Hot drinks in Singapore is experiencing rising retail prices amid inflation, resulting in historical highs compared to the average of the review period. Price spikes are attributable to global commodity crunches that are giving rise to snowballing costs – skyrocketing energy prices have led to more expensive production for raw materials, packaging, as well as logistics.
Beyond the inevitable transfer of growing costs to consumers, hot drinks in Singapore is now subject to Nutri-Grade labelling as of 30 December 2022 (also impacting soft drinks and drinking milk products). The objective of the initiative is to increase consumer awareness through nutrient transparency and drive healthier habits – efficacy is expected with increasingly health- conscious consumers, as noted by Euromonitor International’s Voice of the Consumer: Lifestyles Survey 2022, which highlighted an increase in the share of consumers closely reading nutritional labels on packaged food and beverages (rising to 38.
In retail value share terms, the competitive landscape continues to be dominated by Nestlé Singapore Pte Ltd, supported by its three leading brands Milo, Nespresso, and Nescafé. Nestlé enjoys a longstanding presence in the local market and makes consistent efforts to strengthen brand equity with active consumer engagement.
With the full resumption of mobile lifestyles in 2022, supermarkets and hypermarkets continued to gain share within hot drinks, as local consumers returned to physical stores on a more frequent basis for their grocery shopping, leading to marginal share loss for retail e-commerce due to the proximity of stores in residential areas. Nevertheless, sales through the latter continue to grow.
In line with an easing of restrictions in Singapore, demand for hot drinks through foodservice has notably increased in 2022, leading to declining volumes through retail. Nevertheless, demand through the latter channel remains significantly higher than pre-pandemic levels due to habit persistence and hybrid working measures.
Dairy substitution as part of instant formats of hot drinks is gaining in prominence, offering lactose-intolerant consumers new drink options as well as catering for those seeking sustainable alternatives as they perceive that plant-based drinks and food as healthier for the body and less detrimental to the environment in terms of production. This is evident in instant coffee mixes which are based on oat and almond milk and offered by Nescafé Dolce Gusto pods, and in instant tea mixes as offered by Lipton Sesame Soy Milk Tea.
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Hot Drinks
This report originates from Passport, our Hot Drinks research and analysis database.
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