Where Consumers Shop for Hot Drinks

Delivery

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.