A Look and Instant Coffee Pricing and the Global Market Landscape

instant coffee pricing

Instant Coffee Market Overview

Instant coffee, often referred to as soluble coffee, includes spray-dried powder, freeze-dried powder, and liquefied forms of coffee, including liquid concentrates. Spray drying and freeze drying are the main methods of processing coffee that involve the dehydration of brewed, roasted, and ground coffee. The freeze-dried method produces superior products that are higher priced.

The growth of the global instant coffee market remains steady as of 2015 because competition among vendors has intensified. This could be attributed to the introduction of single-cup coffee brewing systems and ready-to-drink coffee. The brewing segment is surpassing the sales of instant coffee, owing to the growing preference for new flavors in mature markets such as Brazil and Vietnam.

However, as instant coffee takes less time to prepare, we expect the global instant coffee market to continue growing. The sale of instant coffee constitutes 40% of the global coffee sales.

The global trade of instant coffee grew at an annual rate of 4%, which represented an increase from 360,000 tons in 2005 to 440,000 tons in 2011. Spray-dried products dominated the global instant coffee trade. In 2011, freeze-dried exports were close to 95,000 tons a year, accounting for 23% of the global instant coffee trade.

Instant coffee has gained significant traction globally because it is easy to prepare. The shelf life of instant coffee is longer compared to ground coffee because it remains in powder form after the coffee extract is condensed during the drying process. Also, instant coffee costs less than ground coffee, which has helped increase its consumption significantly among people of all age groups, especially youth.

In Japan, the demand for instant coffee has increased in the country, as many prefer it to more involved, conventional methods that require an investment in time and equipment. The demand for instant coffee is also increasing in non-coffee producing countries such as Russia and Ukraine for the same reason.

Coffee Prices

Global coffee prices were volatile from 2004 to 2014, owing to dwindling supplies, climatic changes, and overproduction during periods of low demand. During this period, production levels in Brazil and Vietnam dropped, leading to a reduction in the price of coffee worldwide. Consequently, farmers reduced their coffee output in the market. As Brazil and Vietnam are the leading coffee producers globally, these developments had a considerable impact on the global coffee market as a whole.