Other Hot Drinks in Israel

PROSPECTS

Parents try to avoid sugary beverages for children

Health awareness is rising and consumers are becoming increasingly concerned about their sugar consumption, as well as their children's. The negative impact continued to be felt within other hot drinks in 2018, which is comprised of sugary chocolate-based flavoured powder drinks, with the category seeing a slight decline.

Unit prices drop due to growing presence of private label

The average unit price of other hot drinks is also in decline too, thanks to the increased presence of private label products. Children tend to be loyal to specific flavours and therefore specific brands too, which has allowed Strauss Group Ltd to dominate the category for many years, while private label and other, smaller brands have only succeeded in gaining limited share.

Healthier or premium options offer potential

With other areas of non-alcoholic drinks, such as coffee, benefiting from a trend towards premiumisation there is the potential for this to offer some scope for development within other hot drinks. Companies could look to target Millennials with the offer of more indulgent options, with a number of cafés already successfully offering premium hot chocolate, such as Landwer Café and Java.

COMPETITIVE LANDSCAPE

Strauss Group Ltd leads with Chocolit

Strauss Group Ltd continues to dominate other hot drinks with its well-established brand Chocolit, a nostalgic brand that the vast majority of consumers in Israel are familiar with. The company launched a campaign at the end of the review period focusing exactly on the nostalgia associated with the brand, with it encouraging parents to remember games from their childhood and play them with their children.

Other hot drinks lacks marketing support

With interest falling due to health concerns, and with a general lack of competition for leading player Strauss, there was limited marketing seen within other hot drinks towards the end of the review period. Unless new players decide to enter the category then this unlikely to change, with smaller players lacking the funds while the two leading players are investing in more dynamic areas of their businesses.

Other hot drinks becomes increasingly consolidated

With the Max Brenner brand of chocolate-based flavoured powder drinks disappearing from shelves, following Strauss Group’s decision to sell the brand in 2017, there remains only a small number of players left in the market. With the category declining there seems little scope for new entrants, with Strauss having a loyal brand following while private label wins favour among price-conscious families.

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