Hot Drinks in Egypt

Slower growth for hot drinks in Egypt

Hot drinks in Egypt experienced a slowdown in growth in 2018, which was a direct result of the ongoing high inflation since late 2016. The International Monetary Fund (IMF) loan that was signed in late 2016 had accompanying economic measures to be taken, which included the application of Value Added Tax (VAT) and the removal of fuel and power subsidies.

Constrained budgets lead to changes in consumption

With the recent price increases, consumers have opted to change their consumption habits, in light of their more constrained budgets. Within hot drinks, tea and coffee are considered essential products by many Egyptian consumers.

Manufacturers react to inflation

In light of ongoing high inflation, increased costs of production and importing, and consumers opting for cheaper alternatives, manufacturers have opted to increase their promotions to attract price-orientated consumers. Brands promotions can be seen in distribution channels, especially in hypermarkets, where volume sales are significant.

New product developments

In 2018, there were no significant new product introductions, owing in large part to the state of the market and its uncertainty. Moreover, market saturation has been reached in some categories, although there is scope for new flavours to be introduced, or products with a health and wellness positioning, where significant potential exists, as health awareness increases.

Hot drinks forecasts

In the short to mid term, inflation is expected to remain high as the economic measures take effect. As such, market performance is expected to be slow, with diminished growth figures compared to the pre-devaluation performance, Hot drinks sales are, however, expected to continue to grow, owing to Egyptian consumers’ strong habit of drinking tea and coffee.

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