Drinks are hotting up

With the nation’s drinking habits changing across several categories, Wholesale News takes a look at how that’s impacting hot beverages and where the biggest opportunities for convenience lie

 

WHAT ARE THE BIG CONSUMER TRENDS IMPACTING THE CATEGORY?

Michelle Jee, Senior Brand Manager – Out of Home, Tetley

“Out-of-home hot beverage consumers are becoming progressively more adventurous in their choice of flavours and blends, with 47% inclined to spend more money on their drinks as they seek out premium and healthier hot beverage options. Combined, green and matcha tea accumulate 21% of favourite non-black blends out of home, which reflects consumer demand for new flavours and blends that offer refreshment.

“Matcha and green tea are two blends that consumers are willing to pay a little more for and are drinking with more frequency than they were 12 months ago.

“Consumers are exploring and trialling new hot beverage blends out of home and want operators to provide them with a selection to test new flavours. This has led to significant growth in popularity for fruit, herbal and green teas, with herbal teas having seen a growth of 9.6% from 2016 v 2017. Consumers are becoming increasingly more health conscious, therefore, operators are able to introduce the health benefits of different blends and tap into driving more sales in this current market trend.”

 

WHERE ARE THE BIGGEST GROWTH AREAS?

Hazel Detsiny, Vice President Marketing Foods & Tea, Unilever UK

“Tea as an ingredient is being utilised outside of hot beverages – something we brought into fruition with the launch of Real Iced Tea by Lipton. We identified there was a clear trend  brewing among Brits for iced tea, with cold-serve tea bags starting to emerge into the market. But there was one thing missing – the actual tea! The fast-brewing and authentic cold brew market has opened up a whole new consumer pool and appeals to those who don’t like hot drinks. It also keeps things exciting for our loyal tea drinkers, giving them a new way to enjoy their favourite beverage.

“With black tea accounting for 85% of the total category, we believe the opportunity here is huge too. Using our expertise, we came up with new formats (Perfect with Dairy-Free and The Tasty Decaf) that respond directly to consumer needs, ensuring longevity for our PG Tips brand.”

 

IS THE NEED TO REDUCE SUGAR CONSUMPTION IMPACTING HOT DRINKS TOO?

Susan Nash, Trade Communications Manager, Mondelēz International

“There’s an ongoing consumer focus on health and wellbeing across the market and, therefore, a need for sugar reduction in various products. Cadbury Hot Chocolate has launched its first reduced-sugar variant to tap into this. This latest innovation offers the hot chocolate taste shoppers know and love, with 30% less sugar.

“Cadbury has a leading 73% share of the £26 million hot chocolate market, so is perfectly positioned to bring consumers this new great-tasting, lower-sugar option. Reducing sugar is the second-biggest priority for shoppers who are looking to improve their diet, so this innovation is set to help drive incremental sales for retailers and wholesalers by bringing new shoppers into hot chocolate.”

 

WHAT’S YOUR ADVICE FOR WHOLESALERS TO MAKE THE MOST OF THE CATEGORY?

Martyn Bell, Category Marketing Manager – Convenience Coffee, Jacobs Douwe Egberts

“Merchandising stock by sub-category is an effective technique; increasing visibility of products is key to increasing demand, for example, through POS and ads in depot. With the fast-paced nature of the hot beverages category, it’s important that operators keep on top of the ever-changing trends within the out-of-home market. By partnering with known and trusted brands, such as Kenco, outlets will have access to channel insight and will receive guidance on tapping into the latest trends.

“In retail, coffee is under-spaced and with the demand for premium coffee and specialities, there’s opportunity to develop more space for these segments.

“However, with only 32% of convenience stores stocking microground coffee, such as Millicano, and only 16% stocking Kenco specialities, supply is not there to meet demand. There’s a real opportunity for wholesalers to communicate to retailers on the under-stocked products and encourage consumers to trade up within their coffee purchases. To maximise sales further, it’s important wholesalers provide a selection of top-quality products and offer variation to a selection of coffee preferences, occasions and budgets, boosting overall sales and giving consumers more to choose from.”

 

IS THERE A KEY MESSAGE WHOLESALERS CAN PASS ON TO RETAILERS TO SELL MORE TOO?

Michelle Jee, Senior Brand Manager – Out of Home, Tetley

“Tetley recommends blocking  brands and arranging bestselling ones together. For easy navigation, it’s crucial different teas are displayed in a clear sequence where the consumer can easily distinguish what’s on offer.

“To further aid in upselling and overall boosting sales, supplying a range of sizes and different formats, particularly green, fruits and herbal, and speciality as these have seen significant and consistent growth in the market.

“To aid in making consumer shops as easy as possible, there should be clear signposting in the hot beverages sections and utilisation of POS to maximise sales to their full potential. Tetley has accommodated this by creating a fantastic range of both on- and off-shelf POS, which includes a selection of pallet wraps, shelf strips and aisle flags.”

 

HOT DRINKS IN NUMBERS

Nestle sheds light on the category’s biggest trends

30.6%

growth in cold ready-to-drink coffee with value up 27.7%, showing that refreshment and the ability for consumers to buy on the go are popular

 

£16.5m

has been added to the hot drinks category in the past four years as a result of shoppers trading up to more premium coffee

 

£750m

worth of core soluble coffee, showing that energy and recharge go hand-in-hand with hot beverages

 

13.9%

volume growth in frothy coffee mixes such as coffee shop-style cappuccino and lattes show the importance of enjoyment in the category, as does the increase in value of coffee pods and super premium soluble coffee

 

11.7%

increase in value for fruit and herbal tea within grocers, while decaf coffee is up by 5%, which demonstrates health is a key driver

Originally published , updated .

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Tags

coffee convenience hot chocolate hot drinks Jacobs Douwe Egberts Mondelez retail tea Tetley trends Unilever wholesale