The hot beverages market has enjoyed a prosperous year from September 2010 to September 2011, as market value has increased by 4.1% to 1.44 billion. This comes as the industry has been subjected to the tough economic conditions of the recession throughout 2008 and 2009.
In this market assessment, the term hot beverages encompasses all teas, coffees, hot chocolates and malted drinks sold across retail outlets in the UK, however, it does not include the sale of these products in outlets such as cafes, bars, pubs and restaurants.
The market is absolutely dominated by sales of standard instant coffee and black tea in bags, the report shows. These two drinks are sometimes looked upon as the national drinks of the UK and are extremely well-established. Many consumers stick to a particular brand and product, so standard drinks are still by far the largest sector in terms of value. However, there is a growing trend for consumers upgrading to premium products, or products that have known health benefits, such as green tea.
Looking specifically at coffees, the premium and super-premium coffee sectors have shown the most growth over the last few years, for instance, between 2009/2010 and 2010/2011, sales of super-premium coffee have increased by 57.9%, demonstrating the potential for this sub-sector within the hot beverages industry.
Both decaffeinated tea and coffee products are also performing well, showing small increases year-on-year. This is mainly because many people are becoming aware of the health implications of what consuming an excess of caffeine can cause. In turn, many people are turning to redbush or rooibos teas and decaffeinated coffees.
Within the teas sector, some of the major brands have been undergoing changes of late, with many leading brands such as PG Tips, Ty.phoo and Tetley all adopting ethical stances when it comes to sourcing their tea.
The hot chocolate and malted drinks market experienced only modest growth over the last five years, demonstrating an overall increase of 13.6% in market value, from 2006/2007 to 2010/2011. On top of this, the fruit and herbal teas sector has done well in the past 4 years with market value increasing by 21.5%.
The leading brands in the instant coffee industry are Nescafé and Kenco, which are both owned by large multinational companies. However, the leading company in the ground coffee sector is Taylors of Harrogate, which is owned by Bettys & Taylors, a relatively small company when compared to Nestlé or Kraft.
The future looks fairly sturdy for the hot beverages industry, with an average year-on-year growth of around 3.5% anticipated over the next 5 years according to Key Note. This enforces the notion that the industry is very well-established in the UK and will continue to be for some time.
Source: Research and Markets
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