Affected by the closure of schools and the on-trade channel, besides the economic crisis and consumer income contraction due to the COVID-19 crisis, sales of NH beverages decreased in 2020, with consumers turning to substitutes such as tap water as a feasible and cheaper alternative. Though very heavy in minerals, and having had quality concerns in the past, Chile’s tap water is drinkable.
With a strong tea culture embedded in Chilean society, making it one of the countries with the highest tea consumption in the region, the shift in consumption occasions towards the home, caused by the closure of most of the Chilean on-trade channel during the COVID-19 crisis and lockdown, meant continuation in growth for NH fruit/herbal tea during 2020. The broad penetration enjoyed by Supremo, Club and Lipton brands in the modern and traditional channels sustained their share leadership during the crisis, leveraging their bigger marketing budgets and stronger supply chains.
The indulgence sought by consumers stranded at home made them willing to taste new flavours and products such as kombucha, which continued to draw consumer attention in 2020. Presenting itself as a healthier option, with some of the brands leveraging lifestyle and religious trends, such as vegan, halal and kosher, this product, which is manufactured with natural and organic ingredients, gained more accessibility with the do-it-yourself kits from companies such as Ghali Kombucha.
The reopening of the on-trade and institutional channels, that started in late August 2020, following nearly six months of closure, will bring Chile’s on-trade NH tea sales back to positive growth rates, absorbing the higher demand that was seen in the off-trade channel during the year. Moving forward, it is expected that the personal stock levels and the basket volumes will take longer to reach pre-crisis levels, as consumers recover from consecutive crises that affected the retail market, disrupting the supply chain, and many supermarkets that were looted and burned down are still to reopen in several regions of the country.
With the overall e-commerce environment experiencing an increase, being led by major players such as Coca-Cola and CCU with their well-structured websites, online sales of water are expected to continue gaining relevance over the forecast period, especially for flavoured and functional variants, given the constant availability of the diverse and extensive product portfolios of the brands in this space. New flavours, including mixes of vegetables and fruits, are appearing on the market, and appealing even more to consumers that want alternatives to sugary or tasteless products.
Even though it has been gaining penetration in the off-trade channel, a marketplace typically dominated by well-structured, large companies, the future of kombucha will rely heavily on local producers. Being mostly an organic and naturally healthy product, with little or no additives, the shelf life of this product is very limited, up to just six months, making cross-border trade in products a logistical challenge.
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