While foodservice sales of other hot drinks inevitably fell as a result of the closure of cafés, restaurants and bars during lockdown and subsequent restrictions on outlets’ operations in order to maintain social distancing, the impact was not as severe as in the coffee and tea categories. This was largely due to the fact that the first lockdown restrictions occurred between late March and the beginning of June, while consumption of chocolate-based flavoured powder drinks, the dominant category in other hot drinks, is highly seasonal and primarily focused on the winter months.
Having witnessed two consecutive years of decline in both current value and volume terms, other hot drinks has seen retail sales of other hot drinks boosted by measures to contain the COVID-19 pandemic. A number of factors supported the rise in at-home consumption of other hot drinks and resultant increase in demand through retail channels, including restrictions on the operations of foodservice outlets (including closures during lockdown); large numbers of office workers shifting to working from home; and schoolchildren, a key consumer group for chocolate-based flavoured powder drinks, studying at home due to school closures.
Nestlé Nederland BV retains a strong lead in other hot drinks with the Nesquik and Nestlé brands. The company has seen a modest spike in retail sales in 2020 as a result of the COVID-19 crisis, serving to boost its value share.
Having been less dramatically affected by COVID-19 than coffee or tea, other hot drinks is expected to see sales return to normal quickly as the threat from the disease diminishes, with both retail and foodservice volumes set to return to pre-COVID-19 levels in 2021. The category is then expected to see gradual year-on-year decline in retail volumes, and stagnation in foodservice volumes throughout the rest of the forecast period as it faces a number of challenges.
Chocolate-based flavoured powder drinks is also set to continue to struggle to address the challenge represented by ready-to-drink chocolate milk. While chocolate milk is a very popular product in the Netherlands, the Dutch generally prefer hot chocolate made from ready-to-drink chocolate milk rather than using chocolate-based flavoured powder drinks.
With the category occupying only a minor role in the Dutch hot drinks market and facing a number of challenges, other hot drinks is unlikely to attract significant manufacturer investment in new product development, marketing or promotion during the forecast period. With other hot drinks offering limited growth potential and little consumer interest, major hot drinks manufacturers are likely to focus investment on growth areas in coffee and tea.
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This report originates from Passport, our Other Hot Drinks research and analysis database.
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