Korea’s coffee substitute market rises amid climate threats to coffee beans

Agros' coffee substitute extract, I'm Not Coffee / Screen capture from the Agros website

By Ko Dong-hwan

• Published Jul 17, 2025 12:00 PM KST
• Updated Jul 17, 2025 2:25 PM KST

Caffeine-free consumption rising

The coffee substitute market in Korea is expanding, driven by declining global coffee bean production due to extreme climate conditions and rising demand for caffeine-free beverages.

The domestic market is diversifying, with more companies and sales channels entering the space. This trend mirrors global developments, as increasingly harsh environmental conditions impact crop production and prompt coffee drinkers to explore alternative beverages.

Fueling the expansion of the coffee substitute market in Korea — where coffee supply is entirely dependent on imports and consumption remains high — is the growing demand for healthier, caffeine-free alternatives. While many consumers still crave the taste of coffee, they avoid it due to the stimulant’s side effects, which can include sleep disturbances, heightened anxiety, indigestion and increased heart rate.

Companies exploring alternatives to coffee have begun launching their own products. Dong Nam Corp., a food importer based in Anyang, Gyeonggi Province, has been distributing Orzo — a coffee-flavored tea brand from Italian company Crastan — since 2008. The Korean importer, which primarily sources from Italy, has recently seen a sharp rise in Orzo sales.

“I cannot drink coffee because of caffeine. One day, an Italian associate who knew I was not a coffee drinker told me about a barley tea brand called Orzo that people in his country drink as a coffee substitute. We received a sample first and then decided to import the brand, targeting people like me who cannot consume caffeine,” said Dong Nam CEO Cho Dong-hyeon. The company was the first to introduce a coffee alternative to the Korean market.

Agros, a tea beverage maker specializing in oriental herbs based in Gyeongsan, North Gyeongsang Province, launched its own coffee substitute after discovering that its barley tea extract, when highly concentrated and mixed with water, had a coffee-like taste. It researched barley further and introduced a coffee replacement extract, I’m Not Coffee, in 2021.

“I came across the coffee substitute trend outside the country and looked into products like Orzo or Atomo in the United States, also known as ‘beanless coffee.’ I found that they were enjoyed by children or even pregnant women because they are caffeine-free. So we used those products as benchmarks to develop our own coffee alternative,” said Agros CEO Kwon Gi-han.

Coffee substitute beverage brand Sans also promotes its caffeine-free recipe that uses 12 different “super ingredients” — including malting barley, lavender, hibiscus and chicory, among others — to mimic the taste of coffee. Sans earlier this year opened a cafe dedicated to coffee substitutes, the first of its kind in the global coffee substitute industry, in Seoul’s Jongno District.

The Korean boundary-pushers have seen growing demand and rising sales. Dong Nam began supplying Orzo to Costco warehouse stores in 2023 and, after a year, sales of the brand soared, according to Cho.

“Sales had been negligible until we began supplying to Costco. But starting last year, the numbers surged dramatically,” Cho said.

Agros said sales of its coffee replacement have increased each year. Kwon said one of the product’s main consumer groups is pregnant women and those under postpartum care.

“We draw particularly high interest at baby fairs, where our coffee substitute products make up good sales,” Kwon said.

Wake, which operates Sans, last week received Pre-Series A funding from Signite, a corporate venture capital arm under Shinsegae Group, though the funding amount was not disclosed.

Signite attributes its decision to invest in Wake to the robust growth of the global coffee substitute market as well as the company’s technical edge in competing globally.

“With Signite’s investment, we aim to launch Sans cafes inside at least three major department stores here and setting up another road cafe within this year. Our market expansion to overseas will begin next year,” said Wake CEO Ky Kim.

“The decaffeinated coffee market in Korea is about 6.7 trillion won ($4.8 billion) and globally it is 600 trillion won. Atomo has so far invested about 90 billion won into research and development, and we will also invest half of every investment we get into researching for better coffee substitutes,” Kim added.

The global coffee substitute market is experiencing rising demand as the world’s largest coffee bean exporters have faced severe challenges from climate change, jeopardizing future production.

Brazil, which supplies more than a third of the world’s coffee, experienced a sharp decline in production last year due to drought. Vietnam faced similar losses. The Intergovernmental Panel on Climate Change has predicted that nearly half of the land currently used for coffee cultivation could become unsuitable by 2050.

According to market research company Meticulous Research, the global coffee substitute market is estimated to be worth $16.2 billion this year and is projected to reach $24 billion by 2032, growing at an average annual rate of 5.8 percent.