Hot Drinks: Quarterly Briefing Q4 2018

Key Findings

Q4 sees minor revisions to global hot drinks forecasts

Forecast growth for the global hot drinks industry was adjusted by USD587 million over the 2022 baseline in Q4. This was a relatively minor change in the wider context of the industry and represents only about three-tenths of a percentage point off the baseline market size estimate for 2022.

Industry’s resilience to economic trouble will help it stay relatively insulated from the effects of Brexit

The hot drinks industry is in general better able to ride out larger economic trouble than the rest of the beverage industry, a reflection both of the relatively affordable nature of most hot drinks products as well as the importance consumers place on them. This means that while macroeconomic shocks like a hard Brexit can have measurable effects on individual markets, the global effects tend to be relatively minor.

Wave of moves to diversify among the major European coffee players

Jacobs Douwe Egberts (JDE) struck a deal with illycaffé to jointly produce Nespresso-compatible pods, and also acquired Swedish office coffee supplier JOBmeal. Lavazza also made a major investment in office coffee in Q4, with the purchase of Mars’ office coffee business.

Several troubled tea markets see major investment

JDE formed a joint venture with a local tea company in Turkey to make a play for a large hot drinks market where it has so far failed to establish a major role. Meanwhile, Orimi Trade launched a new line of green tea in Russia, which like Turkey is a major tea market that has seen some turbulence in recent years, but which is beginning to recover.