Where Consumers Shop for Hot Drinks

Key Findings

Closure of away-from-home channels affects the overall hot drinks industry and distribution channels

Retail hot drinks sales recorded significant growth in 2020, as a result of the Coronavirus (COVID-19) pandemic. The sharp reduction in consumption occasions in foodservice and increasing working from home completely changed the operating landscape for hot drinks.

Consumers prefer larger baskets in store-based channels, affecting informal retailers for consumers’ impulse purchases

Modern grocery retailers continue to lead the distribution landscape, holding 53% of retailing volume sales. Convenience stores and forecourt retailers, as well as food/drink/tobacco specialists, faced complicated market dynamics in 2020.

E-commerce performs well ahead of previous expectations

E-commerce in hot drinks recorded substantial growth during the pandemic. The digital shift is one of the most profound changes unfolding in commerce. As consumers continue to isolate during the COVID-19 pandemic, this period has accelerated e-commerce adoption, with many consumers experimenting with, and even becoming reliant on the digital channel.

The pandemic’s severe impact on away-from-home spending pushed foodservice players towards a digital transformation

The COVID-19 pandemic’s impact on foodservice spending was severe in 2020, with social distancing regulations closing millions of outlets globally. The pandemic has, unsurprisingly, forced many foodservice players to pivot to delivery services to stay afloat and serve consumers who were largely staying at home in 2020.

Growth in off-trade sales over the forecast period

One of the most outstanding features of the “new normal” will be an increased reliance on e-commerce. Retail consumption is expected to record growth in sales over the next five years. The evolution of delivery services, subscription models and contactless vending solutions will support this growth.