Expansion of cafés continues momentum of hot drinks
The growth momentum of hot drinks in India continued over the review period. Double digit retail value CAGRs over the review period for tea, coffee and other hot drinks propelled hot drinks over the period. Tea was the major contributor to sales of hot drinks, as black standard and speciality tea bags, green tea, tea bags black standard and tea bags black speciality increased in popularity. The entry of the internationally famed ‘Starbucks Coffee’ into cafés in October 2012further helped increase popularity of coffee. The expansion of cafés, such as Costa Coffee, Starbucks Coffee, Café Barista, Café Coffee Day, Caffe Pascucci, Gloria Jean’s, The Coffee Bean and Tea Leaf, Infinitea, Goodricke tea bar and Wagh Bakri Tea Lounges, helped boost sales of hot drinks over the review period.
Premiumisation boosts sales of high-end hot drinks
Premiumisation continued to drive sales of hot drinks, especially of the niche high-end products. In tea, manufacturers continually launched premium green tea, premium tea bags black standard and premium tea bags black speciality products. In coffee, instant coffee witnessed many exotic flavour launches targeting urban consumers willing to spend. Other hot drinks players also committed to upgrade their product formulae and packaging and re-positioned them in line with the premiumisation trend, in order to cater to refining consumer requirements.
Unilever retains its lead in fragmented hot drinks market
Backed by a strong brand reputation and a wide distribution network, Unilever continued to be the leading player in hot drinks in 2012. Although the company has a well-established and loyal consumer following, the company continued to launch a series of frequent marketing campaigns to further strengthen its brand awareness and to capture new consumers. The company continued to be a strong innovator and added Natural Care to its Red Label tea portfolio, targeting health-conscious urban consumers. Unilever launched new flavours within green tea under its Brooke Bond Taj Mahal and Lipton premium brands, enabling the company to maintain retail value leadership over the review period. The company also owns lower-priced brands, such as Taaza Bachat, Ruby, A1 and Super, in order to target the larger low-income groups.
Consumer demand for new experiences drives growth of hot drinks
Indian consumers with increased disposable incomes are driving sales of hot drinks. Consumers on the lookout for new experiences are shifting away from traditional and standard hot drinks towards more exotic variants. The increase in the number of cafés has resulted in urban youth becoming more attracted to hot drinks which reinforce their sense of individuality, expressing their tastes and knowledge. Although this is not expected to become a mainstream trend, it has, however, touched the mid-to high-income consumers, who are willing to spend. This trend can be seen within green tea, tea bag standard, tea bag speciality, instant coffee and other hot drinks products, leading to a change in the consumption habits of consumers. Urban consumers are preparing sophisticated hot drinks, such as cappuccino, latte and espresso, at home and are buying non-traditional exotic tea blends, driving growth of these categories.
Hot drinks expected to continue to register strong performance
The popularity of hot drinks among consumers is unlikely to falter over the forecast period. Hot drinks form an integral part of the lifestyles of many Indian consumers, including tea at the start of the day, malt-based hot drinks with breakfast and coffee in cafés. Consumers aspiring for a higher-quality lifestyle and on the lookout for a new experience will continue to drive sales of premium products over the forecast period. Strong marketing campaigns to support premium products by the top players, such as Unilever, GlaxoSmithKline, Tata Global Beverages and Nestlé, should ensure consumer interest in hot drinks continues to remain strong over the forecast period.
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