Britain’s appetite for hot beverages has never been stronger, thanks to the irresistible combination of the high street coffee shops’ impact on our lifestyles and the suppliers’ commitment to innovation and investment.
The hot beverages category is worth a massive £1.8bn, with coffee representing 62% of sales followed by tea at 31%. Within coffee, instant coffee makes up the lion’s share of all cups consumed in the UK, at a whopping 84%. Yet while coffee is undeniably popular, tea still remains an iconic part of British culture, with 50 billion cups drunk every year. Also, despite a flood of high-profile non-black tea product innovations, black tea accounts for the vast majority of total tea category sales in retail.
And we mustn’t forget hot milky drinks either. In 2018, UK households purchased over 28,000 tonnes of hot chocolate, cocoa and malted products. The total hot milky drinks category has an annual sales value of £186 million, with hot chocolate representing 66%. Brands continue to dominate hot milky drinks, with 84% of value sales.
With 210 million hot chocolates served out-of-home, this hot beverage has seen the greatest growth of all hot drinks over the last year. Tapping the trend, Ferrero Foodservice has launched Thorntons Luxury Hot Chocolate Powder, raising the standard for powdered hot chocolate out-of-home by helping operators exceed consumer expectations and profit from its growing popularity. Zareen Deboo, Foodservice Channel Operators Manager, Ferrero UK & Ireland, takes up the story:
“Thorntons Luxury Hot Chocolate Powder has been developed to streamline consumer experiences and upgrade the quality of hot chocolate across in-room, vending and the onboard market. The launch guarantees a quality experience that will no doubt surprise consumers, but also help operators boost their hot chocolate sales – no matter their market.”
As well as utilising Thorntons’ signature taste, foodservice operators can also benefit from featuring the British heritage brand front-of-house. The latest findings show 75% of people would prefer a branded hot chocolate – rising to a staggering 90% if consumers knew it was made with Thorntons.
The survey also revealed only 8% of consumers have enjoyed a very good hot chocolate while travelling, 10% from a vending machine and 21% using in-room services. Restaurants and cafes fared better, with nearly two thirds of consumers highly rating their hot chocolate experience (64% and 62%). With this real disparity between key markets and the hot chocolate experience available, Thorntons Luxury Hot Chocolate Powder brings a golden opportunity for operators to boost their offering backed by 100 years of Thorntons quality and craftsmanship.
Zareen Deboo explain: “Brands can be the driving force in boosting profits by providing consumers with products they know and trust. With nine out of ten consumers saying they would opt for a hot chocolate made with Thorntons, the brand’s strong heritage has the power to instantly improve the perception of an offering and significantly increase its appeal.”
Made using Thorntons chocolate recipe and already containing milk powder, operators simply need to add water to instantly create a luxurious hot chocolate. The range includes a 1.6kg catering pouch, 21g single serve sachet for in-rooms, and 12oz cup for on-board services.
Staying with hot milky drinks, Mondelez International is category leader in the Chocolate Beverage market, the number one manufacturer overall with Cadbury the number one brand. Mondelez’s core range includes Cadbury Hot Chocolate, Cadbury Instant, Cadbury Highlights, Cadbury Bournville Cocoa Powder, Cadbury Freddo Hot Chocolate and premium brand Green & Black’s Cocoa and Hot Chocolate.
With the ongoing consumer focus on health and wellbeing, says Susan Nash, Mondelez International’s Trade Communications Manager, there is a clear need for sugar reduction in various products. Cadbury Hot Chocolate, the UK’s number one hot chocolate brand, has launched its first ever reduced sugar variant with the hot chocolate taste shoppers know and love. Containing 30% less sugar and no artificial sweeteners, Cadbury Hot Chocolate Reduced Sugar is prepared by swirling into hot milk.
Cadbury has also released its first powdered milkshake this year. Cadbury Choc’Shake aims to bring hot beverage shoppers to the powdered beverages category, drive category growth and boost the milkshake market, enabling families to enjoy the classic Cadbury taste all year round in a new, satisfying and refreshing way.
Classic British beverage brand Horlicks is launching a new 300g price mark pack specifically targeting the convenience store sector. The new pack is part of a campaign to consolidate Horlicks presence at the heart of family life, the overriding message being to ‘Take a Moment’ to escape the stresses of modern life. Horlicks’ famous fortified recipe, made with British wheat & barley is unchanged and still contains 14 key vitamins and minerals. Horlicks is the UK’s leading Malted Milk drink, boasting two products in the top 5 Hot Milky Drinks and 54% share of the Malted Category.
Michelle Younger, Marketing Manager for Horlicks says: “Horlicks has unprecedented loyalty among consumers with 99% claiming to be loyal or fairly loyal. We want to offer greater convenience to our customers by strengthening our offer and distribution in convenience and give consumers peace of mind. The 300g price mark pack is supported by a heavyweight marketing communications campaign, including experiential, advertising, in store activation, PR and digital.
NOW TRENDING IN TEA
The UK tea category has been changing for some time, bringing exciting new sales opportunities for wholesalers and their customers, says Brett Grimshaw, Tetley Business Sector Controller Out of Home and Convenience.
“Our evolving lifestyles and interest in health have created space for new products which deliver different taste experiences to shoppers and higher value sales to retailers.
Today the tea category is full of choice and a wide range of teas is now available to suit all tastes, needs and moments, from a relaxing, comforting tea break to maintaining hydration with a healthier drink, not to mention the opportunity to increase wellbeing, with teas with added vitamins.”
The tea shopper is a valuable shopper to retailers. Of everyone buying hot beverages, tea buyers are more likely to buy complementary products with their purchase. Milk, bread, cakes and biscuits are common basket companions, as well as cakes and pastries for on the go purchases.
Tea’s good fit with health continues to be a draw, with value sales up across the board in impulse for products that fit the bill: fruit and herbal up 19.4%; Green up 17.0%; and Redbush up 9.3%. Fruit, herbal and green are up in volume too, says Brett Grimshaw. Tetley has a strong portfolio in these healthy sectors and is number two brand in green with 30.8% share in Impulse and the dominant player in Redbush.
Out of home hot beverage consumers are becoming progressively more adventurous in their choice of flavours and blends, says Michelle Jee, Tetley Senior Brand Manager – Out of Home, with 47% of inclined to spend more money on their drinks as they seek out premium and healthier hot beverage options.
Combined, Green and Matcha tea represent 21% of favourite non-black blends out of home, reflecting consumer demand for new flavours and blends that offer refreshment. Matcha and Green Tea are two blends consumers are willing to pay a little more for, and are drinking more often, according to the Tetley Tea Report 2018.
Tetley recently launched its new Super Tea Envelope range in foodservice in three delicious flavours. This range offers fresh new blends that deliver added nutritional benefits, from reducing tiredness to supporting healthy immune systems. Blends include Super Fruits Boost, flavoured with blueberry and raspberry and providing 33% of the recommended daily amount of essential vitamin B6: Super Green Tea Boost, which also delivers vitamin benefits along with a burst of strawberry and raspberry: and Super Green Tea Immune, a smooth green tea blend with mango and pineapple flavours, also rich in vitamin C.
While traditional tea remains popular, says Hazel Detsiny, Vice President Marketing Foods & Tea at Unilever UK&I, premium and speciality teas are playing a bigger role as shoppers look to recreate the afternoon tea experience at home. Pure Leaf is Unilever’s premium tea range, with intense flavour combinations such as Darjeeling, Rooibos and Chai combining with Pure Leaf’s strong ethical values to make it a perfect brand for today’s consumer:
“We believe there is huge growth potential in the tea category, hence we have been focusing on unlocking it, to please our loyal tea drinking fans and attract new shoppers.”
Tea is being increasingly used as an ingredient outside hot beverages, a trend Unilever brought to fruition with the launch of Real Iced Tea by Lipton, the UK’s first cold brew tea bags, made using real tea leaves. This has opened the Lipton brand to a new consumer pool, appealing to people who don’t like hot drinks and giving tea drinkers a new way to enjoy their favourite beverage.
Unilever have also come up with new tea formats that respond directly to consumer needs, under the PG tips brand. Perfect with Dairy Free appeals to people following a free-from diet, while Tasty Decaf offers a fresh, rounded taste with less than 0.2% caffeine.
In a separate move Unilever have reduced PG tips’ environmental impact by switching to 100% plant-based material for its teabags, and have already produced five billion biodegradable tea bags. They also took the decision earlier this year to make the Pure Leaf range entirely bag-free, in new recyclable cartons.
COFFEE SHOP CULTURE LEADS THE WAY
With coffee representing 62% of retail sales followed by tea at 31%, these are exciting times for the coffee category, says Laura Dunn, Nestlé UK & I Shopper Activation Manager – Wholesale & Convenience. With the rise in coffee shop culture, the UK continues to fall more and more in love with coffee. Retailers and brands alike are continually innovating to meet consumer needs – whether by bringing better solutions that meet our increasingly fluid lifestyles, dialling up the importance of the coffee ritual as a way of staying connected, or helping us get out of bed in the mornings with great coffee.
Britain’s favourite coffee brand, accounting for more than 3.6 billion cups drunk every year, NESCAFÉ Original leads the regular instant coffee segment with 78% of sales. The number 1 coffee brand at breakfast, NESCAFÉ Original continued its hugely successful Morning Personalities campaign in 2019, featuring six new limited-edition jars, supported by a Channel 4 TV sponsorship.
NESCAFÉ Original in1 gives consumers the ability to enjoy great tasting coffee that is easy to prepare wherever they are. With 45% of consumption out of home, in1 provides a convenient way to stay alert and recharge. The NESCAFÉ Original in1 range will shortly be relaunched with a new and improved recipe and pack design.
Premium is the highest value segment in instant coffee, worth over £337m. NESCAFÉ GOLD is premium’s beacon brand, with the highest share, awareness and consideration. 2.3bn cups are bought each year, equating to over 6m a day, or over 70 every second. NESCAFÉ GOLD is the only premium brand with a full range offering, including original NESCAFÉ GOLD Blend, Intense and Smooth. NESCAFÉ GOLD will be supported by a record £7.6m investment in 2020. Shoppers spend more per trip on NESCAFÉ GOLD than any other premium brand and are more likely than the average coffee shopper to go somewhere else if it is not in stock.
After three years of sustained growth, the Origins & Organic coffee segment is now worth £58m, over half of the Super Premium segment. Growth is set to continue as coffee shops drive the Origins trend out-of-home, fuelling demand for in-home solutions. NESCAFÉ GOLD Origins is clear segment leader with 55% share. It offers four variants from some of the best coffee growing regions. In 2020, NESCAFÉ GOLD Origins will be supported by an £1.3m investment.
The Super Premium segment has more than doubled since 2012 and is now worth £105m. Tapping into the trend for barista-style coffee made at home, NESCAFÉ AZERA is the No.1 brand, with 53% share, and a key growth driver, up +3%. Nescafé Azera, the premium coffee brand loved by urban millennials, has been rejuvenated with a fresh new visual identity.
NESTLÉ AND STARBUCKS MAKE IT TOGETHER
Nestlé’s range of coffee products under the Starbucks brand is the first launch since the two companies joined forces in August 2018 under a global coffee alliance. The new range consists of 24 products, among them whole bean and roast and ground and the first Starbucks capsules developed using Nespresso and Nescafe Dolce Gusto proprietary coffee and system technologies. It includes a variety of signature Starbucks blends and single-origin coffees, as well as classic beverages such as Caramel Macchiato and Cappuccino. All products are made from 100% high-quality Arabica coffee from the world’s premier coffee growing regions. Pods can be recycled through the existing UK Nespresso and NESCAFE Dolce Gusto recycling systems, including over 7,000 CollectPlus drop-off points around the country.
Staying with coffee, JDE Professional have a presence across the UK and Ireland serving the highest quality coffee, from coffee ingredients to machine-based solutions. Martyn Bell, Category Marketing Manager – Convenience Coffee at Jacobs Douwe Egberts, says they are finding consumers are increasingly motivated to seek out a luxurious, quality experience and for the first time ‘indulgence’ has overtaken ‘functionality’ when it comes to coffee consumption, rising to 60% in 2018.
Latte continues to be the UK’s favourite coffee shop drink, says Martyn, driving demand for speciality style coffees at home and out of home. This has led to the development of a fast-growing category of “Instant Speciality” coffees from JDE, combining the simplicity of instant coffee with the indulgence of a luxurious latte or frothy cappuccino, and opening the way for traditional “black or white” coffee caterers to add value to the category by offering a range of indulgent instant speciality coffees, which only need a kettle to prepare.
With its Kenco Specialities in a new 750g tin format, JDE has extended its offering to support operators without time or space for a machine, to offer an indulgent, high quality, frothy coffee. Kenco Cappuccino is available in caterer-friendly tins and Latte launches later this year. Offering independent caterers and operators the ability to serve the coffee shop style beverages consumers are looking for, with the quality assurance of the respected Kenco brand.
Responding to the rapid growth in the UK coffee shop market, buying group Caterforce is launching a new coffee brand from October. Roast 440 has been designed with independent coffee shops, cafes, pubs, restaurants and hotels in mind and is available exclusively through Caterforce members. The new range includes five varieties of coffee beans and three varieties of filter coffee to suit every taste, including single origin and Rainforest Alliance options. Each high-quality blend has been carefully selected and balanced, using the finest coffee beans for each application.
In 2016, the UK had over 22,000 coffee shops and by 2018 this had grown to 24,000, an increase of +9%. These coffee shops consume 2.3 billion cups of coffee per year, which in 1kg bags equates to 460,000,000 bags.
Claire Williams, Group Marketing Manager at Caterforce, says: “The UK coffee market is growing rapidly, and consumers expect a great cup of coffee anytime, anywhere. Launching Roast 440 represents an opportunity to establish a coffee branunique to Caterforce. It enables us to offer exclusivity at competitive prices in the right sizes, pack formats and blends for our customers. Our members are already selling into coffee shops and cafes, with products such as cakes, breads and sandwich fillings, so it’s a great addition to our offering.
“With so many coffee shops out there, our customers need to stand out, so we’ve also created a distinctive and stylish range of marketing materials, uniforms, crockery and point of sale displays. Everything it takes to turn great coffee into great business.
“We’ve also partnered with Pure Leaf as our preferred tea partner as they offer a premium range of tea which complements our coffee brand, and with the Italian maestros at Cimbali to offer a wide range of professional grade coffee machines.”
Established in 1991, Caterforce is one of the UK’s biggest foodservice buying and marketing groups, with seven members strategically located around the UK and a combined turnover of over £500 million. Roast 440 is the Group’s third own brand label, following the successful Chefs’ Selections brand and Caterforce Professional cleaning range. There are now more than 350 Chefs’ Selections products and in 2018 the brand generated an annual turnover in excess of £50m.
Taylors of Harrogate is to launch its 2018 Product of the Year-winning coffee bags into the convenience sector. Its coffee bags have already proved a huge hit in supermarkets, making Taylors the UK’s biggest coffee bags brand and now the company is turning its attention to helping convenience retailers add even more excitement and quality to the hot beverage aisle. Coffee bags will be available to the convenience sector in retail packs of 10.
Taylors coffee bags’ popularity is set to grow even further as the brand launches a £2M multi-channel advertising campaign to drive awareness and trial of this fuss-free way to enjoy proper coffee. The ‘Why didn’t we think of them before?’ campaign leads with a brand-new Taylors television advert, featuring a number of comical scenarios where the idea of coffee bags was scuppered throughout history, ending on the message “Ground coffee, in bags. Why didn’t we think of them before?” The TV campaign is supported by out of home, digital, PR and sampling activity at music festivals and train stations. Greg Harvey, Channel Controller at Taylors of Harrogate, says: “Demand for convenient, fuss-free, quality coffee has never been greater, so we’re really excited to be bringing coffee bags to the convenience sector. Taylors coffee bags deliver all the flavour of roast and ground coffee with none of the fuss, providing convenience store owners with the perfect opportunity to inject some excitement and quality into their hot beverage offering.”
Huhtamaki’s latest sustainable solution for the booming hot beverage market is the compostable Bioware Impresso Double Walled Hot Cup. As with all Huhtamaki’s Impresso’s double wall cups, says Becci Eplett, Marketing Manager, Huhtamaki UK, the innovative design means the cup uses up to 25% less material than most other smooth walled double and triple wall cups on the market – a game changer for environmentally conscious businesses looking to reduce the weight of their packaging without compromising on performance. All paperboard used to make Huhtamaki paper cups and containers is fully traceable to sustainably managed, PEFC certified sources.
For operators who want to offer customers a compostable cup in fresh, bright colours and step away from ‘beige,’ the new ‘feel good’ Impresso is the perfect choice and has EN13432 certification, which means it is compostable in the UK at approved composting facilities.
All Huhtamaki paper cups can be recycled. Huhtamaki have also launched an initiative aimed at increasing UK cup recycling with the addition of a message on their Specialty cup range to ‘please recycle this cup’, along with a QR code that can be scanned by a mobile phone, leading the consumer to a web page containing details of cup recycling sites and schemes.