Other Hot Drinks in South Africa

PROSPECTS

Other plant-based hot drinks drives overall performance of other hot drinks, due to perceived healthier perception

Other hot drinks recorded a stable performance in retail volume terms, driven by the ongoing demand for the largest category of other plant-based hot drinks in 2019. Despite carrying a higher unit price compared to other types such as chocolate-based flavoured powder drinks and malt-based hot drinks, other plant-based hot drinks benefits from the rising health trend, as it is perceived to be a healthier alternative to hot chocolate or coffee.

Greater value added to malt-based hot drinks with healthier positioning

Despite declining retail volume sales in 2019, malt-based hot drinks recorded positive current value growth, supported by product innovation due to the launch of a new variant by leading brand Milo with 26% less sugar. This launch addresses the rising health trend and growing concern over the high sugar content of some flavoured powder drinks, while still retaining its strong positioning as a breakfast energy drink.

Stable demand for chocolate-based flavoured powder drinks with further potential offered by convenient pod format

Chocolate-based flavoured powder drinks continued to experience stable demand through both foodservice and retail in 2019, offering an indulgent treat for both children and adults. The emerging availability of hot chocolate capsules that are compatible with Nespresso pod coffee machines will continue to gain in popularity as they offer greater convenience for consumers at home.

COMPETITIVE LANDSCAPE

Nestlé strengthens leadership with wide innovative product portfolio

Despite challenging market conditions, Nestlé consolidated its leadership of other hot drinks in 2019 by gaining further value share in chocolate-based flavoured powder drinks which it dominates with popular brands Nestlé Hot Chocolate and Nesquik Chocolate, other plant-based hot drinks with Ricoffy, and malt-based hot drinks with Milo. The latter benefitted from the launch of a new variant with 26% less sugar, addressing demand for healthier products, while still offering lower-income consumers competitive prices, in addition to a wide range of pack sizes to offer greater flexibility in terms of budget.

Nomu continues to gain share with healthier variant of cocoa drink

While Nestlé dominates chocolate-based flavoured powder drinks in South Africa, third-ranked brand Nomu continued to gain value share and record impressive double-digit current value growth in 2019. The brand continues to attract high LSM consumers, with its latest release Nomu Unsweetened Cocoa Drink gaining greater shelf space in retailers.

Consistent share loss for National Brands with intensifying competition within other plant-based hot drinks

Second-ranked National Brands Ltd continued to lose strong value share and suffer declining current value sales in 2019, due to increasing competition within the category, with its well-known brands Frisco and Koffiehuis losing popularity in other plant-based hot drinks. This was due to the consolidation of leading player Nestlé and the increasing emergence of smaller players under “others”.

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