UAE Instant Coffee Market Forecasts from 2023 to 2028

The UAE instant coffee market is predicted to grow at a CAGR of 11.90% from US$69.371 million in 2021 to US$152.387 million by 2028.

The market is projected to show considerable growth during the forecast period, primarily attributed to the growing health concerns and steps undertaken by health authorities and media to curb the consumption of sugary and unhealthy drinks.

Demand for domestic coffee consumption

The general population's preferability to consume coffee during entertainment and small gatherings is further boosting the demand for instant coffee products. For instance, to launch their products in the GCC region and the markets of the UAE, Filipino firms Oh So Healthy Snacks and Pacquiao Coffee have struck distribution agreements with SandBox. Moreover, rising awareness regarding instant coffee’s benefits such as time-saving and convenience is further boosting its demand. Furthermore, growing coffee and tea centres across the country are also contributing to the expanding demand for instant coffee.

Additionally, there is a considerable demand for domestic coffee consumption among the middle class. Instant coffee is more popular among consumers since it is more convenient for eating and drinking than other types of coffee. This market's expansion has been aided by the product's adaptability to a variety of consumer tastes and preferences as well as its capacity to be disseminated through several different distribution channels to facilitate in-home consumption.

Growing demand for flavoured coffee

The premiumization of the instant coffee business has been facilitated by the rising emphasis on distinctive, authentic flavours and diverse functional qualities of coffee. Designing authentic flavours for instant coffee is becoming more important to UAE artisan brands. Companies are using more flavours that cater to regional palate preferences. There is a consistent demand for flavoured coffees in UAE. From the perspective of supply, businesses are putting more of an emphasis on acquiring coffee ingredients to enable customers to cook up the beverage that is ideal for them. Moreover, to innovate and explore, the businesses are growing their portfolios through mergers and acquisitions and product launches. For instance, to meet the demand of UAE consumers,

There has recently been a push for speciality shops in UAE. Consumers prefer to drink coffee at specialized coffee shops because they are actively looking for certified coffee goods to ensure the legitimacy of their coffee purchases. The opening of speciality stores in the area is being aided by the availability of more coffee options and the removal of limits on choosing the best coffee. For instance, in May 2023, the statement café On Two began serving customers in Dubai's Mall of the Emirates. The location offers visitors convenience, privacy, comfort, and class while showcasing a distinctive luxury ambience and an innovative variety of premium coffees. Further, the need for a complex coffee flavor profile and a rise in consumer behaviour that values high-quality coffee are both contributing to the forecast period's growth in the instant coffee market in UAE.

The online instant coffee market is expected to grow substantially.

There has been a boost in online shopping in UAE which has led to a rise in people buying instant coffee from online platforms. The number of internet users in the country are increasing and this is leading to a growing number of users utilizing online platforms for coffee purchase. According to data from World Bank in 2022, Internet users across the Middle East region accounted for around 206 million users. There were 16.82 mobile phone subscribers in the UAE as of January 2021, according to the market statistics published by the UAE’s Telecommunications Regulatory Authority (TRA). The subscription per 100 people stood at 186.1 with mobile subscriptions having 72.6% of the total subscription base. Also, the role of the government has been significant in boosting online services in the UAE. In February 2023, the UAE government launched the Emirati initiative, which includes a single window platform for providing services to UAE citizens through the Dubai Now application.

Governmental initiatives towards online services

The government gradually made more services available online. As a result, the UAE was ranked first in the Arab region and 13th globally in the eParticipation index according to the UN’s E-Government Development Index 2022 covering 193 countries. These initiatives have led to a revolution in UAE and made people use online services more and are expected to boost the instant coffee demand over the forecast period. The rise in literacy rate has also led to an increasing number of people using online portals for shopping. The e-commerce sector in UAE can boost the online segment customers for the Instant coffee market in the forecast period. This is because it holds internet penetration of more than 90% throughout the country.

Furthermore, according to Visa transaction data, the UAE shopper is among the top spenders online. In the wider Middle East, North Africa, and South Asia (MENASA) region, the UAE represents the biggest annual spend per online shopper at $1, 64813, with growth projected through 2020 at 29.6 per cent. Also, card payments continue to grow in the UAE, by 9.4% in 2022 following the post-pandemic recovery of the economy. These factors represent favourable prospects for the growth of instant coffee markers in the UAE till the forecast period.

The Dubai market is anticipated to grow substantially.

Instant coffee contains powerful antioxidants and nutrients such as vitamins B2, B3, and B5 owing to which it is becoming an essential beverage for consumers. The growing shift towards healthy lifestyle adoption coupled with the growing coffee culture and rapid population growth is majorly driving the demand for instant coffee in Dubai. For instance, according to the Dubai Statistics Center, in April 2022, the overall population in Dubai reached 3.50 million which represented a significant increase of 52.3% in population growth in comparison to 2015’s figure of 2.33 million.

There has been a significant decline in the consumption of aerated drinks, which has further led to an increase in the demand for instant coffee. According to the World Bank, the life expectancy of the people living in UAE has increased by 0.18% in 2020, making it 78.03 years, which further indicates how the consumers are extremely health conscious and strict about their diet. Another driving force for the spurring demand for instant coffee in Dubai is the easy accessibility and convenience with which it is available in the market.

Key Developments

• In 2021, RoR Roastery, situated in Dubai, declared that they would expand their selection of coffee goods by 300% with the introduction of the newest 20 coffee single origins, 4 unique blends, and 20 separate single origins. Additionally, as per the report released by the Business Registration and Licensing sector of the Department of Economy and Tourism of UAE, Dubai has strengthened its reputation as a global centre for dealing coffee as a commodity.

Segmentation:

By Type

• Freeze-Dried Instant Coffee
• Spray-Dried Instant Coffee
• Others

By Distribution Channel

• Offline
• Food Services
• Retail
• Supermarket/ Hypermarket
• Convenience Store
• Others
• Online

By Province

• Dubai
• Abu Dhabi
• Sharjah
• Others