Capsules Take the Lead in Germany’s Coffee Profits Despite Smaller Market Share
The way coffee is consumed has always shaped the dynamics of its industry, and in Germany, a closer look at the 2021 market reveals a surprising story. Among the various coffee formats—ground coffee, whole beans, soft pods, and capsules—profitability varies dramatically, painting a clear picture of the industry’s current trends and challenges.
While ground coffee remains a household staple with the largest market share at 41%, its profitability tells a different tale. The net profit margins for ground coffee are a modest €0.08 per kilogram, despite its widespread popularity. On the other hand, capsules, which make up only 12% of the market, command the highest net profit margin at €7.52 per kilogram. This disparity highlights how premium pricing and consumer demand for convenience are reshaping the coffee industry.
Whole bean coffee, often favored by enthusiasts seeking freshness and quality, holds a 36% share of the market with a margin of €0.39 per kilogram. Meanwhile, soft pods, occupying 11% of the market, offer a more balanced margin of €1.86 per kilogram. Yet, none of these formats come close to the profitability of capsules, which continue to dominate the high-end segment of the coffee market.
This trend raises important questions for those involved in the coffee value chain. Farmers, who are often at the beginning of this chain, face negligible profits compared to other stages of the process. Many costs, such as family labor and informal work, are excluded from the calculations, leaving farmers with a small fraction of the final retail price. At the same time, retailers and manufacturers increasingly focus on high-margin products like capsules to stay competitive in an evolving market.
Consumers also play a pivotal role in this dynamic. Capsules are seen as a convenient and high-quality option, but their higher price point reflects their premium nature. This raises questions about sustainability, as the popularity of capsules has brought concerns over their environmental impact, particularly regarding waste and recycling challenges.
Germany’s coffee market provides a snapshot of broader global trends in coffee consumption. The numbers reveal a growing disconnect between market share and profitability, with high-margin products like capsules becoming the centerpiece of industry focus. However, this shift must be balanced with efforts to address issues like equitable income distribution for farmers and environmental sustainability. The coffee industry stands at a crossroads, with profitability driving innovation but also prompting deeper reflections on its impact across the supply chain.
