While the market may be maturing, it is still a popular segment within the hot drinks category.
“I definitely see growth in the category [coffee pods] continuing to slow, although it is important to keep in mind it will be growing quickly relative to other forms of hot drinks,” Euromonitor industry analyst, Matthew Barry, told BeverageDaily.
Despite concerns over the negative environmental impacts of coffee pods, this is not the main reason the category growth has slowed compared to recent years, Barry said.
“While there are some concerns weighing down the category such as its environmental costs, the main issue is just that this is a maturing market.”
“In Europe and North America, most of the people who are interested in pod machines have bought them at this point and it will be nearly impossible to keep up the growth rates seen in the recent past,” he said.
Ireland coffee consumers switch from instant to pods
Ireland, in particular, will lead the overall hot drinks category with an expect annual growth rate of 11%, making it the only country in the world with double-digit annual growth forecasted for the next five years, Barry said.
Swedes consumed the most coffee in 2016, according to Euromonitor, followed by other northern European nations. “These are all wealthy countries in chilly climates with well-developed coffee shop sectors and no cultural tradition of tea-drinking, all of which are things that favor high coffee consumption,” Barry explained.
“Ireland is emerging from years of austerity and is one of Europe’s fastest-growing economies. As a result, the Irish consumer is increasingly in a mood to spend and one of the ways this is playing out is a major shift in coffee consumption habits,” Barry said
According to Euromonitor, the majority of all coffee growth in Ireland can be attributed to coffee pods. Irish per capita consumption of coffee brewed from pods was 42 cups in 2016, up from just three in 2011.
“Meanwhile, the instant coffee that has long been the dominant form of coffee in Ireland is declining in popularity,” he added
Tea still growing, but competes with rise of coffee
All forms of hot drinks are growing with tea, in particular, benefitting from health and wellness trends in developed countries such as Canada, where tea consumption is on the rise, according to Barry.
By 2020, tea purchases will more than double in Canada with the purchase driver being that the tea is more closely associated with health benefits.
However, there is a trend occurring in traditional tea-drinking countries where younger consumers are opting for coffee over tea because it is seen as more “modern,” Barry said.
“Usually in these cases, tea remains a staple beverage and consumption doesn’t change dramatically.”