCa segment. In addition, the retail part is flooded with brands and products regarding ground and ready coffee, increasing competition in the U.S. market. The increase in the launch of new and advanced coffee-making machine which provides café like taste at home and which are more convenient is also restraining market growth. For instance, in November 2022, Nescafé announced the launch of its new coffee maker, Neo. The technology of Neo is designed to be sustainable and provide café like taste at home at higher convenience.

SEGMENTATION

By Type Analysis

Higher Demand for Soluble/Powder Coffee to Fuel Soluble/Powder Segment Growth

By type, the market is segmented into liquid and soluble/powder. The rising demand for convenient coffee products in the U.S. fuels the need for soluble coffee products in the U.S. market. The soluble/powder segment has a higher U.S. instant coffee market share due to the significant availability of products than liquid coffee. In addition, the longer shelf life also contributes to higher demand in the segment.

The liquid segment is expected to grow at a significant CAGR during the forecast period. Liquid coffee products have been showing an increasing growth in food service sales owing to the convenience of storage and beverage preparation.

By Distribution Channel Analysis

Rising Advancement in the Online Retail Channel to Fuel the Growth in the Soluble Coffee Industry

Based on distribution channel, the market is segmented into HoReCa and retail. Retail is further segmented into supermarkets/hypermarkets, convenience stores, specialty stores, and online retail. The supermarkets/hypermarkets have the highest market share owing to the higher availability of different product variants.

However, online retail is said to have the highest CAGR owing to the rapid growth in technology and the convenience of doorstep delivery offered by the leading online grocery and e-commerce companies. As the markets have become normal post-pandemic, the retail shops have been showing a boost in sales, and manufacturers are expanding their business operations through retail establishments.

For instance, in April 2022, Coracle Coffee launched a specialty instant soluble coffee, more precisely, in the water-soluble pouch. The company has a patent for these innovative products and is looking to expand the B2B business of soluble coffee with a new and innovative distribution approach.

KEY INDUSTRY PLAYERS

Growing Market Players’ Focus on New Product Launch to Propel Market Growth

The prominent market players are capitalizing on investment and innovation strategies to expand their geographical presence. They are focusing on partnerships with related stakeholders, suppliers, and their fellow market players to penetrate more effectively and focusing on innovations in this market. Furthermore, the leading market players are focused on launching new products and regional expansion to cater to growing consumer demand. For instance, in 2020, The J.M. Smucker Company launched new product varieties, namely cold brew coffee, in North America.

Other key players in this market are Nestle S.A., Massimo Zanetti Beverage USA, Kraft Heinz, and others.

LIST OF KEY COMPANIES PROFILED:

• Massimo Zanetti Beverage USA (Italy)


• Blue Bottle Coffee, Inc. (U.S.)


• Westrock Coffee Company (U.S.)


• Finlays (U.S.)


• Keurig Dr Pepper Inc. (U.S.)


• Nestle S.A. (Switzerland)


• Bkon (U.S.)


• Boston’s Best Coffee Roasters (U.S.)


• The J.M. Smucker Company (U.S.)


• The Kraft Heinz Company (U.S.)


• Kerry Group plc (Ireland) 

KEY INDUSTRY DEVELOPMENTS:

• August 2023 – Tim Hortons announced the launch of its new seasonal instant coffee products with all unique seasonal flavors, such as maple pumpkin cold brew soluble coffee, to increase its product portfolio and cater to the growing demand.


• December 2022 – Dunkin Donuts LLC announced its plans to launch its new liquid concentrate range in the retail market to expand its market presence further and cater to the rising demand in the country for specialty coffee.


• October 2022 – Blue Bottle Coffee, Inc. announced the launch of its all-new espresso instant coffee in the U.S. market. As per the company, the new product launch is owing to the country's higher demand for espresso-based beverages.


• August 2022 – Pop & Bottle announced the launch of its all-new instant coffee product exclusively at Walmart, owing to the higher penetration of the supermarket chain in the country.


• June 2022 – Jacobs Douwe Egberts, one of the major players in specialty instant coffee products, announced its plans to launch its all-new L’OR ranges across multiple product categories globally. The new products are available across all retail distribution channels in innovative packaging to cater to the rapid demand growth for specialty coffee.


• January 2021 –Boomi Coffee, an India-based company, announced the launch of its Araku Boomi instant coffee in the U.S. retail market. The product is said to be produced without artificial ingredients, flavors, or additives. Thus, the product is marketed as 100% pure. With this launch, the company aims to expand its U.S. market presence and cater to consumers' increasing demand for additive-free products.

REPORT COVERAGE

The U.S. instant coffee market research report provides a detailed analysis of the market and focuses on key aspects such as leading companies, type, and distribution channels. Besides this, the report offers insights into the market trends and highlights key industry developments. In addition to the aforementioned factors, the report encompasses several factors that have contributed to the growth of the market over recent years.

Report Scope & Segmentation: