Hot Drinks in Japan

Changing environment placing pressure on manufacturers

The Japanese hot drinks market is undergoing a process of significant upheaval, as the contraction and changing demographic profile of the population and rapidly evolving consumer lifestyles impact demand. Long-established traditions of consumption are being undermined, while the range of rival products compatible with evolving demand trends is expanding.

Growing manufacturer emphasis on convenience and on-the-go consumption

Hot drinks manufacturers face the challenge of adapting their offers to potentially challenging demand trends. The increasing importance of convenience to ever busier consumers is a key influence on demand, with consumers looking for products that require minimal preparation and can be consumed on-the-go.

Starbucks deal offers Nestlé opportunity to adapt to demand trends

Nestlé remained the clear leader in the Japanese hot drinks market in 2019. While the company has a presence in other hot drinks through the Milo brand, it is primarily reliant on coffee, in which it is the leading player.

Innovation targeting convenience and personalisation

Innovation in 2019 focused on targeting trends towards convenience and personalisation, as well as working to expand the range of potential consumption occasions for hot drinks. UCC Ueshima Coffee’s introduction of the My Coffee Style service in March 2019 highlighted manufacturers’ efforts to adapt to the influence of the Third Wave Coffee movement, which is underpinning demand for products with an authentic, artisanal-style positioning.

Challenging environment provides some opportunities for development

Hot drinks will face significant challenges during the 2019-2024 forecast period. The contraction and ageing of the population will act as a constraint on growth, while increasingly hectic consumer lifestyles are set to bolster the competitive threat from rival product categories such as RTD tea and coffee.

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