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The coffee substitute market size is projected to increase by USD 1.69 billion, at a CAGR of 8.66% between 2023 and 2028.
Furthermore, In Europe, the demand for coffee substitutes is surging due to heightened awareness of health risks linked to excessive caffeine intake and a growing preference for healthier beverage alternatives. Consumers seek alternatives to traditional coffee for varied health benefits and reduced caffeine intake. This trend reflects evolving consumer preferences and aligns with the global shift towards healthier lifestyle choices, impacting market dynamics and fostering growth in the market across Europe. drink nuJo company offers coffee substitute products such as Nujo Bold brew and Roasted root brew.
The market shows an accelerated CAGR during the forecast period.
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Increasing demand for natural and functional beverages is the key factor driving the market. Natural and functional beverages refer to conventional liquid food that provides consumers with added health benefits and specific bodily functions in addition to providing general nutritional benefits. Green tea is often considered a natural and functional beverage due to its unique health-promoting properties. Moreover, as coffee consumption rises and veganism gains popularity, the food and beverage industry is exploring food alternatives and substitutes, incorporating ingredients like matcha tea, inulin, and prebiotic fiber, alongside dairy alternatives enriched with vitamin B6 to cater to diverse consumer preferences while addressing texture and milk sensitivities.
Further, owing to the growing health consciousness, consumers increasingly seek out products that offer nutritional benefits and support overall well-being. The increasing demand for products made with natural ingredients and minimal processing drives the demand for green tea. In addition, the growing concerns regarding the health risks associated with excessive sugar consumption, such as obesity, diabetes, and heart disease, encourage consumers to shift to healthy alternatives, including natural and functional beverages. Therefore, the increasing demand for natural and functional beverages drives the growth of the market during the forecast period.
The adoption of innovative marketing and promoting strategies by companies is the primary trend shaping the market. The market players collaborate with influencers and content creators on social media platforms, which can help brands reach a wider audience and raise awareness regarding their products. Pushing about various aspects, including product reviews, recipe demonstrations, and lifestyle posts, to showcase the benefits and versatility of herbal tea and soft drinks. Conducting interactive online campaigns, such as contests, quizzes, and challenges, encourages consumer participation and engagement with the brand.
Further, the market players' sustainability initiatives such as eco-friendly packaging, carbon-neutral operations, or ethical sourcing practices gain popularity and, in turn, increase the sales of their products. Moreover, the other aspects of marketing, such as blog posts, articles, videos, and podcasts that cover topics such as health benefits, brewing techniques, and sustainability practices, enhance the demand for coffee substitutes. Therefore, the adoption of innovative marketing and promotion strategies by various companies will propel the growth of the market during the forecast period.
The rising popularity of coffee among millennials is the major challenge that affects the market expansion. The culture of socializing at cafes has become popular among millennials. The increased influx of people to urban areas and a substantial increase in the number of employees in service industries have necessitated an increase in the number of cafes and food service outlets, which increased the demand for such products. Varied tastes and preferences for different types have further led to the emergence of shops, specialty coffee shops, and quick-service restaurants. Leading cafe chains, such as Starbucks, Costa Coffee, and Barista, are opening their outlets in emerging economies.
Further, the growing popularity of malls and shopping centers has also led many new players to invest substantially in the distribution of coffee through these centers. Besides, with the growth in the number of coffee-themed restaurants, manufacturers are receiving several branding opportunities. Coffee-themed restaurants offer premium products to consumers, which leads them to seek these premium products at retail stores. Thus, the growing demand for coffee among millennials, especially in countries such as India, will hamper the growth of the market during the forecast period.
The herbal coffee substitutes?segment will account for the largest share of this segment. The rising demand for herbal coffee substitutes stems from increasing awareness of their health benefits and the desire for healthier beverage options. Consumers, sensitive to caffeine or seeking functional benefits like stress relief and digestive support, prefer these substitutes. They align with plant-based diets and offer diverse flavors beyond traditional coffee, appealing to environmentally conscious consumers. Functional ingredients like adaptogenic herbs and superfoods further attract health-conscious consumers, driving the growth of a segment of the market during the forecast period.
The market share by the offline segment will be significant during the forecast period. Market players are focusing on strengthening their organized distribution networks to increase sales and revenues. Supermarkets, hypermarkets, and convenience stores aim to attract customers by offering discounts and shopping packages. Organized retailing is considered the most effective mode, such as the distribution of tea, as it allows consumers to inspect the products before purchasing.
The offline segment was valued at USD 1.92 billion in 2018.
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Additionally, market players focus on promotional and marketing strategies to increase customer footfall. Some of these promotional and marketing strategies include branding through signages, the distribution of samples, and the provision of discounts on product kits. Also, Companies rely on retail stores and plan their budgets for marketing, advertising, and promoting to create product and brand visibility among consumers. The expansion of organized retailing across the world is expected to drive the growth of the offline segment of the market during the forecast period.
Europe is estimated to contribute 32% to the growth of the global market during the forecast period
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Technavio's analysts have provided extensive insight into the market forecasting, detailing the regional trends and drivers influencing the market's trajectory throughout the forecast period. European consumers are increasingly seeking coffee alternatives with reduced caffeine, natural ingredients, and potential health benefits. Specialty coffee substitutes, known for their premium ingredients and artisanal production, resonate well with Europeans who appreciate high-quality food and beverages. Distribution channels like supermarkets and specialty stores facilitate wider access to these products. Brands focus on educating consumers about the benefits and ingredients of coffee substitutes through transparent labeling and marketing campaigns. Collaborations like Coca-Cola and Pernod Ricard's Absolut Vodka and Sprite further drive market growth.
Companies are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market forecasting growth and analysis.
The market growth and forecasting report also includes detailed analyses of the competitive landscape of the market and information about 20 market companies, including:
World Matcha Inc., Flying Embers, Hand Family Companies, Mud Wtr Inc., PepsiCo Inc., Postum, Reliance Industries Ltd., Remedy Organics, Rishi Tea and Botanicals, Slate Craft Goods LLC, So Good Brand Inc., Tattvas Herbs LLC, Teeccino Caffe Inc., The Coca Cola Co., The Hain Celestial Group Inc., World Finer Foods LLC, and Mondelez International Inc.
The market analysis and report of qualitative and quantitative analysis of companies has been conducted to help clients understand the wider business environment as well as the strengths and weaknesses of key market players. Data is qualitatively analyzed to categorize companies as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize companies as dominant, leading, strong, tentative, and weak.
The market research and growth report forecasts market growth analysis by revenue at global, regional & country levels and provides an analysis of the latest trends and growth opportunities from 2018 to 2028.
The market continues to thrive as global coffee consumption remains steady, driven by diverse dietary habits and a growing awareness of its potential health benefits. While moderate consumption may promote brain health and provide temporary relief from headaches and restlessness, excessive intake can lead to caffeine overdose and associated symptoms like diarrhea and chest pain. Recognizing the diverse consumer base, market players offer a range of products, from traditional matcha and teas to innovative caffeine-free alternatives infused with Ayurvedic herbs like Brahmi and Ashwagandha for lactating women and those with caffeine sensitivity.
Additionally, in the food alternatives or substitutes arena, there is a growing emphasis on nutritional values, offering options such as caffeine-free herbal teas, specialty blends, and roasted grains, complemented by refreshing choices like lemon water enriched with vitamin C, catering to various dietary preferences including vegetarian diets. Leading market players in online stores, department stores, grocery store aisles, and health-food stores are increasingly prioritizing natural and organic ingredients while avoiding artificial additives, catering to diverse dietary preferences including gluten-free and vegan options, with companies like Ayurvedic Roast Company offering products enriched with ingredients like Shatavari.
Furthermore, the market is witnessing a surge in popularity as consumers seek healthier lifestyles and alternatives to traditional coffee. These alternatives boast various benefits such as fiber content, essential vitamins, and minerals including calcium, magnesium, potassium, and phosphorus. With diuretic and antioxidant properties, they promote digestion and liver health while combating oxidative stress and chronic illnesses. Made from a blend of herbs, roots, and grains, including dandelion roots, roasted barley, carob, and cinnamon, these organic products are free from synthetic chemicals and pesticides, and certified by USDA Organic standards. For those with sensitivity to caffeine, options like mushroom coffee and roasted chicory root offer metabolism-boosting properties without compromising on taste or quality.
Market Scope |
|
Report Coverage |
Details |
Page number |
161 |
Base year |
2023 |
Historic period |
2018-2022 |
Forecast period |
2024-2028 |
Growth momentum & CAGR |
Accelerate at a CAGR of 8.66% |
Market Growth 2024-2028 |
USD 1.69 billion |
Market structure |
USD Fragmented |
YoY growth 2023-2024(%) |
8.22 |
Regional analysis |
Europe, North America, APAC, South America, and Middle East and Africa |
Performing market contribution |
Europe at 32% |
Key countries |
US, China, Japan, Germany, and UK |
Competitive landscape |
Leading Companies, Market Positioning of Companies, Competitive Strategies, and Industry Risks |
Key companies profiled |
Anthonys Goods, World Matcha Inc., Dandy Blend, drink nuJo, Flying Embers, Hand Family Companies, Mud Wtr Inc., PepsiCo Inc., Postum, Reliance Industries Ltd., Remedy Organics, Rishi Tea and Botanicals, Slate Craft Goods LLC, So Good Brand Inc., Tattvas Herbs LLC, Teeccino Caffe Inc., The Coca Cola Co., The Hain Celestial Group Inc., World Finer Foods LLC, and Mondelez International Inc. |
Market dynamics |
Parent market analysis, Market growth inducers and obstacles, Fast-growing and slow-growing segment analysis, COVID-19 impact and recovery analysis and future consumer dynamics, and Market condition analysis for the forecast period. |
Customization purview |
If our report has not included the data that you are looking for, you can reach out to our analysts and get segments customized. |
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1 Executive Summary
2 Market Landscape
3 Market Sizing
4 Historic Market Size
5 Five Forces Analysis
6 Market Segmentation by Distribution Channel
7 Market Segmentation by Product Type
8 Customer Landscape
9 Geographic Landscape
10 Drivers, Challenges, and Trends
11 Vendor Landscape
12 Vendor Analysis
13 Appendix
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