Coffee Capsules Market

Market Overview

The global Coffee Capsules market is registering a CAGR of 7.07% during the forecast period 2023-2031.

Coffee packaged in a plastic or aluminum container rather than a paper filter is known as a coffee capsule. Usually, it is separate from other products because it is designed to work with a particular brand or system.

Single-serve vacuum-packed coffee capsules must be used with a suitable machine. Coffee consumption is rising among consumers who are concerned about their health. As a result, producers release brand-new formulations, like coffee capsules, onto the market.

Caffeine also enhances athletic performance by increasing fatty acid oxidation and metabolism and mobilizing fatty acids from fat cells. Due to its anti-cancer properties, coffee has grown in popularity, with consumers concerned about their health. Due to these factors, the market's demand is anticipated to increase over the forecast period.

Market Dynamics

Global Coffee Capsules Market Drivers

Widescale Adoption of Non-Alcoholic Beverages to Surge the Demand for Coffee Capsules

In recent years, non-alcoholic beverages have grown in popularity. Non-alcoholic beverages are RTD coffee and tea, bottled water, carbonated soft drinks, and fruit juices. Non-alcoholic beverage consumption is predicted to rise due to growing urbanization, more disposable income, changing lifestyles, and increased health awareness.

Coffee is a popular non-alcoholic beverage praised for its scent and caffeine content. Furthermore, it is the world's second most exported commodity after oil. Coffee consumption is increasing due to its health advantages and the expansion of coffee shops, which is a significant factor in the rising demand for coffee capsules.

escalating issues with typical coffee pods

To ensure precise extraction, coffee capsules are pre-measured, ground, and tamped, which helps decrease worries about poor-quality or subpar coffee. Compared to standard coffee pods, coffee capsules can stay fresher for longer and retain flavor and aroma until opened. Using coffee capsules to make a cup of coffee is simply because it doesn't require any special cooking skills. Additionally, they come in a variety of flavors. These elements are anticipated to boost the market's revenue growth by raising demand for coffee capsules.

Global Coffee Capsules Market Restraints

Harmful Effects of Packaging on Environment to Hinder Market Growth

There was once a coffee bean, then an instant coffee jar, and now the world has embraced a new fad of coffee capsule machines. Consumers are becoming more interested in these coffee capsules. However, the detrimental impacts of packaging are anticipated to deter demand for coffee capsules.

Coffee capsules are unrecyclable due to their composition of plastic and aluminum. Despite attempts to promote recycling, plastic and aluminum capsule packaging is discarded. The separation of two materials is required for recycling. However, it is not possible in a typical recycling facility. Around 300,000,000 aluminum and plastic capsules are used annually in the United Kingdom. As a result, the majority of the land is in landfills. Due to their intricate packaging, coffee capsules are difficult to recycle in ordinary municipal recycling operations.

Global Coffee Capsules Market Opportunity

Increasing Coffee Machines at Hotels, Restaurants, and Offices to Promote Market Growth

The increased usage of coffee machines in hotels, restaurants, and businesses will likely drive up demand for coffee capsules. Coffee machines are small electric equipment used to brew coffee. Furthermore, the coffee machine reduces the time and effort necessary to produce coffee in cafés and businesses.

Furthermore, increased travel, changing lifestyles, hectic work schedules, and increased coffee consumption drive demand for coffee machines in various locations. Finally, rising millennial demand for non-alcoholic beverages will likely boost demand for coffee machines in hotels, restaurants, and businesses.

Regional Analysis

Depending on the region, the market is analyzed in North America, Asia-Pacific, Europe, and LAMEA. The two most important markets for coffee capsules are North America and Europe.

Europe

Europe is expected to hold the largest share of the market. Germany, the United Kingdom, France, Russia, and Spain are the most significant contributors to the overall market income of coffee capsules in the European area. Germany is the top importer of green coffee beans in Europe. The coffee roasting business is massive, allowing the country to service home and foreign markets. Nestlé's Nespresso dominates the German coffee capsules industry, having a broad product reach across the nation. During the forecast period, the German coffee capsules market is expected to grow at a CAGR of ~4.4%. Growth is attributed to rising coffee consumption. Germany's most popular beverage is still coffee, according to Germany Trade & Invest (GTAI).

North America

North America's coffee capsule market is divided into two major countries: the United States and Canada. Due to the convenience element connected with coffee capsules, the demand for coffee capsules in the region has grown. However, since the capsules market has matured in countries such as the United States and Canada, the growth rate will likely remain stagnant over the projection period.

Asia-Pacific

Asia-pacific also keeps up the competition with Europe and North America; hence, the Asia-Pacific coffee capsule market is anticipated to post the fastest revenue CAGR over the forecast period. Significant factors influencing the growth of the APAC market include shifting consumer preferences from tea to coffee and changing lifestyles. Asia-Pacific consumers, especially in China, India, and Japan, favor purchasing goods with positive health effects. Additionally, the region's strong demand for novel products is driving the expansion of the APAC market. The Indian coffee capsules market is expected to grow 1.7 times between 2022 and 2031, generating an additional opportunity. According to the India Brand Equity Foundation (IBEF), India is the world's sixth-largest producer of coffee and the fifth-largest exporter. The market for coffee capsules is expected to grow in demand as coffee consumption rises. According to the Coffee Board, Government of India, Ministry of Commerce & Industry, the country produced 334,000 MT of coffee in 2020–2021 and is expected to produce over 348,500 MT in 2022.

Segmental Analysis

The global coffee capsule market is divided into open-source and close-source systems based on product.

Closed source system

The closed-source system category captured the most market share in 2022 and is expected to increase by ~6.82% CAGR by 2031.

Open source system

Over the forecast period, the open-source segment is anticipated to contribute the largest revenue share. As capsules made by various manufacturers are compatible with that machine, open source enables a wider variety of products to be used in the device. Open source is advantageous because customers have a wide range of options and price points. This is anticipated to boost open-source demand and propel this market's revenue growth.

Based on application, the global coffee capsule market is divided into commercial and domestic applications.

Commercial

The commercial segment is anticipated to hold the largest market share in 2022 and grow at a CAGR of ~4.6% throughout the forecast period. Growth is a result of the adoption of coffee capsules in workplaces, cafes, and other settings so that coffee can be served quickly and with little to no effort. As more people drink coffee from coffee shops, restaurants, and workplaces, the number of retail establishments such as cafes and bars grows. The growing availability of coffee capsules in cafés and bars raised global demand for high-quality Arabica coffee. These enabled producers to focus on high-quality beans, mitigating the consequences of a recent drop in coffee prices.

Domestic Application

During the forecast period, the domestic application segment is anticipated to grow at a significant CAGR. A new trend becoming increasingly popular is specialty coffee infused with different flavors and origins. This trend is anticipated to drive the household application of capsule machines in nations with high consumption rates, such as the U.S., Germany, Switzerland, and Japan. Western consumers prefer home-brewed preparations, which is expected to drive market growth.

The global coffee capsule market is divided into supermarkets/hypermarkets, specialty shops, and e-commerce based on the distribution channel.

Supermarkets/hypermarkets

Supermarkets/hypermarkets are the primary channels for selling coffee items due to their sizeable retail area catering to various tastes. Supermarkets and hypermarkets provide a plethora of brand and functionality options.

Impact of covid-19

The coronavirus pandemic is the first and most severe human catastrophe, affecting tens of thousands of individuals globally. Aside from the harsh consequences on people's health and healthcare services, coronavirus impacts companies and the economy. The virus has spread to nearly all coffee exporting and importing countries since the World Health Organization declared the COVID-19 outbreak a worldwide pandemic in mid-March 2020.

The pandemic is likely to influence all stages of the coffee value chain, including on-farm operating activities (coffee planting and harvesting), post-harvest refining, internal and international transportation, and intermediate and ultimate demand.

Recent Developments

Single-serve coffee, an innovative compressed coffee ball that uses a seaweed-based casing rather than an aluminum or plastic capsule, was introduced by the Swiss coffee brand "CoffeeB" in September 2022.

Tim Hortons introduced four new types of Nespresso-compatible espresso capsules in August 2022. The four flavors are traditional, bright, bold, and decaf.

Neo, the brand's next-generation coffee pods and machines, were introduced in November 2022 by Nestle's Nescafe Dolce Gusto. The paper-based coffee pods can be composted at home.

Lavazza will introduce its line of environmentally friendly coffee blends, La Reserva de Tierra, in March 2022.