Q4 was a positive one for the global hot drinks industry, with positive revisions of USD420 million over the 2021 baseline, thanks to improving economic forecasts in key markets like China and Brazil. It was also a busy quarter for acquisitions, with Nestlé taking control of Blue Bottle, and Unilever buying Pukka Herbs, signifying the growing importance of ethically-sourced products to the global hot drinks market.
The global hot drinks industry saw an improved outlook in Q4, with positive forecast revisions amounting to USD420 million over the 2021 baseline. This was primarily due to revised GDP forecasts in major emerging markets, especially China, Brazil and Russia. In the overall context of the global hot drinks market, however, the scale of this revision was small, and only amounts to roughly a third of a per cent of the global retail market.
China saw a small revision in Q4 ,with a rise in forecast CAGR over the next few years of around a 10th of a percentage point. Because of the size of the Chinese market though, this tiny change was still enough to make it the single largest source of absolute revisions to the global market this quarter. This is reflective of China’s major role in global hot drinks, which has grown considerably in recent years, as large numbers of Chinese consumers have switched from loose teas to packaged, branded products.
Global tea leader Unilever purchased Pukka Herbs ,and global coffee leader Nestlé took a controlling stake in Blue Bottle in Q4, both examples of major global players absorbing small, ethically-focused premium brands. The purchases, along with other similar ones that have occurred in the recent past (notably, Lavazza’s purchase of organic Canadian coffee brand Kicking Horse) show that sustainable and ethical products are growing in importance to the major players in global hot drinks.
Other notable moves in Q4 include Massimo Zanetti’s purchase of a coffee roaster in Indonesia and JDE’s decision to expand its L’Or line of pods into Brazil. These actions show that pods and developing markets are viewed as promising targets for growth in global hot drinks.
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