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UK hot drinks market dominated by Nestlé

Press Release   •   Jul 05, 2013 12:31 BST

The UK hot drinks market remained fairly flat in 2012, with a decline in retail volume sales seen across the coffee and tea sectors.

Global inflation was an issue in all packaged food and drink throughout 2012, but coffee and tea in particular seem to have suffered more greatly, with the price of global coffee beans on the open market rising at its highest rate since 1977, by 120% through 2011 and 2012. Chocolate also soared, with tea increasing also, although not by such a dramatic amount. Inevitably, this has led to a significant squeeze all the way down the supply chain.

According to 'Hot Drinks in the United Kingdom,' health conscious consumers continue to drive sales in the tea market, while the expensive specialty coffees has managed to retain its position as one of the most popular hot beverage drinks over the years.

For the last decade, tea and coffee varieties have increased enormously with consumers taking a far greater interest in different styles of coffee and tea from all over the world, as a result of greater awareness (highlighted by the media) and due to greater health and holistic benefits and even some ethical fair-trade considerations as well.

In 2011, the UK hot drinks market saw several new products. Whilst Nestlé retained its lead due to the strong position of Nescafé in instant coffee, the environment looks set to change as consumers are becoming increasingly aware of quality and provenance and are moving from instant to fresh ground coffee as the coffee culture in the UK strengthens.

Supermarkets and hypermarkets remained the leading distribution channels for hot drinks in 2012 as these outlets offer a wide product range and also benefit from the use of frequent price promotions. In addition, most consumers view it as more convenient to purchase hot drinks when doing their weekly shopping.

Changes in distribution mainly reflected changes in consumers' general grocery shopping patterns and a greater shift towards convenience formats, as more of these smaller grocery formats have opened, a trend which is expected to increase in future.

Growth within the UK hot drinks market is not forecast to fall but it is going be a challenge to generate particularly impressive growth from anywhere. Hot drinks as a category is not particularly dependent on the UK economy, but it has been affected adversely by the recession and consumer behaviour during this period, and this may continue for some time to come.

For more information on the UK hot drinks market, see the latest research: Hot Drinks Market Research

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