Hot Drinks in China

Hot drinks sustains moderate retail volume growth

Hot drinks continued to post moderate retail volume growth, though slower than in 2017, mainly supported by the steady performances of coffee, tea and other hot drinks. Retail volume sales of instant tea declined due to increasing health concerns and cross-category competition, while growth slowed in flavoured powder drinks in other hot drinks for the same reasons.

Younger consumers drive sales growth

Younger consumers – those under 40 – as a group with high purchasing power continue to shape new consumption behaviour and drive innovation. Manufacturers targeted various occasions in consumers’ daily work and home lives to expand business.

Leading players help maintain a stable competitive landscape

The competitive landscape remained stable. Nestlé (China) deepened cooperation with JD.

Players start to attract consumers through claims about techniques

Even though few new products were introduced in 2018, limited new product developments focused on technique claims to appeal to increasingly sophisticated consumers – some players highlighted their processing methods to differentiate their products, especially in coffee and tea. For example, within the Starbucks Single Origin range, its Papua New Guinea Highlands variant employs the wet method of coffee processing thus enabling greater acidity and a refreshing flavour.

Consumption scenarios promote creation

In the face of fierce competition from RTD drinks and fresh products from coffee shops and street stands, players in hot drinks sought to retain and attract consumers through innovations that catered to consumption needs in different scenarios. For example, drip bag coffee is easier to prepare than coffee beans, and more economical than products purchased from coffee shops.

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