Hot Drinks in India

COVID-19 impact on hot drinks

Tea, coffee, and other hot drinks are universally consumed products in India, and as a result retail sales were to some extent insulated from the impact of the pandemic. The end of the first quarter and the entire second quarter of the calendar year saw consumers stockpiling these products, as they wanted to make fewer trips to grocery stores in order to reduce the risk of contracting coronavirus.

COVID-19 country impact

India’s lockdown came into effect from 25 March 2020. All forms of movement were restricted for consumers, apart from those classified as essential workers, including medical workers, police and grocery shop owners.

Company response

In light of the COVID-19 pandemic, companies are trying new models and retail formats, creating on-trade experience and coming up with new packaging formats in an effort to attract consumers. Hindustan Unilever (HUL) launched an app call Shikhar, an online ordering platform designed exclusively for HUL retailers.

Retailing shift

Most large companies started spending on e-commerce platforms or other models as a result of the lockdown restrictions arising from COVID-19. Most major players registered 100% growth through their e-commerce channel after lockdown was relaxed.

Foodservice vs retail split

The 41-day lockdown resulted in close to zero sales for foodservice industry, as the majority of outlets were closed. There were also increases in prices of both tea and coffee as these are commodities, and were thus impacted by multiple factors, including weather conditions, and a lack of labour due to lockdown.

What next for hot drinks?

The retail sales growth for hot drinks will be fuelled by in-home consumption, at least over the next few years. The universality of these products, in conjunction with health benefits, especially in the case of tea and malt-based hot drinks, is set to drive performance following the pandemic.

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