Q2 saw only minor revisions to forecast growth projections, with a global upgrade of just USD13 million from the 2021 baseline. JAB Holdings continued to actively build its coffee portfolio, contributing to the increasing consolidation of global coffee, while concerns grew about the threat of rising protectionist sentiment in the US.
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The global hot drinks market saw an upgrade of USD13 million above the 2021 baseline in Q2; a negligible revision in the overall context of the global hot drinks market. Tea was the category that saw the most movement, with a positive upgrade of over USD80 million from baseline, while coffee and other hot drinks saw downgrades. However, in no case were these revisions especially significant compared with the previous baseline.
With economic forecasts largely stable in Q2, the largest source of revisions was new demographic data which indicated that several markets have a smaller number of households with children than before. Several countries that saw these downgrades are among the more important markets for the highly child-centred category of flavoured powder drinks, including Brazil, Mexico and Spain.
In 2017, JAB Holdings purchased American fast-casual chain Panera Bread, and announced it was looking to sell luxury brand Jimmy Choo, while Jacobs Douwe Egberts (which is owned by JAB) bought several coffee brands in Brazil, and finalised a deal to acquire Singapore-based Super Group. These moves are putting pressure on other major coffee players, with particularly interesting results among several large Italian coffee companies.
Rising commodity costs forced US coffee market leader JM Smucker to raise prices in early 2017, while several companies with a major stake in the US market publicly expressed concerns about the threat of new trade barriers going up in the US. Should new tariffs be imposed, the effect would not only be significant on hot drinks sales in the US itself, but also on sales in countries reliant on the US as a trade partner, such as China and Mexico.