The twentieth century has seen a number of important developments in coffee including the development of both instant and decaffeinated coffees.

Decaffeinated coffee was first invented in 1903 when a German coffee importer, Ludwig Roselius, turned a batch of ruined coffee beans over to researchers. Although not the first to remove caffeine, they perfected the process of removing caffeine from the beans without destroying any flavour. He marketed the coffee under the brand name "Sanka" (a contraction of "sans caffeine"). Sanka was introduced into the US in 1923.

The first soluble coffee was invented by a Japanese-American chemist called Satori Kato who lived in Chicago. However, the first mass produced instant coffee, was the invention of George Constant Washington, an English chemist living in Guatemala. While waiting for his wife one day to join him in the garden for coffee, he noticed on the spout of the silver coffee pot, a fine powder, which seemed to be the condensation of the coffee vapours. This intrigued him and led to his discovery of soluble coffee. In 1906 he started experiments and put his product, Red E Coffee, on the market in 1909. In 1938, Nestlé, after being asked by Brazil to help find a solution to their coffee surpluses, invented freeze-dried coffee. Nescafe was developed and first introduced into Switzerland. Instant coffee really took off after 1956 when commercial television was introduced. The commercial breaks were too short a time in which to brew a cup of tea, but time enough for an instant coffee. The entrepreneurs of the coffee world like Nestlé and General Foods realised this was their big chance and advertised their instant coffee during the breaks. In retaliation, the tea companies introduced the tea bag in a desperate bid to compete.

The government took over the tea trade in Britain during the Second World War introducting rationing which continued until 1952. After the war, however, people didn't start drinking as much tea again as expected - they drank coffee instead.

The modern-day espresso machine was perfected by Achilles Gaggia in Italy in 1946. He managed to use a higher pressure than steam by using a spring powered lever system. Gaggia brought his revolutionary espresso machine to London in the 1950s and opened a mocha bar in Frith Street in Soho - hence the modern day coffee bar was born. The first pump driven espresso was produced in 1960 by Faema.

Because of the economic importance of coffee exports, a number of Latin American countries made arrangements before World War 2 (1939-1945) to allocate export quotas so that each country would be assured a certain share of the coffee market. The first coffee quota agreement was arranged in 1940 and was adminstered by the Inter-American Coffee Board. It was not, however, until 1962 that the idea of establishing coffee export quotas on a worldwide basis was adopted. This was set up by the United Nations as the International Coffee Agreement. During the five-year period when this agreement was in effect, 41 exporting countries and 25 importing countries agreed to its terms. The agreement was re-negotiated in 1968, 1976 and 1983. Participating nations failed to sign a new pact in 1989 and, as a result, world coffee prices plunged. There were a series of crop failures, most notably in Brazil in the early 1990s which meant that coffee prices increased dramatically. Only recently have prices begun to drop again.