Hot Drinks in Bulgaria

Hot drinks in 2021: The big picture

On-trade sales of hot drinks in Bulgaria saw a slow recovery in 2021, whilst the lasting trend of preparing coffee at home and increased brand variety in modern grocery outlets and online continued to drive positive dynamic growth in retail. Fresh coffee beans recorded outstanding growth due to the increasing popularity of pod machines and automatic coffee makers, and tea continued to evolve into an indulgent health and wellness drink for Bulgarian consumers as opposed to a beverage for the cold and flu season.

Premiumisation trend in hot drinks drives higher value growth in 2021

The premiumisation trend in hot drinks stimulated strong value growth in 2021 and this is likely to continue over the forecast period despite the economic slowdown post COVID-19. The coffee and tea culture is developing in Bulgaria, with an increased focus on the home preparation of hot beverages.

Hot drinks is increasingly competitive with key on-trade players expanding in retail

Following the successful launch of Costa Coffee by Coca Cola HBC Bulgaria in off-trade, in 2021 another popular premium coffee shop brand expanded in retail, Starbucks Coffee distributed by Nestlé Bulgaria. Both legacy brands saw a positive performance in the current period.

Modern grocery retailers remains the key channel for coffee

During the pandemic, modern grocery emerged as the preferred and one of the fastest growing retail channels thanks to the COVID-19 safety measures introduced by retailers, as well the as product variety on offer. Consumers valued even more the convenience of purchasing everything in one place and avoided frequent store visits.

Despite gradual recovery in on-trade in 2021, foodservice remains seriously hit by COVID-19’s restrictive measures

The foodservice industry was one of the most affected industries during the COVID-19 pandemic. The reopening in May 2021 followed by the record strong summer months in July and August brought some optimism to foodservice owners that full recovery is imminent; however, the fourth wave of COVID-19 is expected to cause another closure and/or restrictive measures in Q4 of 2021, which will push the recovery of foodservice to 2022 or even 2023.

Brand portfolio optimisation to overcome the upcoming rise in unit prices

COVID-19 brought disruption in the supply chain and stock price of coffee, cocoa and tea in international markets. While the 2020 unit price in hot drinks was hardly affected due to availability and the utilising of available volumes, in 2021, brand owners will be pressured to introduce new higher prices, especially in coffee.