Retail current value sales of better for you (BFY) beverages rose at their most rapid rate in more than a decade during 2020. This was driven by an increase in the unit price, with retail volume sales actually falling slightly.
BFY reduced caffeine hot drinks saw the fastest growth in retail current value sales of BFY beverages during 2020, amid a surge in demand for reduced caffeine fresh coffee, decaffeinated instant coffee mixes and decaffeinated instant standard coffee. Demand for reduced caffeine tea also rose, albeit much more modestly.
Retail volume sales of BFY beverages declined during 2020, partly because a growing number of consumers switched to unsweetened beverages, such as kombucha, RTD tea and flavoured bottled water. A so-called ‘soda tax’ on sugary drinks that was introduced in the region of Catalonia – the second-largest of the country’s 17 regions in terms of population – during 2017 also played a role in this, albeit a marginal one at national level.
Retail current value sales of BFY beverages are forecast to be flat in 2020 but will come close to matching the performance of the review period during the forecast period as a whole. The economic uncertainty engendered by the pandemic will linger into 2021, which will weigh on consumer confidence.
The lingering economic impact of COVID-19 may have a negative effect on the purchasing power of local consumers. This may lead some manufacturers to reduce their product ranges and launch fewer brand extensions and new offerings.
With consumers likely to be more price sensitive during the forecast period due to the lingering economic impact of COVID-19, this may boost the retail value share of private label, which is already a significant presence in BFY beverages. Mercadona, the country’s largest grocery retail chain, is particularly well positioned to exploit this trend, as it already offers a wide range of BFY beverages under its Hacendado brand.
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