Dongseo Foods Launches 'Kanu Barista'
Capsule Coffee Market Reaches 400 Billion KRW Last Year
Challenging Nestle Korea's Dominance... Competition Expected to Intensify
Dongseo Food, the market leader in coffee mix, is expected to cause a significant shift in the capsule coffee market as it enters this sector. In response to the shrinking mix coffee market, Dongseo Food plans to expand its base and secure new growth engines through capsule coffee.
According to industry sources on the 14th, Dongseo Food will launch its first capsule coffee product, 'Kanu Barista,' along with the Kanu Barista coffee machine, and will start selling them nationwide at major supermarkets and online channels from the 16th. Dongseo Food's coffee machine features the patented 'Triangle Tamping' technology, which presses the coffee firmly just before extraction to maintain aroma and quality. The capsules are composed of 8 types of dedicated capsules and 6 types of compatible capsules.
Dongseo Food's entry into the capsule coffee market was already anticipated since last year. Since the first half of last year, Dongseo Food has consecutively filed patents related to capsule coffee and machines. The reason for Dongseo Food's entry into the capsule coffee market is that while the ready-to-drink coffee market is shrinking, the capsule coffee market is growing. The ready-to-drink coffee market reached 1 trillion KRW in 2017 but has been declining since, shrinking to 850 billion KRW in 2018 and 780 billion KRW in 2020. Dongseo Food holds over 80% market share in the ready-to-drink coffee market. Although coffee mix accounts for a large portion of sales, the market itself is shrinking, so the need for business diversification has been consistently raised.
The capsule coffee market, which was worth 100 billion KRW in 2018, nearly doubled to 198 billion KRW in 2020 and grew to over 400 billion KRW last year. The market has continued to grow steadily as consumer patterns have changed, with home cafes and office cafes becoming popular during the COVID-19 pandemic.
By dominating the capsule coffee market following the ready-to-drink coffee market, Dongseo Food plans to solidify its position in the coffee market and establish a long-term growth foundation through capsule coffee. However, this plan is not an easy path. In fact, Dongseo Food previously launched the capsule coffee brand 'Tassimo' in 2011 in partnership with the multinational company Kraft but failed to establish a foothold in the market. However, the capsule coffee market has grown rapidly compared to that time, and Kanu's brand recognition is strong, so it is expected that a market share expansion strategy based on this will be effective.
The capsule coffee industry is also on alert. With overseas brands, cafes, and even rental companies like SK Magic and Cheongho Nice turning their attention to the capsule coffee market, a fierce competition is underway, and a new strong player has emerged in the market based on solid brand recognition and product quality. Currently, the industry estimates that Nestle Korea, led by Nespresso and Nescafe Dolce Gusto, holds about 80% of the capsule coffee market share.
An industry insider said, "Since Nestle Korea's market share is so solid, it seems practically difficult to overturn it in the short term," but added, "However, since it is a brand that every Korean knows and trusts, if costs and marketing are concentrated, it is expected that an initial market share can be secured to some extent."
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