Other Hot Drinks in the United Kingdom

2020 IMPACT

Stockpiling effect benefits other hot drinks

The national lockdown during the first wave of the pandemic in the UK in March 2020 and the introduction of social distancing measures in order to fight the spread of virus has strongly impacted sales of other hot drinks via foodservice with the channel set to record double-digit volume decline over the year. Indeed, foodservice chocolate-based flavoured powder drinks sales have been particularly strongly hit as they dominate sales through this channel, due to the loss of out-of-home social occasions and especially as a consequence of the second wave, which is likely to impact autumn and pre-Christmas sales.

Chocolate-based flavoured powder drinks sales rise through retail driven by at-home demand

Chocolate-based flavoured powder drinks is set to be the only positive performer within the category in retail terms in 2020, driven by at-home consumption trends. Autumn/winter demand is also likely to boost demand for this drink type towards the end of the year, as the country faces a second national lockdown and the re-introduction of various restrictions.

Mondelez retains leadership due to wide portfolio of chocolate-based flavoured powder drinks

Mondelez UK Ltd retained its leadership of other hot drinks in 2020, due to its strength in the dominant chocolate-based flavoured powder drinks with its brand Cadbury which offers a range of indulgent products inspired by popular chocolate confectionery including Cadbury Wispa, while its brand Green & Black's Organic Hot Chocolate continued to gain value share by appealing to consumers’ sentiment for more sustainable products. Nevertheless, the player lost marginal value share to GlaxoSmithKline Plc in 2020; despite ongoing declining demand for malt-based hot drinks, the latter continued to gain ground through its Horlicks and Horlicks Light variants.

RECOVERY AND OPPORTUNITIES

Slow recovery for other hot drinks through foodservice with lockdown measures likely to continue to impact independent outlets

Due to the pandemic, an increasing number of foodservice companies, particularly independents which do not have the financial support that chained players enjoy, have faced liquidity problems due to lower sales volumes as a result of both lockdown measures and social distancing policies. This situation is expected to continue for some time in the near future, challenging foodservice outlets, which could push many of them out of business.

Premiumisation and healthier variants remain key opportunities for other hot drinks despite overall declining retail demand

A return in shifting consumption occasions for other hot drinks towards foodservice over the course of the forecast period is set to have a negative impact on retail demand, with the latter predicted to return to its declining trend as witnessed towards the end of the review period. This is despite the fact that heading into winter 2019/2020, consumers are likely to spend more time at home, offering some opportunities for chocolate-flavoured powder drinks retail sales.

Smaller distribution channels offer further opportunities

The increasing demand for other hot drinks through e-commerce in 2020 due to social distancing measures and greater demand for online sales of groceries during the pandemic, will continue to rise over the forecast period. It will therefore, be important for other hot drinks brands to reinforce their online presence and media strategies, looking also to implement or expand their direct-to-consumer platforms.