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.
This report comes in PPT.
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.
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.
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.
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.
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