RTD Coffee Market: Ready-to-Drink Coffee Industry Analysis and Forecast 2024-2030

RTD Coffee Market Overview:

RTD coffee, or Ready-to-Drink coffee, refers to pre-packaged coffee beverages that are ready for immediate consumption without the need for any additional preparation. These beverages typically come in a variety of formats, including bottles, cans, and cartons, and are available in numerous flavors and styles, such as cold brew, iced coffee, and flavored lattes. The RTD coffee market has seen substantial growth globally, even in areas where café culture was not traditionally prevalent. This growth is significantly attributed to the expanding availability of RTD coffee in supermarkets, convenience stores, and online retail platforms, a trend that gained momentum during the prolonged COVID-19 pandemic.

The resurgence of workplace commuting has increased the demand for grab-and-go products. Coffee consumption, particularly in at-home categories like RTD coffee, is expected to rise owing to reduced average incomes. According to SMR, the global RTD coffee market is projected to reach USD 35.92 billion by 2030. The appeal of RTD coffee lies in its convenience and the variety of flavors it offers, catering to diverse consumer preferences. This versatility has been crucial to its market growth, which saw a notable 9.85% increase in value in 2023 compared to 2021. The RTD coffee market continues to thrive, driven by busy lifestyles and the ongoing demand for convenient, flavorful coffee options.

Rapid Growth in RTD Coffee Consumption Across All Demographics and Regions

Strong consumption of RTD coffee across all age groups and regions is driving significant RTD coffee market growth. This trend is particularly notable among consumers aged 18-39, who favor RTD coffee for its caffeine content, providing an instant boost suitable for their busy schedules. In 2022, global coffee consumption reached approximately 176 million 60-kg bags, a slight increase from 167 million bags the previous year.

Flavor variety is a critical factor in RTD coffee purchases, appealing to diverse tastes with options ranging from classic black coffee to flavored variants such as vanilla, hazelnut, caramel, and mocha. For instance, in the Netherlands, around 45% of the population prefers black coffee, while Australians tend to favor lattes and cappuccinos. Price also significantly influences RTD coffee purchase behavior. The quality of beans used affects the retail price, with the average price of Arabica beans at USD 2.29 per kg and Robusta at USD 2.22 per kg.

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RTD Coffee Market Dynamics:

The RTD Coffee Market is experiencing significant growth driven by the rising demand for convenient beverages. Consumer choices are heavily influenced by convenience, prioritizing products that are easily accessible and consumable without compromising on quality or taste. The modern lifestyle, described by high work stress and a preference for on-the-go solutions, has propelled the need for rapid energy boosts and refreshments. Recent analysis of the RTD coffee market highlights its diverse packaging options, portability, and ability to instantly satisfy caffeine cravings. According to Study, global coffee consumption reaches approximately 7.4 million metric tons annually, with per capita consumption standing at 1.3 kilograms globally.

The surge in awareness regarding ethical concerns surrounding coffee farming, environmental impact, and health issues has led to an uptick in the adoption of plant-based and dairy-free alternatives. Consumers are increasingly gravitating towards eco-friendly options owing to factors like food allergies and lactose intolerance, as well as growing awareness of the benefits of a plant-based diet and vegan lifestyle.

Manufacturers in the RTD coffee market are responding to this demand by offering a variety of alternatives to conventional brews, including on-the-go options based on almond milk, coconut milk, or oat milk. A key driver of this market expansion is the rising demand for on-the-go refreshments, particularly in urban areas where hectic lifestyles necessitate quick and accessible beverage choices. RTD coffee's convenience, requiring no preparation, coupled with its refreshing and invigorating qualities, makes it a favoured option among busy consumers. As such, these trends are expected to propel the RTD coffee market further during the forecast period.

RTD Coffee Market Trends:

Product innovation emerges as a prominent trend within the RTD Coffee Market, with leading players focusing on introducing new offerings to maintain competitiveness. Notably, partnerships like the collaboration between Sinopec's Easy Joy and TH International Limited in September 2022, which introduced co-branded ready-to-drink coffee products in China, represent this trend. Furthermore, startups such as Sleepy Owl from New Delhi expanded their product range in May 2022 by introducing ready-to-drink cold coffee cans featuring various Flavors like caramel, hazelnut, and classic. These innovative launches not only enhance brand visibility but also cater to the increasing demand for diverse and convenient coffee choices. Consequently, ongoing product innovations are poised to drive the RTD Coffee Market forward in the forecast period.

RTD Coffee Market Challenges:

Regulatory compliance poses a significant challenge for the RTD Coffee Market, potentially impeding its growth trajectory. Compliance requirements encompass various aspects such as food safety, labeling, ingredient specifications, and manufacturing practices, which demand meticulous adherence from manufacturers. To navigate these challenges, strict adherence to hygiene standards, implementation of HACCP systems, and maintaining sanitation throughout the production process are imperative.

Ensuring compliance is crucial not only for product safety but also for preserving consumer health and bolstering the market's reputation. By prioritizing regulatory adherence, the RTD coffee industry can mitigate risks and reinforce consumer confidence in its offerings. Consequently, the emphasis on regulatory compliance associated with RTD products is expected to be a driving force for the RTD Coffee Market in the forecast period.

RTD Coffee Market Segment Analysis:

Packaging Type Insights: Bottles segment dominated the market in 2023 and is expected to hold the largest RTD Coffee Market share over the forecast period. The RTD Coffee Market sees a surge in popularity for bottled packaging, primarily due to its sealed, portable design that guarantees freshness and flavor preservation, making it an ideal choice for consumers on the move. Bottled RTD coffee perfectly complements the fast-paced, on-the-go lifestyle by offering a convenient and spill-proof solution, eliminating the need for additional accessories. Furthermore, the transparent nature of bottles enables consumers to visually inspect the product, fostering trust and enhancing appeal. These combined factors contribute significantly to the widespread preference for bottled packaging within the RTD Coffee Market.

Distribution Channel Insights: In 2023, the supermarkets/hypermarkets segment emerged as the dominant force in the global RTD Coffee Market. Consumers increasingly favor these retail environments for purchasing ready-to-drink coffee owing to their convenience, diverse offerings, and easy accessibility. Supermarkets and hypermarkets provide a comprehensive shopping experience, consolidating a wide array of RTD coffee brands, flavors, and formulations under one roof. The ample shelf space and strategic product placement within these stores amplify visibility, enabling consumers to explore various options effortlessly. Furthermore, the opportunity to compare prices, scrutinize product labels, and capitalize on promotional deals adds to the allure of buying RTD coffee in supermarkets and hypermarkets, rendering it a convenient and efficient choice for consumers seeking quick and accessible coffee solutions.

RTD Coffee Market Regional Analysis:

North America led the market in revenue in 2023 and is expected to maintain its dominance in the forecast period. The region's fast-paced lifestyles complement the convenience of RTD coffee, making it a top choice for on-the-go consumers. Furthermore, the prevalent culture of takeaway and a robust coffee-drinking tradition further endorse convenient coffee options. With a strong presence of established RTD coffee brands, ongoing product innovations, and aggressive marketing initiatives, widespread awareness and acceptance of RTD coffee have been achieved. Furthermore, the diverse consumer base benefits from a wide range of flavors and formulations, catering to various taste preferences. Ultimately, North America's lifestyle, cultural inclination towards convenience, and dynamic RTD coffee market landscape collectively contribute to the region's preference for RTD coffee products.

The Asia Pacific RTD Coffee Market is undergoing rapid expansion, driven by several key trends. Such as, the growing preference for RTD coffee among younger demographics, coupled with urbanization and evolving lifestyles, is fuelling market growth. Additionally, there's a noticeable increase in demand for RTD coffee products featuring distinctive flavors and functional ingredients that cater to local tastes and preferences. E-commerce platforms are emerging as pivotal drivers of RTD coffee sales in this region, providing convenience and accessibility to a tech-savvy consumer base.

RTD Coffee Market Recent Development:

In the RTD Coffee market, industry participants are strategically emphasizing collaborations and joint ventures as part of their initiatives to broaden their product offerings, acquire fresh customer bases, and extend their presence into new geographical territories. Such as, By Q3 2023, Goldex Morocco, the Moroccan franchisee of Costa Coffee, aims to inaugurate five new outlets across Morocco. The expansion plan includes two outlets in Casablanca, two in Rabat, and one in Bouskoura, with an undisclosed investment.

• In July 2023, Nestlé Thailand expanded its product lineup in the RTD coffee category by introducing NESCAFÉ GOLD Creama Craft Latte and NESCAFÉ GOLD Creama Craft Americano in Thailand. These additions enhance Nestlé's offerings in the RTD coffee segment.
• In July 2023, Keurig Dr. Pepper Inc. forged a strategic alliance with La Colombe, entering into a long-term sales and distribution agreement for La Colombe's ready-to-drink coffee. Additionally, Keurig Dr Pepper made an investment in La Colombe, anticipating significant value creation from this partnership.

Key players in RTD Coffee Market

1. PepsiCo (U.S.)
2. The Coca-Cola Company (U.S.)
3. Nestlé S.A. (Switzerland)
4. JAB Holding Company (Luxembourg)
5. Asahi Group Holdings, Ltd. (Japan)
6. McDonald's Corporation (U.S.)
7. Danone S.A. (France)
8. Dunkin' Brands Group, Inc. (U.S.)
9. Suntory Beverage & Food (Japan)
10. Lotte Chilsung Beverage Co. Ltd. (South Korea)
11. Starbucks Corporation (U.S.)
12. Ajinomoto General Foods Inc. (Japan)
13. Cargill (U.S.)
14. Dr Pepper Snapple Group (U.S.)
15. Ferolito Vultaggio & Sons (U.S.)
16. Green Mountain Coffee Roasters (U.S.)
17. Japan Tobacco Inc. (Japan)
18. Monster Beverage Corporation (U.S.)
19. Pokka Group (Japan)
20. San Benedetto (Italy)
21. Illycaffè S.p.A. (Italy)
22. Chameleon Cold-Brew (U.S.)
23. UCC Ueshima Coffee Co. Ltd. (Japan)
24. International Delight (U.S.)
25. Bolthouse Farms (U.S.)