Hot Drinks in Malaysia

COVID-19 impact on hot drinks

The hot drinks market in Malaysia has only declined by a small amount in total sales terms in 2020, despite the large loss of custom in the foodservice channel as a result of measures to tackle COVID-19. While the on-trade has contended with outlet closures, restricted opening times and limited seating, the nationwide use of food delivery services has helped it prevent bigger losses.

COVID-19 country impact

Malaysian borders were closed to foreigners on 17 March. The Malaysia Movement Control Order (MCO) started on 18 March, and included measures such as limited operating hours for grocery retailers of 08.

Company response

Companies across the board in Malaysia, marketing-wise, have been very supportive of the decision for quarantine. Indeed, many have revised their advertisements to encourage at-home consumption.

Retailing shift

While foodservice is considered essential by the government and businesses in the channel have been allowed to continue operating in a takeaway and/or delivery capacity, the issue for the on-trade has been the lack of dine-in consumption on account of social distancing measures. Also, in terms of hot drinks, when customers are ordering for delivery, upon arrival their beverages might have cooled down thus changing the taste.

Foodservice vs retail split

Although most foodservice outlets in Malaysia were closed for less than a month at the outbreak of COVID-19, there were many businesses that individually decided to stay shut for a longer time in certain locations, up to three months. This contributed to not only a greater decline in on-trade hot drinks sales, but also a stronger shift to the retail channel, which some Malaysians have used to replicate the café experience at home, eg with fresh ground coffee pods.

What next for hot drinks?

COVID-19 is likely to impact the market for the next few years and possibly beyond due to some degree of social distancing remaining in place for the foreseeable future. Foodservice operators are still not able to serve at their previous maximum due to the strict measures in place.

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