Latin America Instant Coffee Market Size (2024-2030)

The Latin America Instant Coffee Market was valued at USD 17.91 billion in 2023. Over the forecast period of 2024-2030, it is projected to reach USD 35.35 billion by 2030, growing at a CAGR of 10.2%.

Instant coffee, also referred to as coffee powder, is the most popularly consumed product. The product is created through the process of grinding roasted coffee beans. Currently, there has been a shift from traditional coffee to instant coffee powder.

Key Market Insights:

Individuals are increasingly embracing instant coffee due to its simplicity and speed of preparation. Consumers can easily make it by adding boiling water to instant coffee powder and stirring. This method offers several benefits, such as boosting metabolism, supporting proper liver and brain function, and containing lower caffeine levels. Its growing popularity among young people is attributed to its appealing taste and the introduction of new and attractive flavors by manufacturers.

Latin America Instant Coffee Market Drivers:

Growing Popularity of Instant Coffee drives market growth.

Single-origin coffee is typically linked with superior quality and distinctive flavor profiles compared to blended coffee. Consequently, instant coffee brands are addressing the demand for higher-quality products by offering single-origin options. For example, in February 2023, Blue Bottle Coffee unveiled a small batch offering as part of its endeavor, under the Nestlé-owned brand, to provide an exceptionally unique coffee experience. This new specialty coffee was reportedly sourced from a region in Yemen, known for its 7,500-foot elevations and dry climate. The offering was part of Blue Bottle’s Exceedingly Rare program, featuring single-origin coffees often available in very limited quantities. Additionally, modern consumers are becoming more selective about their coffee, showing interest in the origin and unique characteristics of their coffee. Therefore, providers offer single-origin coffee with transparency and a unique narrative for each cup, appealing to consumers who value authenticity and traceability in their coffee experience. These factors are expected to create a positive market outlook during the study period.

Latin America Instant Coffee Market Restraints and Challenges:

A high concentration of acrylamide hinders the market growth.

The growth of the instant coffee market may be hindered by the presence of acrylamide in larger quantities compared to freshly brewed coffee. Acrylamide, a harmful substance formed during the roasting of coffee beans, poses potential health risks. High consumption of acrylamide can be detrimental to the nervous system and may also elevate the risk of cancer.

Latin America Instant Coffee Market Opportunities:

Increasing product diversification creates opportunities.

With the growing workforce, coffee consumption has significantly increased in recent years. The expansion of the instant coffee market has attracted numerous players to the industry, resulting in a highly fragmented market. This saturation has heightened competition among companies to attract new consumers and retain existing ones through innovative products, flavors, packaging, and marketing strategies. Market players have introduced new flavors such as matcha, hazelnut, mint, caramel, Italian roast, green bean, and French vanilla. Additionally, they have launched small sachets to make instant coffee more affordable. These innovative marketing strategies have led to the skyrocketing popularity of premium, high-quality coffee. Coffee manufacturers are developing flavors tailored to local tastes and consumer preferences. The popularity of instant coffee has surged due to its ease of preparation, quickness, affordability, accessibility, and variety of flavors. The inclusion of antioxidants, which benefit consumer health, further drives market growth. These efforts are expected to expand the consumer base and create lucrative opportunities for industry players.

LATIN AMERICA INSTANT COFFEE MARKET REPORT COVERAGE:

Latin America Instant Coffee Market Segmentation:

Latin America Instant Coffee Market Segmentation By Packaging Type:

• Sachets
• Pouches
• Jars

The pouch segment is anticipated to grow significantly in the market. Pouches are highly effective for instant coffee packaging due to their ease of storage, unbreakability compared to glass jars, and availability in various quantities. They offer excellent portability as they are lightweight and can be easily carried anywhere. Additionally, pouches are more cost-effective than jars, making them a budget-friendly option and driving their demand in the market. With the adoption of sustainable packaging materials across industries, instant coffee pouches can be produced using eco-friendly, green, and sustainable materials, making them a favored choice in today's environmentally conscious world.

Latin America Instant Coffee Market Segmentation By Type:

• Freeze-Dried Instant Coffee
• Spray-Dried Instant Coffee

The spray-dried segment has dominated the market. Spray-dried instant coffee is produced by spraying liquid coffee droplets into extremely hot and dry air, causing the liquid to evaporate and leaving fine coffee particles as the final product. This method is the most popular for instant coffee due to its straightforward production process and lower cost compared to freeze-dried instant coffee. The affordability of spray-dried coffee makes it accessible to a broad range of consumers and more profitable for producers. Advances in technology that simplify, streamline, and enhance the compatibility of spray-drying processes are expected to drive the growth of this segment in the future.

Latin America Instant Coffee Market Segmentation By Distribution Channel:

• Supermarkets/Hypermarkets
• Convenience/Grocery Stores
• Specialist Retailers
• Online Channels
• Other Distribution Channels

The supermarkets/hypermarkets segment has emerged as the predominant force within the market. These retail giants possess extensive distribution networks and boast a significantly broader consumer reach compared to other retail formats. Consumers exhibit a strong preference for these one-stop shopping destinations due to their convenience, offering a comprehensive array of brands and products under one roof. This consumer inclination is a key factor behind the segment's dominance.

Moreover, the acceleration of urbanization, coupled with the expansion of retail chains, is poised to further bolster the growth trajectory of this segment. The proliferation of supermarkets and hypermarkets in urban areas aligns with the increasing demand for accessible and convenient shopping experiences.

In addition, numerous brands are capitalizing on the extensive foot traffic in these venues by conducting product demonstrations. These in-store activations not only engage potential customers but also enhance brand visibility and consumer loyalty, thereby providing an additional impetus to the segment's growth.

Given these dynamics, the supermarkets/hypermarkets segment is well-positioned to continue its market dominance, driven by consumer convenience, urban retail expansion, and strategic brand engagement initiatives.

Latin America Instant Coffee Market Segmentation- by Region

• Brazil
• Mexico
• Argentina
• Chile
• Rest of Latin America

Brazil holds the position as the largest region in this market. Despite regional flavor profile variations, Brazilian coffee is renowned for its low acidity, full body, and dark roast, making it particularly popular for espresso-based drinks. Brazilian beans often feature tasting notes of caramel, chocolate, nuts, and spice, and are typically less fruity.

Brazil is also one of the world's top coffee exporters. According to the World Bank in 2022, Brazil's economic stability and rising wages over the past five years have enabled more than 20 million people to move from lower to middle social classes. The per capita income increased from USD 6,814.9 in 2020 to USD 7,518.8 in 2023, with the new middle class beginning to influence consumption patterns.

Recently, coffee consumption has surged, as coffee outlets have become popular hangout spots for friends, family, colleagues, and business associates. In Argentina, there is a growing preference for higher quality and specialty coffee drinks, driven by the increasing number of specialist coffee shops. The Argentine coffee market is both unique and lucrative, offering exciting business opportunities for new entrants and space for ongoing development and consolidation.

COVID-19 Pandemic: Impact Analysis

The COVID-19 pandemic posed significant challenges for many in the coffee industry; baristas were among the first to face closures of coffee shops, and several small coffee chains did not reopen after the pandemic hit. Despite these difficulties, the robust coffee supply network and coffee manufacturers ensured that consumers could still access their coffee even during the pandemic.

Latest Trends/ Developments:

In February 2024, Hindustan Unilever Limited (HUL) expanded its Bru Gold portfolio by introducing a new range of flavored coffee, including vanilla, caramel, and hazelnut variants. The company aims to drive growth by attracting more users, creating additional consumption occasions, and enhancing the premiumization of its portfolio.

Furthermore, in February 2024, Bank of America and Starbucks Coffee Company announced a partnership agreement that allows customers to earn up to 2% cashback on qualifying purchases made with a Starbucks Rewards account.

In May 2022, Arizona Beverages entered the coffee market with its Sun Brew line, offering 100% Arabica coffee crafted from hand-selected beans sourced from Central and South America. The Sun Brew range includes three roast styles: Snake Bite Blend, Cactus Blend, and Sedona Blend. These coffees are available for purchase online at DrinkAriZona.com and Amazon.com, as well as at select grocery stores across South America.

Key Players:

These are the top 10 players in the Latin America Instant Coffee Market: -

1. JM Smucker Company
2. Nestlé SA
3. JAB Holding Company
4. Luigi Lavazza SpA
5. Tata Consumer Products Ltd.
6. Starbucks Corporation
7. Kraft Foods Inc.
8. Total Global Beverages Ltd
9. Matthew Algie & Company Ltd.
10. Unilever Plc