Where Consumers Shop for Hot Drinks

June 2023

Over the review period, both offline and e-commerce retail channels witnessed notable growth in response to increased demand for hot beverages prompted by the pandemic. This surge in demand had a significant impact on hot beverage trends across various retail channels. While modern food retailers continue to hold a dominant position in sales, e-commerce is gaining market penetration. This report explores the state of play of the global hot drinks distribution environment.

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This report comes in PPT.

Key Findings

Inflationary pressures affect hot drinks sales and shape consumer behaviour

The hot drinks industry faced another challenging year in 2022. Manufacturers experienced input cost rises and supply chain disruptions, with a significant impact on margins. As affordability becomes a priority amid the inflation surge, consumers are showing a tendency to switch to private label and seek cheaper outlets. At the same time, the on-trade is still recovering from the major losses registered in 2020, shifting consumer demand out-of-home.

Modern grocery retailers dominate, but small grocery outlets see stronger growth

Although small local grocers remain a key channel in many emerging markets, modern grocery retailers dominate sales in the hot drinks retail industry overall. In particular, supermarkets are the leading retail channel, while discounters saw their popularity rise in 2022, as consumer confidence deteriorated sharply amidst the cost of living crisis.

E-commerce continues to grow post-pandemic, with continued innovation

Both retail and foodservice hot drinks are aggressively moving online. New coffee and tea outlets are increasingly designed to facilitate rapid fulfilment of to-go orders, rather than encouraging lingering, as seen in previous years. Meanwhile, in retail, e-commerce is still a minority of overall buying but its share is growing annually, particularly in Asia Pacific and North America.

Consumers will continue to be price-sensitive in the near term

Global inflation is forecast to moderate towards 2024; meanwhile, discounters and warehouse clubs will gain continued traction as global consumers are more likely to focus on prices. To adapt to changing consumer behaviour and buying trends, an increasing number of companies in the hot beverages industry are making efforts to meet various occasions, which may be at-home or out-of-home, as well as on-the-go, through pick-up and delivery options.

Key findings
Inflationary pressures challenge the hot drinks industry
Coffee remains the major contributor to hot drinks value sales
Positive outlook for hot drinks sales over the forecast period
Sustainability pressures are becoming more acute for the industry
Retail offline dominates, but e-commerce continues to gain share
E-commerce continues to retain customers after the pandemic…
…with the US leading the channel shift
Modern grocery remains the main channel in hot drinks
Hypermarkets lose share globally, but remain the third largest channel
Costco catches up with discounters amid a toughening economic context
Nespresso expanding its new boutique concept to reaffirm the relevance of retail
Cutbacks benefit discounters
Aldi and Lidl maintain the leadership of global discounters
Budget-conscious consumers drive private label’s growth
Sales of private label are growing rapidly in Western Europe and North America
Modern grocery retailers support the penetration of own labels
Ending of pandemic-related slows down e-commerce sales growth
Asia Pacific is the regional leader in e-commerce sales of hot drinks
US and China-based players take the lead in global e-commerce retailing
Nestlé SA dominates online sales of hot drinks in the US
Food and beverage industry focusing on digital commerce
On-trade continues its gradual recovery in 2022
Subscription models to support on-trade recovery
Panera creates a loss leader subscription
Case study: Starbucks achieves success by embracing customisation with its mobile app
Hot drinks industry is set to grow over the forecast period
Inflation forecast to decline in 2023, with discounters benefiting as spending is squeezed
Striving to be everywhere as a brand strategy
Key takeaways

Hot Drinks

This is the aggregation of Coffee, Tea, and Other Hot Drinks.

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