Yerba mate is one of the most popular non-coffee or tea hot drinks in the world. Although only prevalent in a handful of places, where consumption does occur it tends to be heavy. It plays an important social and cultural role in countries like Argentina and Uruguay, where it is not only the biggest non-coffee or tea hot drink, but the biggest hot drink overall. However, this dependence on a limited number of mature and economically shaky markets is a problem. Consumption has largely plateaued in most of its core Latin American markets and its largest non-Latin American market, Syria, is hardly in a position to carry the category forwards.
For mate to continue growing, it will either have to fight its way into crowded hot drinks markets in areas beyond Latin America that already have well-entrenched coffee and tea consumption, or it will need to catch on as a natural energy additive to soft drinks. While the former is not impossible, as mate has a reputation of being healthy and a good source of energy, it faces hurdles because of its relative unfamiliarity and a taste that usually takes some getting used to. The latter option is more promising, and a wave of drinks with mate as a key ingredient is hitting countries far afield from South America, suggesting that this is beginning to happen.
Other Plant-based Hot Drinks sales in major mate markets
Source: Euromonitor International
Note: Under Euromonitor International definitions, mate is classified as an "Other Plant-based Hot Drink." Although the category also includes beverages made from other plants, including chicory, soy, and various cereals, in the markets under discussion mate comprises the vast majority of the Other Plant-based Hot Drink category.
Argentina is the central player when it comes to mate
The global mate market is on shaky foundations because of its epicentre: Argentina. The country where mate sales are the highest (half a billion dollars at retail, annually) has been in economic trouble for years, with runaway inflation, soaring fiscal deficits, and strict capital controls. The election of pro-business reformer Mauricio Macri in December of 2015 has brought hope that the situation is turning around, but the economy continues to shrink as the new government cuts subsidies and lays off public sector workers.
The mate market has been somewhat protected from the larger economic fluctuations, thanks in no small part to price controls. In September of 2016 the government announced a 5.82% increase in prices, the sixth such intervention in recent years. However, that is still far behind the rate of inflation. Even with price controls, growth has been inconsistent, and should the government ever let the price rise closer to its natural equilibrium the market would likely see a sharp decline.
Other Plant-based Hot Drinks sales in Argentina 2010-2015
Source: Euromonitor International
The rest of Latin American cannot save the category
Argentina is not the only country that drinks a lot of mate, but the other markets are not in any position to compensate for weakness in the Argentinian market. Brazil is the world’s second-largest yerba mate market, where the drink is known as chimarrão . However, the market is forecast to contract at a rate of 4% annually in volume terms. Chimarrão consumption is limited to only a few areas in the country and is struggling to reach millennial consumers who prefer other hot drink options, especially outside of the southern regions where it is traditionally consumed.
Uruguayans drink about 19 litres of mate a year per capita, making them the world’s leading consumers and helping to make their small country the third-most important global mate market. However, this high consumption means that there is limited room to grow. Low agricultural commodity prices and economic trouble in both its large neighbours (Brazil and Argentina) have not helped matters. That leaves Chile as the only remaining significant mate market. While the economy here is growing, mate is not a primary beverage in Chile and does not benefit as much from economic growth as other hot drinks. In fact, it has the lowest GDP elasticity of any of them.
GDP elasticity of Hot Drinks in Chile
Source: Euromonitor International's Hot Drinks Industry Forecast Model
All this means that despite the problems in the Argentinian market, it is the only country in which the category is expected to grow significantly during the forecast period. The retail market for other plant-based hot drinks (in which mate is the only significant product) is expected to grow by 16,071 tonnes by 2020 in Argentina, versus just 407 in Chile and 59 in Uruguay. That increase will be coming nearly entirely from population growth, as the market is otherwise saturated. There are few new occasions for which Argentineans could conceivably drink more mate.
Demand drivers for Other Plant-based Hot Drinks in Argentina 2013-2020
Source: Euromonitor International's Hot Drinks Industry Forecast Model
Note: Population Growth is in teal
From Buenos Aires to Beirut and Berlin
The only major area outside of South America where mate in its hot form is firmly established is the Middle East. Syrian and Lebanese immigrants to South America who returned home brought the mate habits of their adopted homeland with them and the drink is now firmly established in both places. Syria remains the largest non-Latin American export destination for yerba mate in the world, even with civil war raging. Import volumes have actually increased since the war began, and it is not unusual to see soldiers marching into battle with a rifle in one hand and a bombilla of mate in the other.
The mate drinkers of the Levant show that while it will be difficult for mate to catch on abroad, it is not impossible. The main problem is that mate is a highly social drink in its core markets. Recreating mate’s social role in new countries is unfeasible, so it will have to rely on health positioning instead. This will require the unfamiliar foreign beverage to distinguish itself from a crowded field of health-positioned hot drinks. This is not impossible, but is at the very least a challenging proposition.
A more promising route is not in hot drinks but soft drinks. Club-Mate, a carbonated RTD tea made from mate, has long been popular in Germany and is a fixture of Berlin’s thriving nightlife because of its low-sugar caffeination. It is now distributed in several dozen countries from Armenia to Thailand. Everywhere it goes it tends to be closely tied to nightlife and tech culture, and is becoming common in Silicon Valley, where programmers tired of standard energy drinks are using it to fuel themselves through long programming sessions.
In the wake of Club-Mate’s success, mate is becoming more popular in a variety of RTD formats. Hain Celestial, Brisk and Steaz are just some of the brands that have rolled out energy drinks, RTD tea, or (most often) beverages that blur the lines between the two categories. They join Guayaki, already a well-established mate-based energy drink in this space. Yerba mate has a reputation of being a “clean” source of energy, especially as opposed to energy drinks, and with demand for drinks that create jitter-free focus seemingly inexhaustible, there is a natural place for these drinks in markets around the world. While bombillas with straws sticking out of them will never be anywhere near as common in New York as they are in Buenos Aires or even Damascus, mate has a promising future as a natural source of energy.