Hot Drinks in Malaysia

Hot drinks growth gaining traction encouraged by improved consumer sentiment

In 2018 hot drinks registered higher growth compared to 2017, both in terms of foodservice and retail volume sales. This was driven mainly by recovering consumer sentiment and the removal of Goods and Services Tax (GST) from 1 June 2018, which saw lowered prices for hot drinks products.

Increased use of internet retailing to reach online shoppers

In view of a growing internet penetration rate in Malaysia, hot drinks players leveraged on internet retailing to appeal to millennials and online shoppers, while utilising their extensive delivery coverage to reach out to consumers living in suburban and rural areas. Although internet retailing’s contribution to total sales remained small, players actively created an online presence to stay ahead of competitors.

Nestlé (M) Bhd retains leading position

Nestlé (M) Bhd remained the top player in hot drinks with several leading brand names under its umbrella, namely Nescafé and Milo – the top brands in coffee and other hot drinks respectively. The player established strong resonance with Malaysian consumers due to its long-standing presence and expansive product portfolio.

New products tap into growing premiumisation and health advocacy

As Malaysians are increasingly knowledgeable about coffee and tea, more consumers demanded premium quality products to satisfy their sophisticated tastes. This saw a premiumisation movement in both coffee and tea in 2018, within which players launched speciality products with premium positioning, such as Essenso Microground Black Coffee by Super Food Technology Sdn Bhd – an instant standard coffee that mimics the taste of freshly brewed espresso.

Hot drinks expected to see slowed volume growth as category reaches maturity

Hot drinks is expected to record stable but slower retail volume growth over the forecast period. This is because coffee and tea consumption have long been an integral part of the local lifestyle, whereby the categories face saturation and maturity.

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