Hot Drinks in New Zealand

Maturity of demand translates to moderate sales growth in hot drinks

Sales of hot drinks in New Zealand continued to increase moderately in retail volume terms in 2019. Coffee remains the largest category, with demand split into two distinct consumer groups.

Health and wellness and indulgence remain at the forefront of innovation in hot drinks

With mass demand for hot drinks stable and focused on mainstream demand for traditional products such as instant coffee and black tea bags, there is little need for the industry leading players to innovate in order to maintain demand. However numerous industry players, including the leaders in specific categories and smaller emerging players with a niche positioning, responding to rising consumer demand for healthy products and the increasing interest in hot drinks that offer indulgence.

Nestlé continues to lead despite the strong challenges from Jacobs Douwe Egberts

2019 saw Nestlé New Zealand Ltd maintain its leading position in hot drinks via its two leading brands Nescafé in instant coffee and Milo in malt-based hot drinks. However, consumer interest in these two brands is waning and despite their traditional positioning and substantial and highly loyal consumer bases, Nestle’s leading hot drinks brands are likely to continue losing value share over the forecast period as new generations of consumers look beyond basic products and standard brands for added value that are not currently offered by Nescafé or Milo.

Innovation remains a constant presence in coffee, with local players coming to the fore in 2019

Coffee remained by far the most innovative category in hot drinks in New Zealand during 2019. This is a reflection of the country’s dynamic and exciting coffee culture as well as the fact that sales of tea and other hot drinks are dominated by traditional products that have remained little-changed for generations.

Sales to continue rising moderately, split between classic hot drinks and emerging products

The forecast period is likely to see the bulk of hot drink sales New Zealand accounted for by basic, traditional beverages such as instant coffee, black tea bags and malt-based hot drinks. Moreover, the leading brands that have been popular for decades are unlikely to face many headwinds, although it should be noted that the high sugar content of the leading brands in other hot drinks could present challenges in terms of waning consumer demand.

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