Korea's Dongsuh to rival Nestle in local capsule coffee market

South Korea’s No.1 instant coffee maker Dongsuh Foods Corp. is set to rival global food and beverage giant Nestle in the local capsule coffee market.

Dongsuh Foods, a 50:50 company between US’ Mondelez International Inc. and Korea’s Dongsuh Co., said on Tuesday it has launched its first capsule coffee brand Kanu Barista. The lineup is categorized as light, medium and dark roasts as well as decaffeinated.

The new products are made with Dongsuh’s in-house triangle tamping technology, which tightly compresses coffee grinds and removes air pockets to get the best taste from the extraction, the Korean food company said.

Dongsuh Foods is well known for its instant coffee Maxim both in domestic and global markets. The company launched Kanu in 2011, which has become one of the top instant coffee brands in Korea.

It also released US-based the Kraft Heinz Company’s Tassimo capsule coffee in Korea in the same year but didn’t garner attention from the market.

As the capsule coffee market has expanded to 400 billion won ($315.5 million) in Korea, Dongsuh Foods has spent three years researching and developing its capsule coffee to make Americano, which is beloved by many local consumers.

The capsule coffee market in Korea is dominated by Nestle, which boasts a combined share of 80%. Global coffeehouse chains Starbucks and Paul Bassett, as well as Carlyle-backed Korean coffee franchise A Twosome Place, are also making capsules compatible with Nestle's Nespresso machines.

As consumption of instant coffee has declined for years in Korea, Dongsuh Foods is aiming to boost the capsule sales for long-term growth. The company’s revenue and operating profit in 2022 amounted to 1.5 trillion won and 200 billion won, respectively.

Write to Soo-Jung Ha at agatha77@hankyung.com
Jihyun Kim edited this article.