RTD Coffee in Germany

2020 IMPACT

RTD coffee slumps as Coronavirus (COVID-19) weakens the demand for impulse-driven products

Following strong off-trade volume and current value growth, albeit from a low sales base, RTD coffee is projected to see a decline over 2020 as a whole. The measures taken from March 2020 to stem the spread of COVID-19 in the country hurt the development of the category.

Hot but shorter summer and the COVID-19-accelerated do-it-yourself trend dampen sales of RTD coffee in 2020

While the German summer was again dry and hot in 2020, the season was shorter than in previous years. RTD coffee or “iced coffee” depends on seasonal sales and many consumers stayed at home and away from workplaces and social gatherings due to the COVID-19 crisis.

Strong promotional activities help the main players to minimise the negative impact of COVID-19 on impulse products

The category faced severe challenges during and beyond the lockdown as impulse consumption occasions remained limited and eschewed by many consumers. However, the leading players, branded and private label, have tended to consolidate their positions by investing in strong promotional activities in retail channels, including major supermarkets and discounters.

RECOVERY AND OPPORTUNITIES

Uncertain future for RTD coffee as lingering impact of COVID-19 on impulse consumption and convenience channels threatens the category

The recovery of RTD coffee is expected to be slow, with off- and on-trade volume and value (at constant 2020 prices) sales unlikely to return to their 2019 levels before the end of the forecast period. Small formats for on-the-go consumption, which rely heavily on impulse purchases and convenience channels like forecourt retailers, are expected to face the biggest challenges.

Innovation is likely to be the key avenue to growth in the short to medium term as players try to engage with younger and health-orientated consumers

Over the forecast period, innovation is predicted to be the key growth driver in RTD coffee. While the consumption of impulse products is expected to recover slowly, RTD coffee is still popular with younger consumers, which affords innovation and growth opportunities.

Vending offers potential alternative impulse and convenience channel as the effects of the pandemic linger

As RTD coffee is expected to continue to be heavily reliant on impulse and convenience channels, the distribution focus is likely to shift to other types of retailers. E-commerce is not a realistic option as RTD coffee products often contain fresh milk, which has a short shelf life.