South Korea's W3.7tr coffee market built on 106,000 cafes

South Korea's coffee market has grown more than 35 percent over six years, reaching 3.7 trillion won ($2.61 billion). Consumer spending has shifted rapidly from instant coffee mixes toward roasted beans, with premium specialty coffee and budget, large-volume options expanding simultaneously. The number of coffee shops has surpassed 100,000, now accounting for one in every seven food-service outlets in the country.

The Ministry of Agriculture, Food and Rural Affairs and the Korea Rural Economic Institute released a coffee industry and consumption trend analysis Tuesday, showing the domestic coffee market reached 3.74 trillion won in 2024 — a 35.6 percent increase from 2018. The compound annual growth rate over that period reached 5.2 percent.

Roasted beans drove the market's expansion. The roasted coffee segment grew to 1.32 trillion won last year, posting a compound annual growth rate of 15.8 percent since 2018. By contrast, the "prepared coffee" segment — dominated by instant coffee mixes that once led the domestic market — shrank at an average rate of 0.5 percent per year over the same period. The figures signal a clear shift in consumer preference from instant mixes to roasted beans.

How Koreans drink coffee has split in two directions rather than simply trading up. Demand for specialty coffee — where consumers scrutinize bean variety, origin and roasting method — has risen, while the market for affordable, large-volume coffee consumed on commutes or after meals has grown alongside it.

The result is a market structure in which both the premium and value segments are expanding at the same time, driven by consumers who prioritize taste and quality on one end and those who weigh satisfaction against price on the other.

The coffee boom has reshaped the streetscape as well. The number of coffee shops reached 106,452 in 2023, up 5.7 percent from the previous year. Their share of the overall food-service industry rose 4.1 percentage points, from 9.3 percent in 2018 to 13.4 percent in 2023 — meaning more than 13 out of every 100 food-service outlets, or roughly one in seven, is now a coffee shop.

Coffee processors, however, are on the decline. The number of coffee processing businesses fell 8.0 percent year-on-year to 1,660 in 2023. While the industry's overall footprint continues to grow, the center of gravity is shifting away from manufacturing and processing toward coffee shops that engage consumers directly.

The industry's heavy reliance on imported raw materials is also evident. Imports of coffee raw materials reached 204,841 tons in 2024, up 5.8 percent from the previous year, with the import bill reaching $1.37 billion.

The K-coffee export market — which processes imported raw materials and ships finished products abroad — is also growing. Exports of coffee-related products last year reached $229.6 million, up 4.6 percent from the previous year. Export volume stood at 35,349 tons, of which instant coffee accounted for 98 percent.

Roasted bean exports have shown particularly strong momentum of late. As of May 2025, roasted bean export volume was up 46.8 percent from the same month a year earlier. While instant coffee still makes up the bulk of export tonnage, roasted beans produced with advanced roasting technology are steadily expanding their reach in overseas markets.

Export markets are also shifting. By export value in 2024, Israel held the largest share at 18.1 percent, followed by China at 15.4 percent, Australia at 7.1 percent, the Philippines at 6.5 percent and Chile at 5.7 percent. Israel overtook China as the top export destination in 2023, ending China's run as the leading market through 2022.

The Ministry of Agriculture, Food and Rural Affairs sees increasingly segmented consumer tastes as the primary driver of the domestic coffee industry's growth. While the sector faces structural constraints from its near-total dependence on imported raw materials, the ministry believes there is room for it to grow into an export industry by adding value through roasting and processing.

"The domestic coffee industry has built a highly dynamic ecosystem in which the premium and value markets are growing together, underpinned by increasingly diverse consumer preferences," said Jeong Gyeong-seok, the ministry's director general for food industry policy. "We will pursue wide-ranging policy support to integrate food technology into coffee manufacturing and retail, and to help the sector emerge as a core export category under the K-Food+ initiative."