Soluble coffee - outlook

The bulk of the soluble coffee exported from producing countries is spray-dried powder. Brazil accounts for just under half of all soluble coffee exports. Intense price competition coupled with diminishing demand has led to a marked reduction in the spray dried powder manufacturing capacity in many consuming countries, although a significant proportion of that reduced capacity has been transferred to other, usually emerging, markets. It does not appear, therefore, that there is a very secure future for new entrants planning to supply spray-dried powder. 

Freeze-dried soluble continues to make significant progress, although processing is comparatively expensive and the product quality demands a high proportion of the more expensive arabica. The process is therefore unsuitable for countries that produce only robusta. The market has primarily been developed by Nestlé and Kraft Foods, although a number of other companies are actively involved in the sector, particularly those producing own labels. Brazil and Colombia are important suppliers and while the market for freeze-dried coffees is growing there are concerns that there is already tremendous manufacturing over-capacity in both Brazil and a number of consuming countries such as Germany. Freeze-dried coffee accounts for around 30% of all sales of soluble coffee. Trade opinion suggests that the market for soluble coffee as a whole is likely to grow only slowly over the next ten years; by contrast the market for freeze-dried coffee is expected to continue growing at a much faster rate.  

The opportunity for new suppliers must be weighed against current excess manufacturing capacity, which is probably sufficient to cover most, if not all, the anticipated increase in demand for a number of years. Although most exports of soluble coffee are as finished product (in primary so not retail packaging), some sales are made as frozen concentrate for finishing in the country of destination.  

Exports of soluble coffee by coffee producing countries for the period 2004 - 2009 are shown in the table below. Most of the coffee exported was produced in the country of shipment. Soluble coffee is also produced in Malaysia for use in regional markets and in the Philippines, where it is used for domestic consumption. 

Source: ICO. For more up-to-date statistics go to www.ico.org 

* in GBE, bags of 60 kgs.