This article is part of our Hot Beverages Digital Feature.

Consumers may be trading up in hot beverages but they’re still looking for a bargain. Case in point: value sales in bargain stores and hard discounters are up 6.7% and 7.2%, respectively [Kantar 52w/e 19 July 2015].

“This is a strong channel for the tea category,” says Faye Newman, senior category manager for tea at Unilever UK, owner of PG Tips. “A focus on being where the shoppers are, and ensuring that PG is available to buy, is a key part of our brand strategy.”

Retailers grocery category index y-o-y%
Bargain Stores 2 4.6 230.0 6.7
The Co-Op 5.1 6.3 123.5 -2.1
Farm Foods 0.6 0.7 116.7 7.8
Waitrose 4.8 5.5 114.6 3.4
Morrisons 10.4 11.3 108.7 -1.0
Sainsbury’s 14.6 15.6 106.8 1.5
Asda 14.3 14.8 103.5 7.9
Tesco 25.7 26.5 103.1 -0.9
Iceland 2.1 1.8 85.7 -10.4
Independents & Symbols 1.2 1.0 83.3 -2.2
Hard Discounters 7.7 6.3 81.8 7.2
Kantar 52w/e 19 July 2015

And, the discounters are starting to look beyond everyday options to enhance their ranges. Lidl, for example, added an own-label Deluxe line of premium fruit & herbal tea as well as roast & ground coffee in August. Aldi, meanwhile, has added Premium Peppermint Tea to its range as well as Fairtrade Colombian Coffee Beans.

However, the hard discounters still undertrade in hot beverages and, according to Brand View, both Aldi and Lidl have cut their ranges over the past year. Notably, Lidl has reduced its SKUS from 71 to 41, following a big cull in October 2014 [Brand View 52w/e 19 July 2015].

The big four aren’t suffering as badly as some would expect: value sales are down 1% in Morrisons and 0.9% in Tesco but Sainsbury’s has seen 1.5% category growth. Asda, meanwhile, is steaming ahead with 7.9% growth.

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