South America Coffee Pods Market - Strategic Insights and Forecasts (2023-2028)

The South America coffee pods market is projected to show steady growth during the forecast period.

South America Coffee Pods Market Trends:

Coffee pods are single-served, a pre-packed coffee canister that is enough for brewing one cup of coffee and comes with its own filter. Coffee made using coffee pods saves both time and energy by simplifying the brewing process. Coffee pods are available in various quantities, flavours and additives according to the needs of the consumer. The coffee pod market in South America is segmented into categories: the type of coffee pod, caffeine content, flavour, distribution channel and country.

South America is one of the highest coffee-consuming regions in the world, and the demand is growing even further. According to the International Coffee Organisation data, in 2021, South America consumed 16.3 billion kgs of coffee. Coffee has also become an important part of several South American countries such as Brazil, Colombia, Guatemala and Venezuela. Approximately 21.3 million bags of coffee were consumed in Brazil in 2022, making it the world's second-largest consumer of coffee. Guatemalans consumed 2.34 kg of coffee per person in 2020, according to Faostat, which is an increase of 113 per cent over the prior year, whereas Venezuelans consumed 2.00 kg of coffee per person in 2020, an increase of 3.09 per cent over the previous year. This data demonstrates the growing strength of the region’s coffee sector. Therefore, the introduction of coffee pods has had the greatest impact on the South American coffee industry and has spread in this region like wildfire.

The demand for coffee pods in South America has been growing recently and is expected to do so in the future. Significant South American key market players have already begun to take tactical steps to seize the opportunity. Consumers are particularly attracted to coffee pods because of their convenience and affordability. South American consumers are also ready to spend money on single-serve coffee machines so they may have a cafe-like experience at home, which has also boosted the demand for coffee pods in this region. Other factors, such as the developing middle-class population, fast urbanisation, improving living standards, and changing food trends, are also contributing to the expansion of the coffee pod market in South America. The market is also growing due to increasing customer demand for quick, premium, ready-to-drink beverages, along with their disposable income. Moreover, the growing prevalence of cafe culture, the introduction of new coffee categories, and growing consumer knowledge and experimentation with coffee are also contributing to the expansion of the coffee pod market in South America.

South America Coffee Pods Market Drivers:

New product launches, M&A activities and easing investment activities by key market players

Significant companies in the industry have already started to make strategic efforts to take advantage of the lucrative coffee pod market, through continuous product launches, M&A activities and investments. In November 2022, Nestle launched Nescafé Dolce Gusto Neo, a new at-home coffee maker that employs paper-based and biodegradable coffee pods, in Brazil. The paper-based pods for Nescafé Dolce Gusto Neo cost about EUR0.50 apiece and have an SRP of EUR179. The Neo system's pods are constructed from paper and a biodegradable biopolymer liner. They break down in three months in commercial composting facilities and six months in home composting.

Moreover, in August 2021, Cápsulas de Café was added to DIA Argentina's portfolio of own brands as part of its ongoing hunt for novel ideas. Some are of Italian descent and work with Dolce Gusto® machines, while others work with Nespresso® machines. All local stores as well as DIA online, provide these items at the lowest prices on the market.

In February 2020, Brazilian coffee giant Três Coraçes Group acquired Japan-based Mitsui Alimentos' business to strengthen its position as the industry leader in Brazil. According to the contract, Três Coraçes Group must pay Mitsui Alimentos' domestic coffee business in Brazil BRL 210 million, about $50 million. The Sao Miguel FIP, controlled by the Lima family, and Strauss Coffee both own a portion of the Três Coraçes Group joint venture.

South America Coffee Pods Market Geographical Outlook:

Brazil is anticipated to hold a significant amount of the market share of South American coffee pods during the forecast period

Brazil is anticipated to hold a significant market share in South America. Key determinants contributing to coffee pods in Brazil include rising coffee consumption, rapid urbanisation, rising disposable income, the introduction of new coffee categories and growing consumer knowledge and experimentation with coffee. Brazilian consumers are also ready to spend money on single-serve coffee machines due to rising disposable income and rapid urbanisation so that they can have a cafe-like experience at home and workplace. Consumers are particularly attracted to coffee pods because of their convenience and affordability. They can also provide high-quality coffee, which mainstream customers are slowly coming to recognise and value. According to the most recent IBGE poll, 57 per cent of coffee pod users are under the age of 40, as are 49 per cent of Brazilians overall. In other words, millennials are the prime demographic group responsible for the growth of coffee pods in the country. The growing demand for speciality and artisanal coffee is also propelling the growth of the coffee pods market in the country. Therefore, market players are launching new coffee pods in premium flavours to capitalise on this trend.

Market Key Developments

• In August 2021, Cápsulas de Café was added to DIA Argentina's portfolio of own brands as part of its ongoing hunt for novel ideas. Some are of Italian descent and work with Dolce Gusto® machines, while others work with Nespresso® machines. All local stores as well as DIA online provide these items at the lowest prices on the market.

• In December 2021, the first commercial biodegradable coffee pad is offered by Senseo. With the relaunch of one of JDE Peet's portfolio's marquee brands, SENSEO®, they have developed a cutting-edge product line by introducing a new, environmentally friendly single-serve coffee system to the market.

• In June 2022, three new items were introduced by Jacobs Douwe Egberts' premium coffee brand L'Or: L'Or Artiste, L'Or Instant Jar, and L'Or Flavours Collection Aluminium Capsules.

South America Coffee Pods Market Scope: