Dongseo Foods Breaks Out of Range-Bound Performance with Focus on 'Capsule Coffee'

New Capsule Coffee Machine 'Pebble' Launched After 1 Year
Improved Accessibility with Lower-Priced New Model
Attention on Whether Sales Will Exceed 1.5 Trillion Won After Over 10 Years

Dongseo Food, the No. 1 coffee company in Korea, has been busy since the beginning of the year. This year, the company is determined to break free from over a decade of stagnant performance by focusing on capsule coffee as a new growth engine.

According to the distribution industry on the 9th, Dongseo Food will launch a new capsule coffee machine, the ‘Kanu Barista Pebble,’ on the 18th. This new product release comes about a year after entering the capsule coffee market with the ‘Kanu Barista Urban’ and ‘Kanu Barista Breeze’ in February last year. With the release of the new machine, Kanu Barista now offers three types of capsule coffee machines and 11 varieties of dedicated capsules.

Dongsuh Foods, 'Kanu Barista Pebble'

The newly introduced Kanu Barista Pebble maintains the same functions as the existing machines but features a smaller size by reducing the water tank capacity. The company explained that the slim design focuses on increasing usability even in narrow spaces. With the reduced size, the price is also lowered by about 20,000 to 50,000 KRW compared to previous products, enhancing accessibility.

This year, the capsule coffee business is expected to lead the improvement of stagnant performance amid a shrinking instant coffee market, which is Dongseo Food’s main product segment. Dongseo Food has maintained an unshakable No. 1 position in the domestic instant coffee market for years, holding over 80% market share with flagship products such as ‘Maxim’ and ‘Kanu.’ However, as consumers increasingly prioritize health, consumption of instant coffee containing sugar or flavoring agents is declining. The market, which was worth 1 trillion KRW in 2017, has shrunk to about 780 billion KRW in 2022.

As the instant coffee market enters a downward trend, Dongseo Food’s performance has also stagnated for over 10 years without significant changes. Sales, which first exceeded 1 trillion KRW in 2007, surpassed 1.5 trillion KRW in 2011 but remained at 1.6151 trillion KRW last year, showing stagnation for 12 years. Operating profit has also hovered around 200 billion KRW for more than a decade.

With its core market shrinking, Dongseo Food has chosen capsule coffee as a new growth engine. The company believes that the demand for capsule coffee is rapidly increasing as home caf? and office caf? cultures spread. In fact, despite the economic downturn dampening consumer sentiment, interest in capsule coffee, which is relatively affordable and convenient to drink according to personal taste, continues to grow steadily. According to market research firm Euromonitor, the domestic capsule coffee market, which was worth 100 billion KRW in 2018, rapidly expanded to about 400 billion KRW in 2022.

Dongseo Food is expected to make significant progress this year, its second year in the capsule coffee market. While the domestic capsule coffee market is virtually monopolized by Nestl?’s ‘Nespresso’ and ‘Dolce Gusto,’ Dongseo Food reportedly exceeded its internal targets set in the first year of launch. In fact, Dongseo Food’s retail sales of roasted coffee (including capsule coffee, whole bean, ground coffee, and drip bags) increased from 3.9 billion KRW with a 5.8% market share in 2022 before the capsule coffee launch to 10.6 billion KRW and a 17.2% market share as of November last year.

With a smooth landing underway, Dongseo Food plans to accelerate marketing efforts this year to increase market share. A company official said, “This year, we plan to continuously expand consumer touchpoints through pop-up store marketing. We will steadily expose products to consumers and gradually raise our goals, and we also plan to continue launching new coffee machines and capsule coffee products within the year.”

This content was produced with the assistance of AI translation services.