Decaffeinated or better known as Decaf Coffee, is made of regular coffee beans that go through a process of removing 97% of its caffeine. Growing product innovations in decaf coffee flavors, such as flavored lattes and cold brews, have driven its growth, in addition to rising disposable incomes which led to higher demand for premium coffee products including decaf coffee.
Furthermore, rising online sales of coffee has also created lucrative opportunity in this niche segment focusing on organic, fair-trade or locally-sourced decaf coffee.
According to a report on Decaf Coffee Market by The Insights Partners, Europe held the largest share in the decaffeinated (decaf) coffee market with slightly more than 30% in 2023, however the Asia Pacific region is expected to see fastest growth with a CAGR of 9% from 2023 to 2031 due to the rapidly growing food services sector.
The report highlighted market drivers such as growing health awareness as consumers experience side effects such as anxiety, insomnia and digestive issues due to excessive caffeine intake. Overdose of coffee can also cause several health issues such as nausea, abdominal pain, tremors, rapid breathing and irregular heart rate amongst others.
As such, decaf coffee allows one to enjoy coffee without its adverse effects. Regulatory authorities such as FSSAI, Food Safety and Applied Nutrition (CFSAN) and The European Food Safety Authority (EFSA) have highlighted the risk of coffee consumption on pregnant and lactating women, children and people with underlying health conditions.
Meanwhile, the growing global health and wellness trend has led to rising inclination towards healthy beverages which also drives demand for decaf coffee. Decaf coffee allows the above smaller demographic of consumers to enjoy coffee without all the harmful side effects.
The decaf coffee market is estimated at 1,116.35 kilo tons in 2023 and is projected to grow to 1,860.39 kilo tons by 2031 with a CAGR of 6.6% (see Chart 1.0). In value terms, the decaf coffee market was valued at US$6.739 billion in 2023 and is projected to reach US$12.33 billion by 2031, with a CAGR of 7.8% (see Chart 2.0).
The decaf coffee market can be segmented into whole bean, ground and others. The ground segment held the largest share in 2023 in terms of volume with 47.5% followed by whole bean (27.9%) and others (24.7%). Whole bean offers a fresh taste with a sensory aromatic appeal, in addition to a longer shelf life. Ground coffee on the other hand was led by consumer preference for convenience and ready-to-use coffee products, which saw its popularity among millennials. Ground coffee can be made available in various forms in terms of fineness such as coarse grind, medium grind or fine grind as an example. Fine grind decaf coffee is widely used for espresso machines, mocha pots and Turkish-style brews. Finally, the Others category includes capsules, pods and dip bags that cater to single serve and on-the-go consumption.
The decaf coffee can also be segmented in terms of plain or flavored, with the latter contributing 68.8% share of the market is 2023 (see Chart 3.0). The flavored segment blends traditional coffee with added flavors – natural or artificial – to cater to a wider consumer segment. Key players often offer seasonal and limited-edition flavors as part of their marketing strategies to promote the coffee flavors as fun or indulgent to their consumers.
Finally, the decaf coffee market can also be categorised into organic or conventional, with the latter still holding the largest share at 68.9% in 2023. However, the organic category is growing faster at a higher CAGR of 9% (see Chart 4.0)
Major players in the decaf coffee market mentioned in this report include Nestle, Kraft Heinz, JM Smucker Co, Massimo Zanetti Beverage Group and Keurig Dr Pepper Inc amongst others.
