The Australia coffee and tea capsules market attained a value of USD 4.57 Billion in 2025. The market is expected to grow at a CAGR of 8.10% during the forecast period of 2026-2035. By 2035, the market is expected to reach USD 9.96 Billion.
Premium and specialty coffee capsules are emerging as a niche trend in the Australia coffee capsule market, driven by urban consumers with higher disposable incomes seeking elevated coffee experiences. The widespread adoption of advanced, capsule-compatible brewing machines further reflects changing urban lifestyles that prioritize convenience, quality, and café-style indulgence at home. According to IBISWorld, the urbanization rate in Australia rose by 1.32% during 2023-24. The trend of the cities being the main market is pushing brands like Nespresso and Lavazza to come up with super-premium blends and limited-edition flavors aimed at the metropolitan consumers who appreciate both convenience and quality. For instance, Nespresso’s “World Explorations” range, featuring the Melbourne Lungo, celebrates local coffee culture with rich, nuanced flavors that resonate with metropolitan coffee enthusiasts seeking both quality and convenience.
Consumer awareness of health benefits linked with black, green, and herbal teas is a main driver of the Australia coffee and tea capsules market outlook. Such awareness has caused an increased demand for capsules containing these tea varieties. Organic coffee capsules also appeal to health-conscious consumers. For example, in Australia, Merlo Coffee has "Organico Capsules" that come from 100% organic arabica beans which are sourced from the countries of Nicaragua, Guatemala, and Colombia. On top of that, there is an increasing appreciation for premium and specialty coffee and tea capsules, including single-origin and organic types.
Australian customers are after high-quality beans and café-like experiences. Vittoria Coffee is one of the brands that offers gourmet capsule lines of unique and exotic blends. In 2020, Vittoria Coffee launched a new range of Nespresso-compatible aluminum caps that are available exclusively at Woolworths in Australia. The caps consist of 100% Arabica coffee, and they happen to be the only locally roasted aluminum caps that are present in Australian supermarkets.
Another trend in the market is of matcha coffee that is rapidly gaining popularity in Australia as health-conscious consumers embrace its antioxidant-rich and energy-boosting properties. The vibrant green beverage, blending Japanese matcha with espresso or milk, appeals to those seeking a cleaner caffeine alternative. Specialty cafés in cities like Melbourne and Sydney now feature matcha lattes and cold brews on their menus. For instance, Matcha Mylkbar in Melbourne has popularized plant-based matcha drinks, showcasing the fusion of wellness and café culture that defines Australia’s evolving premium coffee and functional beverage market.
Base Year
Historical Period
Forecast Period
Compound Annual Growth Rate
8.1%
Value in USD Billion
2026-2035
*this image is indicative*
Environmental issues fuel demand for recyclable, compostable, and biodegradable products, contributing to Australia coffee and tea capsules market value. Companies such as Nespresso Australia introduced recyclable capsules and take-back schemes for environmentally friendly consumers seeking to minimize landfill waste. In 2024, Nespresso launched capsules with 80% recycled aluminum for its Starbucks by Nespresso and Nescafé Farmers Origins brands. These capsules are designed to be infinitely recyclable, reducing the environmental impact associated with coffee packaging.
Online shopping and subscription services are growing fast in Australia, providing convenience, edited choice, and doorstep delivery. One of the notable launches in this arena is Nespresso, launching its coffee capsule subscription service in 2019. The service provides three plans based on consumption behavior, with free delivery and a 10% credit towards next purchases. The subscription model is made easy and flexible to cancel, boosting customer experience and loyalty.
Instant and ready-to-drink drink preferences drive growth for Australia coffee and tea capsules market as they offer quick convenience to quality drinks. This is in concordance with the busy lifestyle of most Australians, enabling them to consume repeatedly with no compromises on taste or freshness. In 2021, Australian startup Savvy Beverage boosted this trend by diversifying its product offerings to include instant coffee and soda beverages infused with nootropic ingredients aimed at improving brain activity.
Australian manufacturers keep introducing new flavors such as hazelnut, vanilla, hibiscus, and mango tea capsules to entice taste buds and sustain consumer interest. For example, Nespresso's "Vanilla Éclair" capsule contains a smooth and spherical espresso with comforting vanilla and malted cereal flavor profiles, ideal to be savored with milk to get a silky texture. This emphasis on new flavor innovation not only enriches the home coffee and tea experience but also leads to repeat buying, as customers are keen to try seasonal, limited-edition, and exotic capsule flavor ranges available from companies such as L'OR Espresso and Twinings.
Apart from e-commerce, availability in supermarkets, convenience stores, and hypermarkets is driving the Australia coffee and tea capsules market growth by bringing products within the reach of a wider consumer base. A recent entry is Italian coffee company Gimoka into Australian supermarkets, made possible through a tie-up with One Collective Group in 2025. This opened up scope for consumer reach beyond niche channels and consumer online purchases and addressed both impulse and habitual purchasing behaviors. Wider distribution through leading supermarkets improves visibility and convenience and propels long-term market growth.
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The EMR’s report titled “Australia Coffee and Tea Capsules Market Report and Forecast 2026-2035” offers a detailed analysis of the market based on the following segments:
Breakup by Segment
Key Insight: Coffee capsules are the most popular in the Australian market, fueled by robust coffee culture and convenience demand. Nestlé and De'Longhi introduced the Nescafé Dolce Gusto machine in Australia in October 2024, making it the first multi-beverage machine on offer there. The revolutionary machine dispenses 14 various beverages, from hot frothy cappuccinos to peach iced teas served chilled, suiting various consumer tastes. Its patented 15-bar pressure pump generates a true café-style flavor, crafting a rich crema layer and creamy froth on milk, offering an authentic café experience from the comfort of one's own home.
Tea & Milk Powder Capsules to Gain Popularity
Tea capsules command a significant Australia coffee and tea capsules market share as they are increasingly popular among health-conscious consumers looking for convenience. Tetley and Twinings, among other brands, have come out with tea capsules that work for common machines, providing multiple flavors and blends. They reflect the emerging trend of expanding retail expenditure on ready-to-consume hot drinks. For example, Tetley introduced in Australia its Cold Infusions line with flavors Strawberry & Watermelon, Raspberry & Cranberry, Orange & Peach, and Mint, Lemon & Cucumber.
Capsules made of milk powder are becoming increasingly popular in the Australian market, where customers are looking for convenience and excellence in their coffee experience. One such example is Morning Australia's "Milk & Magic" coffee capsules, which aim to provide a balanced flavor for milk coffees. Every box includes 10 capsules of Nespresso-compatible coffee, with notes of dark chocolate, magic, and pecan. The mix comes from sources such as Peru La Naranja, Papua New Guinea Highlands, and Vietnam Tamba Mountain and provides a rich, creamy character perfect for cappuccinos and lattes.
Major companies in the Australia coffee and tea capsules industry are concentrating on product innovation, sustainability, and brand differentiation. Major players focus on developing environmentally friendly and compostable capsules to target green consumers and support national sustainability initiatives. Flavor diversification and premiumization are also key strategies, with companies introducing specialty blends, single-origin coffees, and artisan teas to respond to increased demand for high-quality drinks. To further engage consumers, industry players invest in e-commerce websites and digital advertising, offering easy online shopping and subscription options.
Partnerships with cafés, hotel chains, and retail chains extend distribution networks and visibility. Private-label partnerships with supermarkets provide extended reach and competitive pricing. Companies are implementing smart packaging technologies and machine compatibility innovations for convenience and cross-brand usage. Ongoing investment in research & development facilitates flavor innovation and sustainability initiatives. Strategies overall in the Australia coffee and tea capsules sector are focused on balancing premium experience, environmental stewardship, and technology innovation to deepen brand loyalty and target mainstream as well as niche consumer segments.
Formed in 1908 with its headquarters in Sydney, New South Wales, Nestlé Australia Ltd. is a major food and beverages company. Nestlé has pioneered innovations in recyclable coffee capsules, sustainable sourcing, and carbon-neutral business, providing high-quality products under brands such as Nescafé and Nespresso.
Established in 1895 and with its head office based in Turin, Italy, Luigi Lavazza S.p.A. is internationally renowned for its high-quality coffee know-how. Innovation in blend technologies, biodegradable capsules, and its Tierra! sustainability program, the company strengthens its policy of quality, environmental responsibility, and ethical coffee-making.
Established in 2015 and with headquarters in Amsterdam, Netherlands, Jacobs Douwe Egberts Professional is a company that focuses on professional coffee solutions. The firm is renowned for its energy-saving brewing systems, tailored beverage menus, and Common Grounds sustainability platform, which encourages sustainable sourcing and innovation in workplaces and hospitality environments.
Mad Coffee Capsules Pty Ltd., founded in 2014 with its headquarters in Melbourne, Australia, specializes in Nespresso-compatible compostable pods. The business advocates for eco-packaging, roasting coffee locally, and zero-waste production, providing sustainable, quality coffee experience while also backing Australian growers and the environment.
*Please note that this is only a partial list; the complete list of key players is available in the full report. Additionally, the list of key players can be customized to better suit your needs.*
Other players in the Australia coffee and tea capsules market include Grinders Café Espresso, and Unilever Australia, among others.
Download your free sample today to explore the latest Australia coffee and tea capsules market trends 2026. Gain insights into emerging flavors, eco-friendly innovations, and premium segment growth. Understand competitive strategies, consumer preferences, and forecasted opportunities to make informed business decisions and stay ahead in the evolving Australian coffee and tea capsules landscape.
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The market is projected to grow at a CAGR of 8.10% between 2026 and 2035.
Key strategies driving the market include product innovation, sustainability initiatives, and premiumization. Companies focus on eco-friendly, compostable capsules, diverse flavor offerings, and digital sales channels. Partnerships with retailers, cafés, and hotels, alongside machine compatibility innovations and ethical sourcing, further strengthen market growth.
Changing consumer preferences, availability of bulk capsules, and innovations in terms of flavour, variety, and price are expected to be key trends guiding the growth of the market.
Tea capsules and coffee capsules are the leading segments in the market.
Coffee and tea capsules refer to containers with all the ingredients required to produce a single serving of a beverage, which are then combined with a liquid to prepare the beverage.
The key players in the market report include Nestlé Australia Ltd, Luigi Lavazza Spa, Jacobs Douwe Egberts Pro, Mad Coffee Capsules Pty Ltd, Grinders Café Espresso, and Unilever Australia, among others.
In 2025, the market reached an approximate value of USD 4.57 Billion.
Coffee capsules dominate the market, driven by a strong coffee culture and the demand for convenience.
Explore our key highlights of the report and gain a concise overview of key findings, trends, and actionable insights that will empower your strategic decisions.
| REPORT FEATURES | DETAILS |
| Base Year | 2025 |
| Historical Period | 2019-2025 |
| Forecast Period | 2026-2035 |
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Historical and Forecast Trends, Industry Drivers and Constraints, Historical and Forecast Market Analysis by Segment:
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| Breakup by Segment |
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| Market Dynamics |
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