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Strategy Briefing

Hot Drinks: Quarterly Statement Q3 2016

25 pages, Sep 2016

US$1,325

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The third quarter of 2016 opens amidst fresh uncertainty about the recent Brexit vote. While the direct impact of Brexit on the global hot drinks industry will likely be limited, it underscores the fragility of global consumer demand, which faces multiple headwinds in emerging and developed markets alike. That said, growth in hot drinks—coffee above all—remains strong, attracting investment from a range of newcomers looking to profit from the world’s ongoing thirst for premium caffeine.

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Overview

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Gain competitive intelligence about market leaders. Track key industry trends, opportunities and threats. Inform your marketing, brand, strategy and market development, sales and supply functions.

Slowing hot drinks demand in Latin America

The latest quarterly revision (Q3 2016) of the global hot drinks industry forecast model suggests a modest downgrade in growth prospects. The global Passport baseline CAGR for 2015-2020 value growth has been revised down from 3.4% to 3.2%. A nearly half percentage point downward revision in Latin American growth is a major contributor to this weakness; the US and now Western Europe are impacting global prospects.

Brazil’s downgrade is most significant

A deterioration in Brazil’s GDP forecast for 2016 is the single biggest contributor to global weakness. In value terms, the Brazilian forecast for total hot drinks sales in 2020 is estimated to be US$270 million less than previously forecast.

Coffee hardest hit

The downgrade in global hot drinks prospects will not be felt equally across all categories. Coffee categories are disproportionately affected by downgrades for the US, Brazil and Western Europe, which together account for close to one half of global coffee retail value sales.

Local players still thriving in resilient Asian markets

Though a rebalancing Chinese economy remains an ongoing concern, a number of Asian markets – India above all – have thus far proven quite resilient in the face of a slowing global demand environment. This is a real boost for a number of local players, which have seen thriving sales, and a potential acquisition/partnership opportunity for global players looking to counter heavy exposure to slowing demand in the US, Latin America and Western Europe.

Emerging Asian demand powerful, but volatile

Whilst growing spending power in Southeast Asia represents a real opportunity for hot drinks players, volatility is inevitable in the near- to mid-term. Any pull-back in emerging Asia would be especially damaging for instant coffee players, with instant coffee demand notably sensitive to fluctuations in consumer incomes.

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K ey findings

Executive summary

GDP forecasts: Revisions over last quarter

Forecast Update

Global hot drinks sees further downward revision for Q3

Major downgrades in North America and Western Europe

Steadily worsening outlook as 2016 goes on

Coffee hardest hit by quarterly revisions

Biggest downgrades in Western Europe worrying for major brands

Brexit worse case scenario significant, but survivable

Largest players face significant exposure to downgraded markets

Strong exposure to upgraded markets favours these local giants

Potential Asian downturn a concern for instant coffee players

Threats to the hot drinks industry through 2020

Hot Drinks: Quarterly Statement Q3 2016 – Industry Developments

Key developments in hot drinks over the last quarter

Coca-Cola enters retail coffee market

Cott announces purchase of S&D Coffee & Tea

Nestlé announces big investment in Milo

Political unrest affects foodservice sector in US and Europe

About the Industry Forecast Models

About Euromonitor International ’ s Industry Forecast Model

Soft drivers and the Industry Forecast Model

About the industry Forecast Models

Key applications for industry forecast models

Why buy this report?

Want to find out more about this report?

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Megatrends

Strategy Briefing

Hot Drinks: Quarterly Statement Q3 2016

New Report Guarantee

About This Report

New Report Guarantee

Overview

Why buy this report?

Slowing hot drinks demand in Latin America

Brazil’s downgrade is most significant

Coffee hardest hit

Local players still thriving in resilient Asian markets

Emerging Asian demand powerful, but volatile

Want to find out more about this report?

Table of Contents

K ey findings

Executive summary

GDP forecasts: Revisions over last quarter

Forecast Update

Global hot drinks sees further downward revision for Q3

Major downgrades in North America and Western Europe

Steadily worsening outlook as 2016 goes on

Coffee hardest hit by quarterly revisions

Biggest downgrades in Western Europe worrying for major brands

Brexit worse case scenario significant, but survivable

Largest players face significant exposure to downgraded markets

Strong exposure to upgraded markets favours these local giants

Potential Asian downturn a concern for instant coffee players

Threats to the hot drinks industry through 2020

Hot Drinks: Quarterly Statement Q3 2016 – Industry Developments

Key developments in hot drinks over the last quarter

Coca-Cola enters retail coffee market

Cott announces purchase of S&D Coffee & Tea

Nestlé announces big investment in Milo

Political unrest affects foodservice sector in US and Europe

About the Industry Forecast Models

About Euromonitor International ’ s Industry Forecast Model

Soft drivers and the Industry Forecast Model

About the industry Forecast Models

Key applications for industry forecast models

Why buy this report?

Want to find out more about this report?

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