Q2 of 2018 was a positive one for the global hot drinks industry, with all major subcategories seeing upwards revisions from baseline thanks to good economic news in Brazil, China, and the US. In corporate news, cold coffee, sustainable approaches to to-go coffee, and the Indian subcontinent were among the areas that saw particularly high levels of activity in Q2.
Positive economic news in many key hot drinks markets led to upwards revisions of 2022 forecasts by three quarters of a billion dollars over baseline. All three major subcategories saw positive upgrades, with coffee seeing the largest. Overall, this remains a small change in a relative sense though, and amounts to less than half of a percent deviation from the baseline forecasts.
Most changes to baseline forecasts were caused by new GDP growth projections, especially in large hot drinks market like the US and China. Hot drinks demand exhibits an observable relationship with GDP growth, although one less strong than in seen in many consumer goods industries because of the nature of hot drinks consumption.
With the slowing growth of coffee pods in much of Europe and North America, cold coffee has become a leading source of coffee growth, especially in the United States. The newly formed Keurig Dr Pepper looks to take advantage of its combined hot and soft drinks capabilities to enter this expanding market, while Nestlé adds new nitro RTD cans onto the Nescafé brand to capitalize on this trend.
The slowing growth of pods and the pledges of the major players to make their pods recyclable means that the sustainability of pods is less of an issue than it used to be. Instead, sustainability concerns have shifted to single-use to-go cups. While campaigners failed to pass the “latte levy” in the UK, similar measures are being debated elsewhere and many companies are pre-emptively taking action to encourage the use of reusable or recyclable cups.
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