Australia hot drinks market: 2% CAGR predicted between 2012-2017

Press release   •   May 01, 2013 14:27 BST

The Australia hot drinks market witnessed robust growth of 3% in volume terms in 2012, driven largely by the 4% volume growth posted by on-trade. The increasing popularity of the on-trade experience becomes evident when considering the split between off- and on-trade sales, with 57% of the total volume of hot drinks sold through off-trade and 43% through on-trade, compared to the 60:40 split between the two categories at the outset of the review period. Premiumisation proved to be a key driver within the category in 2012, leading to 4% off-trade value growth during the year.

Australian consumers are keen to reward innovative new product development, and this is perhaps best demonstrated by the success of chai latte and Nespresso in 2012, in terms of both value and volume sales. Chai (chai latte or masala chai), no longer just the beverage of choice for alternative lifestyles or Indian immigrant communities, is widely recognised as the "tea drinker's coffee", with less caffeine than a coffee, better value-for-money through on-trade than tea, and with more health and wellness credentials than sugar-saturated hot chocolate. The product is now widely available through on- and off-trade in instant and leaf tea formats, despite being virtually unknown amongst the wider Australian community a mere matter of years ago. Nespresso, on the other hand, a brand which can be virtually credited with creating the coffee pod category in Australia, witnessed the emergence of increased competition in 2012; however, this is more a testament to the strength of the Nespresso offering rather than real competition within the category.

Global giants Nestlé, DE Master Blenders 1753, Unilever Group and Associated British Foods (ABF) contributed the vast bulk of off-trade value sales in 2012, with local company Cantarella Bros completing the "top five" hot drinks players in 2012. Private label, while growing both its value and volume shares over the review period, remains a minor aspect of hot drinks in Australia; however, extensive range premiumisation and new product developments within high-growth categories, such as fresh ground coffee pods, will ensure that private label remains a potential threat within hot drinks over the forecast period.

For more information on the Australia hot drinks market, please click here: Australia hot drinks market issues news updates and report summaries covering all major industries and sectors. The service provides additional client monitoring and timely alerts to breaking industry and sector news leading the day's business headlines. News articles, written by our staff, contain additional analyst insight, providing value added insight for our readers. News updates and real-time alerts on newly-released market reports are also available from our Facebook page, Twitter feed @CandMResearch and RSS links. We also welcome inquiries from business journalists and the news media.