In 2020, total volume and value sales of other hot drinks recorded positive growth, thanks to a large consumer base consisting of young adults and children, many more of whom were required to stay at home during the lockdown measures implemented by the Saudi government to contain the COVID-19 virus. According to industry sources, 60% of the local population is under the age of 30, with other hot drinks now being considered staple products that are consumed mainly at breakfast time or as a quick snack during the day.
On-trade volume in other hot drinks was relatively unaffected by the COVID-19 pandemic in 2020, since many of the options in this category are offered as part of foodservice combo meals and were still readily available through e-commerce food delivery platforms. In addition, foodservice outlets purchased stocks of chocolate-based flavoured powder drinks from off-trade retail grocery channels, thereby offsetting some of the impact.
In 2020, average unit prices of other hot drinks remained relatively stable, as there were little or no supply or distribution disruptions resulting from the impact of the COVID-19 pandemic. The leading player in chocolate-based flavoured powder drinks and malt-based drinks, Nestlé SA, benefits from a strong, stable national and regional network, and stocks of its Nesquik and Milo brands remained widely available across retail grocery channels.
Despite an increase in VAT over the forecast period, it is expected that other hot drinks will continue to register positive CAGR growth, as products in this category are now regarded as necessity purchases that parents buy for their children to be consumed as part of breakfast or as a healthy fortified functional meal replacement for young adults and children.
Health and wellness is likely to be a focal point for innovation in other hot drinks over the forecast period. Growing public concern about rising obesity rates in the wake of the COVID-19 pandemic will encourage companies to expand their offer of reduced sugar and sugar-free products, particularly as a new sugar tax is now in effect in Saudi Arabia.
Over the forecast period, Nestlé SA is expected to maintain its leading position, thanks to its strong supply and distribution network, brand loyal customers and healthy other hot drinks options. In addition, the company invests heavily in advertising on social media and satellite TV, and regularly offers in-store promotions and game apps featuring the Nesquik Bunny that successfully target children.
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