Specialty Decaf Coffee is Riding the Third Wave

Despite the impact of high coffee prices, the specialty decaffeinated coffee market is experiencing growth due to changes in consumers lifestyles, demand for higher quality, improved flavour, and ethically sourced beans. A new initiative aims to further spur the growth of the specialty decaf coffee market. By Vladislav Vorotnikov.

Decaf has been around for over a century, but only in the last decade has the market witnessed robust growth in its specialty segment. As coffee lovers looking to lower their caffeine intake keep searching for new taste and quality options, the growth potential in this category is far from being exhausted. Numerous factors have been contributing to the growth in popularity of specialty decaf in the last few years.

The specialty decaffeinated coffee market is experiencing growth due to increasing consumer demand for high-quality, flavourful, and ethically sourced caffeine-free options, per Allied Market Research, a research firm. According to Allied analysts, in 2023, industry players observed a shift toward premium decaffeinated products, a trend that continued in 2024. Advanced decaffeination methods, such as the Swiss Water and CO2 processes, help preserve flavour while appealing to consumers who prioritise sustainability and health, the analysts further noted. Additionally, specialty coffee roasters are expanding their decaffeinated offerings to cater to discerning coffee enthusiasts seeking an artisanal experience without caffeine. Furthermore, the rising popularity of craft beverages, greater transparency in sourcing, and the influence of third-wave coffee culture have contributed to making specialty decaffeinated coffee a lucrative market segment.

Third wave is a term used to describe the current trend of coffee shops elevating coffee to a place similar to wine, craft beer, or spirits. Remarkably, sales of specialty decaf are believed to grow fast despite the general economic headwinds. Like the specialty coffee segment, the specialty decaf in recent years has been under pressure from turbulent economic situations in some markets.

The growth in the specialty decaf segment is hampered by inflation and rising cost of living, which forces customers to revise their budgets, said Clara Malmros, business development with Decadent Decaf Coffee Co. “I think specialty decaf is still growing faster than ‘classic’ generic decaf, but the price of green coffee, which is having an effect on all coffee prices and the financial climate are affecting what people can and are willing to spend on coffee.” She added that some consumers at this point might be swayed into buying more generic decaf, and for that reason, people are, in general, a lot more price conscious at this moment in time.

Technology is the Key

The technology of making decaf has tremendously changed since its first invention in 1903, when Ludwig Roselius, a German coffee merchant, discovered that his freight of coffee beans soaked in seawater had lost much of its caffeine without losing much taste.

Meeting production standards in the modern premium decaf scene is much more challenging than a hundred years ago. According to Allied Market Research, specialty decaffeinated coffee is distinguished by advanced decaffeination techniques that preserve flavour and aroma, careful sourcing, and the use of high-quality beans. “Key developments in this market include the rise of Fair Trade-certified options, single-origin decaf, and specialised roasters offering artisanal decaf blends. Consumer preferences are shaped by the desire for premium taste without caffeine, concerns about sustainability, and health-conscious choices,” Allied analysts said.

Improvements in precision roasting and fermentation techniques help maintain the complexity of decaffeinated coffee. “As third-wave coffee culture continues to evolve, specialty decaf is becoming increasingly popular among discerning consumers seeking a high quality, caffeine-free coffee experience,” Allied analysts explained.

Among the factors distinguishing specialty decaf, Decadent Decaf’s Malmros primarily mentions high quality beans with a cupping score 80+, the decaffeination method – non-chemical so SWD, CO2. She added that the specialty decaf technology involves the use of sugarcane, freshly roasted, ethical, sustainable. “I would say specialty decaf is at the point where it can be compared to caffeinated specialty coffee,” Malmros shared.

In general, specialty decaf is now wellpositioned as an integral part of the specialty coffee world. “The factors that define specialty decaf are the same as those that define specialty coffee generally,” commented Erin Reed, director of marketing Swiss Water Decaffeinated Coffee Inc. “Of course, decaffeination is an additional process that the coffee goes through, and our goal is to maintain all of the beautiful attributes of a coffee that a producer has put so much effort into creating, whereas some decaffeination processes impart foreign flavours,” she added.

Evolving Market

While the decaf coffee market shows signs of saturation, the ceiling of specialty decaf coffee has yet to be hit. Findings from the US National Coffee Association’s Spring 2024 NCDT Report show that around seven percent of Americans had decaf coffee in the past day.

Innovations is the key engine of the specialty coffee segment in the US, according to statistics. Specialty coffee is currently maintaining a 13-year high, with 45 percent of Americans enjoying this type of coffee in the past day, per the NCA’s report. Within the specialty category, there is a trend recently of coffee beverages that were relatively unknown just a few years ago, skyrocketing in popularity. For example, 45 percent of American adults had a cold brew in the past week, up 162 percent from when the 2016 NCDT first added cold brew. These figures bode well with market players’ observations.

“I think one of the key trends is roasters showing more love for decaf, in other words, specialty roasters are now adding decafs to their roster of coffees, importing single-origin and micro-lot offerings and they are fine-tuning decaf roasting to maintain origin characteristics,”

Decadent Decaf ’s Malmros said. Basically, they are bringing specialty decaf to the traditional specialty coffee level and scene, she noted, adding that this was really displayed last year when a decaf coffee won first place in the US Brewer’s Cup for the first time in the competition’s 20-year history.

On the consumer side, Malmros continued, a few factors that influence consumers decaf choices. “People want ethically sourced coffee, sustainably grown and sustainable packaging, the type of decaffeination method places an important factor and finally high quality – when it comes to specialty decaf the bar is now pretty high, and consumers want to see that roasters have put in the effort sourcing quality coffee and roasting it to a level of excellence.”

Specialty decaf consumption continued to grow in 2024 faster than total decaf and the total coffee category, Reed said, citing data from StudyLogic, a think tank. “We believe that consumer interest in consuming food and beverages that benefit their health and wellbeing are behind this trend,” she added.

The Potential is Yet to be Unlocked

The general consensus among coffee companies is that the specialty decaf market is yet to exhaust its growth potential.

“The future of specialty decaffeinated coffee appears promising, with significant growth expected due to evolving consumer preferences and technological advancements,” Allied Market Research analysts said, adding that specialty coffee roasters are expanding their decaf offerings to meet the increasing demand from health-conscious and quality-focused consumers seeking premium, sustainably sourced, and better-tasting options. “Additionally, the growing availability of single-origin, organic, and ethically sourced decaf options is further supporting market growth. As third-wave coffee culture continues to emphasise craftsmanship and quality, specialty decaf is expected to transition from a niche segment to a mainstream category within the global coffee market,” they said.

“Notwithstanding the impact of high coffee prices and the impact they may have if sustained, we believe that specialty decaf will continue to grow,” Reed forecasted. With the consumer trend of making consumption choices that are better for their health and well-being continuing to be strong, decaf has become more mainstream in acceptance because of the positive benefits it can provide, Reed noted.

She said that Swiss Water’s research has shown that young people have adopted decaf to improve their quality of sleep and balance their energy throughout the day, among other health-beneficial reasons. “We don’t envision this changing but only continuing to grow as the awareness about the positive benefits of decaf becomes more prevalent. These young people grew up with specialty coffee and will continue to look to it for their decaf needs,” Reed explained.

“There is definitely a growing interest in specialty decaf, and even though the market has grown substantially, I don’t think it’s done growing anytime soon,” Malmros said. Plenty of light has been shed on decaf lately in a positive way, she noted, emphasising the importance of James Hoffman, an English coffee expert, author, and entrepreneur, creating ‘The Decaf Project’, which has led to a lot of interest and involvement from roasteries across the globe and to shorts made of the three most popular decaffeination methods showing how they vary, it’s created a buzz about decaf both within and beyond the industry.

The Decaf Project is a large-scale initiative where Hoffman aims to educate coffee enthusiasts about different decaffeination methods by having roasters worldwide roast the same coffee bean, decaffeinated using three distinct processes, alongside the original caffeinated version, allowing for a direct comparison through a global tasting event; essentially showcasing the potential for high quality decaf coffee.

“As I mentioned before, with a decaf winning the US brewers cup, this also brings a lot of attention to decaf and opens up the possibility for a whole new segment of consumers who might be swayed to try decaf. I have great hope that the ‘death before decaf ’ [belief ] will soon be a thing of the past and more consumers will discover the beauty of specialty decaf coffee,” Malmros said.

Vladislav Vorotnikov is a Batumi, Georgia-based multimedia B2B freelance journalist writing about the tea and coffee industries since 2012.