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Hot Drinks Quarterly Statement Q3 2021

September 2021

Changing pandemic forecasts remain an issue for hot drinks in Q3 but industry focus is increasingly shifting to a variety of second-order effects from the pandemic, such as offering products to a newly remote workforce and dealing with the effects of widespread inflation.

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Key findings

Q3 revisions to hot drinks forecast are relatively small as the pandemic continues

The Delta variant of the coronavirus was already present by Q2, so as it has spread across the world in the past few months revisions to hot drinks forecasts have not been dramatic. New lockdown restrictions in much of Asia are the most notable effect. Looking ahead, much depends on the pace of global vaccination efforts and the ability of future mutations to break through the protection of vaccines.

“Breakthrough” mutations would have uneven effects on global hot drinks

The existence of a variant capable of getting through vaccine protection would lead to a new wave of consumers moving into the home. This would be a boost for retail sales of hot drinks in many areas, although in others the negative economic effects of new lockdowns would overwhelm this effect and lead to a decline in sales. Everywhere foodservice and other out-of-home sales would take a large hit, although it is extremely unlikely to the extent of 2020 given that the vaccines should still offer at least some degree of protection to even a breakthrough variant.

Unilever’s new tea operations will re-shape the nature of the global tea industry

Unilever is preparing to spin off its tea brands into a new entity known as Ekaterra, which will for now remain a semi-independent business within the parent company but will likely see an IPO or sale in the near future. Ekaterra will be the largest tea company in the world by some distance but its brands inherit many challenges from Unilever.

The new remote work force and supply-side inflation are creating challenges for the industry in Q3 and beyond

In the long term, the two effects of the pandemic that will linger will be changes in the workforce and issues from the supply side. Remote working is here to stay and the industry is aggressively trying to shuffle its offerings to reach the new class of primarily remote white-collar workers. Meanwhile, multiple factors are driving up input costs, leading to difficult decisions about how much of price increases to pass onto the consumer and/or what strategies to adopt to attempt to mitigate them.

Introduction

Scope
Key findings

Q3 2021 Hot Drinks Update

Summary: The state of global hot drinks in 2021
Little variation to hot drinks forecasts in Q3 at a global level
Downgrades have a complex relationship with viral spread
More pessimistic scenarios decreasing in likelihood
The new shape of the workforce dominates corporate focus in Q3
A new Unilever tea division takes shape
Starbucks and Nestl é deepen their alliance
JAB re- organises its fast casual chains into Panera Brands
Pret prepares vending machines for the new world of hybrid work
To what extent are price increases reaching consumers?

Q3 2021 Macroeconomic Update

Strong global economic recovery underway
Downside risk factors remain significant

Q3 2021 Macroeconomic Update

Real GDP annual growth forecasts and revisions from last quarter, AE
Real GDP annual growth forecasts and revisions from last quarter, EMDE

About Our Industry Forecast Model

Euromonitor International and COVID-19: Forecasts and analysis
Data and reporting timeline
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