Up until August 2021, social distancing measures to curb the spread of COVID-19 remained in place in Singapore, particularly after the emergence of several clusters which prompted the government to implement stricter control measures in July 2021. As such, retail sales of hot drinks have continued to rise.
As there are still some restrictions in place in foodservice establishments in terms of capacity, which affects overall demand through this channel, hot drinks marketed as being suitable for at-home consumption continue to experience rising demand. For instance, fresh ground coffee pods, a dynamic category which addresses demand for the café experience in the home, is being further supported by several new products including a Starbucks-branded Nespresso line and Nescafé Dolce Gusto-compatible pods.
Nestlé Singapore Pte Ltd is set to retain its dominance of hot drinks in 2021 in retail value share terms, due to its extensive portfolio across coffee and other hot drinks. In 2021, the company has continued to release new products to generate consumer interest, including new variants of fresh ground coffee pods under the Starbucks at Home line for its Nespresso machines, and a new instant coffee mix called Nescafé Blend & Brew Rich.
In 2021, the physical retail environment is proving to be more stable compared to 2020, as most retailers have remained open throughout the year, including food and beverages specialist retailers, which were forced to close temporarily during the Circuit Breaker period. While in 2020, demand for groceries including hot drinks through e-commerce received a major boost as many consumers turned to this channel as a perceived safer way of shopping, in 2021, they are growing increasingly comfortable with returning to physical retailers, and thus the share of e-commerce and sales are set to normalise.
Retail commands a larger proportion of hot drinks’ sales in Singapore compared to foodservice, in addition to remaining higher than pre-pandemic levels in 2021 due to ongoing restrictions for the foodservice channel. Singapore has witnessed several periods where dine-in has not been permitted in 2021, resulting in significant declines for horeca.
A stronger return to foodservice is expected to occur from 2022 onwards, as a higher proportion of the local population is vaccinated. Singapore is also likely to attempt to ease its border restrictions over the forecast period, which would also lead to a gradual increase in inbound tourism that will also benefit foodservice consumption of hot drinks.
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