Coffee Pod Market Expected to Reach $2.8 Billion by 2032—Allied Market Research

According to a new report published by Allied Market Research, titled, “Coffee Pod Market," The coffee pod market was valued at $1.2 billion in 2022, and is estimated to reach $2.8 billion by 2032, growing at a CAGR of 8.5% from 2023 to 2032.

Coffee pods are single-serve coffee containers that are made using recyclable paper bags. The bags are encapsulated with a calculated dose of pressed ground coffee. Unlike coffee capsules that majorly feature plastic or aluminum-based packaging, coffee pods are naturally compostable and contain a higher volume of coffee per pod.  

Sustainable and environmentally conscious consumption habits are the pivotal part of the booming demand for coffee pod market growth . The increased popularity of single-serve coffee containers has changed the way people consume coffee. Due to the convenience these products offer in terms of reduced preparation time, they have appealed to many consumers. Coffee pods offer the most compelling option to consumers seeking to reduce individual Cabon footprint, which existing solutions fail to meet such as capsules, thus increases the coffee pod market demand. Coffee capsules often generate waste that becomes difficult to manage and requires a dedicated amount of effort to properly dispose of. Also, pods offer multiple machine compatibility that furthers the adoption rate in the coffee pod industry. 

Developing the coffee market provides a number of opportunities for producers, manufacturers, and other stakeholders. Global coffee consumption is constantly rising as consumers develop new lifestyle habits, recover economies from the pandemic, and flood a variety of flavors. According to the International Coffee Organization (ICO), coffee consumption increased in the year 2021/22 by 4.2%. This increase contributes to market development by addressing varying consumer demands for different types of coffee products. This leads to increased sales of coffee machines that are required to use pods, and thus, allows consumers to quickly integrate pods as a new product in their routine without inconvenience. Availability of these resources people are given improved results in quality coffee at the end with minimum effort required as pods eliminate the need to grind and measure the coffee.  

The coffee pod market analysis on the basis of flavor, caffeine concentration, end use, distribution channel, and region. By flavor, the market is classified into caramel, chocolate, hazelnut, and others. By caffeine concentration, the market is classified as caffeinated and decaffeinated. By end use the market is classified into commercial and residential. By distribution channel, the market is classified into hypermarket/supermarket, specialty stores, online channels, and others. By region, the market is analyzed for North America (U.S., Canada, and Mexico), Europe (the UK, Germany, Spain, France, Italy, and Rest of Europe), Asia-Pacific (China, Japan, India, Australia, New Zealand, South Korea, Singapore, and Rest of Asia-Pacific) and LAMEA (Saudi Arabia, Brazil, UAE, Argentina, South Africa, and Rest of LAMEA). 

Market recovery owing to government relaxation policies, and subsidies are contributing to the growth of the coffee pods market. These efforts from the government are pivotal and assist in recovering various sectors such as hospitality, catering, restaurants, and travel industries to promote economic value. Through improving customer flow in various settings like cafes, bars, and other places that facilitate social gatherings. This led to increased demand in the food and beverages sector in away-from-home channels, which were heavily impacted by the pandemic. To address demand, many cafés have opted for pods that offer an economical and convenient option to serve customers quality coffee, particularly for small and medium-scale businesses. Also, the pandemic has led to many changes in people’s consumption habits and perceptions surrounding coffee. People have now become more accustomed to preparing food at home, café like coffee, which has become popular among working professionals due to changes in working systems including working from home. Many consumers now demand a coffee experience that resembles cafés that increases the coffee pod market share.  

With increased coffee consumption and the introduction of a variety of flavored coffee, consumers' demand for premium beverages is increasing. People in developing countries are willing to pay more to gain value and quality products. Companies are introducing coffee products that make the process of preparing good coffee at home infused with highly demanded flavors like hazelnut, caramel, and chocolate. People show a trend towards experimenting with their tastes by consuming a variety of food and beverages that are available in the market. Primarily the younger generation shows the highest demand for flavored coffee and is more health conscious. Acknowledging this demand, manufacturers are utilizing advanced technology and techniques to extract naturally present flavors in the coffee bean, which is largely affected by its source origin.  Furthermore, like Gen Z, people in the older generation are becoming aware of increasing health problems associated with caffeine consumption. Decaffeinated coffee provides a way for consumers to maintain health and enjoy coffee beverages. With increasing problems like insomnia, elevated blood pressure, and restlessness, many customers prefer decaffeinated coffee.  

Moreover, coffee pods are becoming more desired due to widespread awareness about the health benefits that caffeine, a natural stimulant, provides. Caffeine helps in improving various regulations and improving various body functions, such as metabolism, alertness, and cognition. Changing and actively engaged people's lives, decreased social interactions, and isolation lead to increased anxiety and fear. Coffee is often highly looked at as a refreshing beverage during various settings like reading, meetups, work, and other social events.  

The coffee pod market trends are also largely affected by the challenges faced by global businesses including soaring inflation, hindered supply chains caused by geopolitical unrest, and degrading ecology. With severe climate changes like drought, floods, and drenching rains parts of the agriculture sector have been impacted. According to the report published by the International Coffee Organization (ICO), the global production of coffee decreased by 1.4% to 68.5 million bags in the year 2021/22. Compounded by other factors like increasing prices in raw materials which directly affects the prices and thus degrades the coffee pod market size. Pods manufacturing companies like Caffè Borbone, have reported a decrease in profits of 27% due to the increased cost of production.  

The key players profiled in the study include illycaffe S.p.A., Lavazza Group, Gruppo Izzo S.r.l., Procaffé S.p.A., Labcaffè S.r.l., Kimbo S.p.A., Gruppo Gimoka S.p.A., Blasercafé AG, Caffe Borbone S.r.l., and Segafredo Zanetti S.p.A. The key players in the market have been actively engaged in the adoption of various strategies such as partnership, acquisition, collaboration, and expansion to strengthen their market position. 

KEY FINDINGS OF STUDY 

• By flavor, the chocolate segment was the highest revenue contributor to the market in 2022. 

• As per caffeine concentration, the decaffeinated segment is expected to be the fastest-growing segment in the global coffee pod market during the forecast period.  

• Depending on the distribution channel, the hypermarkets/supermarket segment was the largest segment in 2022. 

• Region-wise, Europe was the highest revenue contributor in 2022.