Hot Drinks in Lithuania

COVID-19 impact on hot drinks

The temporary closure of foodservice outlets from March to April as a result of the lockdown restrictions in Lithuania had only a marginally positive impact on the largest category of coffee, with a slight channel shift towards retail as a result of the home seclusion trend. Coffee’s increasing popularity amongst Lithuanians has been supported by a strong café culture, whereby consumers have attempted to replicate this environment in their homes by purchasing coffee machines which offer greater convenience.

COVID-19 country impact

The emergence of COVID-19 encouraged the Lithuanian Government to introduce quarantine status (lockdown) from 16-30 March 2020, with this extended several times. On 16 March, the country’s borders were closed to foreigners, regardless of the means of transport, excluding cargo and special transport, while all international outbound passenger travel was prohibited.

Company response

The leading players of overall hot drinks, Jacobs Douwe Egberts LT UAB, Paulig Baltic AS and Daisena UAB, unsurprisingly have a strong presence with the most popular category of coffee, with all three holding double-digit value share. Particularly tight competition has been noted between Paulig and Jacobs Douwe Egberts in the more dynamic fresh coffee, with the latter launching L'Or Nespresso-compatible pods which registered share gain in 2020.

Retailing shift

Modern grocery retailers such as supermarkets continued to dominate distribution of hot drinks in 2020, being deemed essential businesses during the lockdown. However, traditional independent small grocers gained some retail volume share offering greater convenience to older consumers as they are located in local neighbourhoods and reduced the need to visit large retailers with the virus in circulation.

Foodservice vs retail split

The smaller foodservice channel for hot drinks, foodservice, had been consistently recording more impressive volume growth rates prior to the pandemic compared to retail, driven by a growing café culture. Whilst this particularly benefited sales of coffee, tea also experienced growing demand through this channel whilst retail sales of tea continued to decline.

What next for hot drinks?

Despite ongoing restrictions heading into the forecast period in Lithuania, demand for hot drinks through foodservice is expected to experience a surge over 2021 after consumers have been forced to spend long periods of time at home. Nevertheless, while foodservice is set to outperform retail once again in terms of volume growth, the latter channel will continue to dominate sales of hot drinks, driven by coffee and increasing interest in more premium offers, different roasts and the expanding assortment offered by the category in terms of flavour innovation with local consumers becoming more confident about mixing coffee with caramel or using flavoured syrups to add interest.

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