Hot Drinks in Norway

COVID-19 impact on hot drinks

COVID-19 will have a positive effect on off-trade volume sales of hot drinks in Norway during 2020. Amid school closures, more people working from home and significant decreases in both out-of-home socialising and travel, volume sales have shifted from the on-trade and B2B to retail.

COVID-19 country impact

On 12 March, the Norwegian government imposed a series of restrictions in an effort to contain the spread of COVID-19. All schools, universities and other educational institutions were closed, while cultural events and organised sports activities were cancelled.

Company response

The off-trade volume shares of the largest players in hot drinks were only modestly affected by COVID-19, with the main impact on retail value shares coming from new product launches. Jacobs Douwe Egberts Norge AS continues to lead hot drinks in terms of retail current value share, largely due to its leadership in coffee, which accounts for the bulk of retail value sales of hot drinks in Norway.

Retailing shift

COVID-19 has shifted volume sales of hot drinks from the on-trade to the off-trade, particularly discounters and supermarkets. For players with substantial off-trade distribution, the decline in on-trade demand has been largely compensated for by an increase in retail current value sales, but niche players with a focus on the foodservice sector have struggled.

Foodservice vs retail split

There was a dramatic shift in demand from retail to foodservice as people avoided crowded places for a significant amount of time following the lockdown, which began in mid-March. Even though bars, cafés, hotels and restaurants were allowed to remain open subject to the observation of social distancing rules and other restrictions, many closed voluntarily for a period due to a lack of business, as many cautious consumers chose to remain at home.

What next for hot drinks?

Increased home working is expected to continue to drive growth in retail volume and current value sales of hot drinks, particularly coffee, into 2021. However, working-from-home reached extreme levels during the lockdown that are unlikely to be repeated in 2021, so growth in volume and retail value sales of hot drinks will decelerate.

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