The hot beverages category has taken a scalding this year. Overall value is static and nine of the top 21 brands are on the slide.
Challenging exchange rates and soaring costs have combined to create problems for suppliers, and continuing competition from ‘real’ coffee and the high street café culture isn’t helping. Neither is the lack of innovation, which is telling on own label ranges even more heavily than brands.
At least the summer was too damp to add further to hot beverages’ woes by driving consumers to the refrigerator.
“On the odd occasion, when the temperature is really high, sales drop off but, in the UK, this is usually a matter of days and has little effect overall,” says Rob Large, Nisa-Today’s category controller for hot beverages. “What really affects it are raw material prices, production, packaging and transport and particularly the weakness of the pound against the dollar and the euro. “Raw materials prices are coming down now but that will have little effect unless the exchange rate shifts.”
Brits are still gradually shifting from tea towards coffee – although you wouldn’t guess that from looking at top-placed Nescafé Original, which fell 4.4% year-on-year to £140.3m. Its stablemate Gold Blend, however, rose 2.4% in fourth place. Consumers are moving towards more premium lines, as well as the roast and ground sector, and Carte Noire benefited with an 11.4% uplift.
“People are tending to buy higher-quality products but in smaller sizes,” says Large.
The UK coffee machine market is full of beans right now, and Italian coffee specialist Lavazza is making sure it has grounds for growing sales. Its A Modo Mio ('my way') system is designed to fit only the brand's pods, which come in four variants ranging from dark and strong to decaffeinated. The company is also making sure they are easy to get hold of, with distribution to convenience stores as well as supermarkets.
By contrast, tea leader PG Tips managed to buck the tea market’s overall 1.4% decline, with a rise of 0.1% to hold second place. It was helped by its foray into green tea and its continued championing of Fairtrade sourcing. However, its main rival Tetley slumped by 2.8% in third place, despite adding Rooibos to its line-up and promoting itself as ‘everybody’s cup of tea’.
Yorkshire Tea overtook Twinings this year after rising 2.7% thanks to steady advertising. Meanwhile, Twinings’ Speciality and Infusions lines were down, though its Everyday rose 17.4% to £11.2m.
In other hot beverages, Cadbury’s Drinking Chocolate pinched share from Cadbury’s Highlights – the former rose 9.5%, the latter dropped 11.5% – while malted drinks, led by Horlicks, continued their slump.