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The Sustainability Gap in Hot Beverages

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Two-thirds of consumers across the world report that they try to have a positive impact on the environment in their everyday actions (Euromonitor International's Voice of the Consumer Lifestyles Survey 2021). Yet only 15% of all hot beverage products sold globally carried some sort of environmental or sustainable positioning in 2020. This suggests that hot drinks brands globally are potentially missing out on a way to appeal to consumers, particularly outside of developed markets.

Hot Drinks SKUs sustainability

Source: Euromonitor International

Large geographical differences found in sustainable products

Western Europe has a notably higher number of sustainably positioned products than any other region. Of the ten countries where sustainability claims are the highest in hot beverages, eight are found in Europe. In Denmark, the global leader, four of every five products carry such a claim. This would be understandable if Europeans showed higher interest in the environment than consumers in other regions, but they do not. In fact, Europeans are slightly under the global average in reported environmental interest.

That means that outside of Western Europe, there exist major demand gaps where consumers have at least a reported interest in more sustainable lifestyles but few hot beverages that speak to this. 79% of Brazilians, for example, report an interest in sustainable lifestyles but just 13% of hot beverage products in Brazil carry a sustainability claim. In comparison, 59% of Germans report they are actively pursuing a more sustainable lifestyle, yet 36% of hot beverage SKUs in Germany in some way promote themselves as sustainable.

Cost is the most likely explanation

The disconnect can be best explained by the average premium that consumers have to pay for a more sustainable hot beverage. In seven of the ten leading tea markets globally, teas that carry the claim “environmentally friendly” or some close variation have prices far higher than tea as a whole (in Turkey, that claim is associated with a 625% jump in price!). The only exception among developing countries, India, also happens to be the only developing country that has Europe-like proportions of its hot drinks market carrying sustainability claims.

Median Tea Price

Source: Euromonitor International

It is easy to understand why, for example, Russians are on the whole unwilling to pay four times as much for tea that carries a sustainability claim, even though a clear majority have an interest in taking steps to help the environment. It is not that they are uninterested in tea that has a lighter footprint on the environment, but that such tea is prohibitively expensive.

Sustainable products should not be luxury goods

As long as sustainability is treated as a premium add-on to beverages it will remain of limited appeal to many of the world’s consumers. India shows though that it is possible to offer products at a price level that is within reach of significant numbers of consumers even in lower-income countries. If the hot beverage industry is seriously interested in becoming more sustainable it will have to start offering products that are both environmentally friendly and at lower price points.

To learn more, access the report: Towards a More Sustainable Coffee and Tea Industry

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