The growth of the UK hot beverages and RTD cold coffee sector is driven by increasing consumer demand for convenience, on-the-go consumption, and the rise of coffee culture, with younger generations embracing innovative flavours and healthier options.
Busy lifestyles and increasing work pressures lead consumers to seek quick and easy caffeine fixes.
RTD coffee provides a convenient solution for enjoying coffee without brewing or preparation.
The trend of carrying beverages on the go contributes to the popularity of ready-to-drink options.
Coffee has become a lifestyle choice, with younger generations embracing coffee culture and seeking new products.
RTD coffee offers a wide variety of flavours and options to cater to diverse tastes.
The demand for non-alcoholic beverages is also rising, with RTD coffee acting as a refreshment and an energising drink.
Kate Abbotson, Senior Trade Communications Manager at Coca-Cola Europacific Partners (CCEP), comments: “The ready-to-drink (RTD) chilled coffee category continues to go from strength to strength, worth more than £323m and growing in value and volume in GB (Nielsen), and at the end of 2024, more than a quarter of UK households were purchasing RTD coffee (Kantar).
“And as the nation’s favourite coffee shop brand, Costa Coffee is leading the way, contributing 7.5% of the entire RTD coffee category growth in the last 12 weeks, with growth set to continue (Nielsen). This is thanks to the brand offering a versatile range of drinks to suit different consumer needs all year round, from indulgent Frappés to our Latte range for an everyday pick-me-up and Double Shot for a no-compromise energy boost.”
Value also remains a lead motivation for shoppers in convenience (Lumina), followed by the demand for quality and brands (Lumina).
“As such, wholesalers and retailers can meet these shopper needs by stocking market leading brands in a variety of price-marked pack (PMP) formats – including on-the-go and multipacks – to cater to multiple soft drink occasions, offering a point of difference that consumers can’t get in larger stores. Our range of PMP packs includes Costa Coffee Latte and Caramel Latte RTD,” adds Abbotson.
“RTD chilled coffee has predominantly been led by on-the-go sales as it is an easy and convenient option for consumers seeking a pick me up to enjoy on the move.”
Adam Hacking, Head of Beverages at Arla, comments: “Despite RTD Coffee being a relatively new UK concept, the pace of category growth has been exceptional, and the sub-category has more than earned its place within all dairy drink fixtures. The category has experienced a significant step forward in terms of household penetration, average basket sizes and consumption growth and has reached a significant scale quickly.”
As a result, the ready to drink (RTD) chilled coffee sub-category is now worth £316m (Nielsen) and Starbucks® chilled coffee is the leading player at £157m (Nielsen).
The brand has continued to grow, increasing by 8.8 per cent value and 9.2 per cent volume in the last 12 months (Nielsen). It holds 50 per cent value share of the chilled coffee sector, making it larger than the next five brands and own-label combined (NIQ).
Despite this level of growth, the fact that chilled coffee still has relatively low household penetration and distribution vs. the wider soft drinks category, means there is confidence in future growth potential.
Consumers are buying into the category primarily for taste and this is reflected in Arla’s ethos for flavour quality and innovation. Starbucks® chilled coffee inspires consumers to enjoy new on the go beverage moments in a convenient and fresh way.
Across the ready-to-drink chilled coffee category, sweet flavours continue to grow in popularity, with Chocolate and Caramel being the fastest-growing flavours.
Multiserve is the fastest-growing segment in RTD coffee as shoppers look to new consumption occasions and use the product more as a take-home drink. The Starbucks® chilled coffee Multiserve range (750ml sharing size formats) now has four core SKUs; Starbucks® Multiserve Skinny Latte, Starbucks® Multiserve Caramel Macchiato, Starbucks® Multiserve Caffè Latte and Starbucks® Multiserve Cappuccino. Such is the popularity of larger formats, Starbucks® Chilled Classics Skinny Multiserve was voted Product of the Year 2024.
Crafted from a smooth blend of Starbucks® Arabica Coffee, with 20g protein per bottle (330ml), creamy low-fat milk, and no added sugar (contains naturally occurring sugars), Starbucks® Protein Drink with Coffee is available in three iconic coffee variations: Caffe Latte, Chocolate Mocha flavour, and smooth Caramel Hazelnut flavour. Created with an active lifestyle in mind, the Starbucks® Protein Drink with Coffee is designed to be enjoyed, whenever consumers need it.
Over the last two years, the protein market has experienced exponential growth, increasing in value from £46m in 2021 to £147m in 2024 (Nielsen). At the same time, the ready to drink chilled coffee category has reached a significant scale quickly and has grown to a size of £361m in value (Nielsen). As the fastest-growing brand in chilled coffee with 50 per cent share of the category and 8.8 per cent value growth year-on-year (Nielsen), Starbucks® chilled coffee has brought the delicious Starbucks taste to a high-protein beverage.
By appealing to existing protein drinkers as a trade-up opportunity and by tapping into the penetration opportunity for new shoppers, the innovation strengthens the protein sub-category with Starbucks’ renowned taste and market-leading pricing.
To complement this, 2024 also saw the launch of Starbucks® Frappuccino Caramel No Added Sugar, another Product of the Year 2025 winner. Offering a delicious blend of Starbucks signature espresso roast coffee, creamy milk and buttery caramel, it provides the same great taste as Starbucks® Frappuccino Caramel.
For those that prefer plant-based alternatives, the popular Starbucks ® Chilled Classics range has been treated to a refresh with not one, but two, new tasty beverages: Starbucks ® Oat Based Cappuccino and Oat Based Caramel Macchiato. These exciting additions to the Starbucks ® Chilled Classics range mean there are now more ways for coffee-lovers to enjoy their favourite Starbucks drinks than ever before. “Expanding the choices we offer to our consumers no matter their flavour preferences or lifestyles, is a testament to Starbucks’ pioneering efforts to continually innovate our product offering without ever compromising on taste,” adds Hacking.
Rob Yates, CEO Tom Parker Creamery, comments: “The cold coffee RTD category represents a huge opportunity for retailers as one of the key growth drivers of the UK coffee category. Consumers drank more coffee in 2024 versus 2023. According to NIQ, fresh RTD Coffee grew in value by 4.2% and volume by 4.5% in 2024, with the total category growing by 4.8% in value and 6% volume.
“We know that this category speaks to Gen Z consumers, who show a preference for RTD cold coffee because it hits the spot when it comes to convenience, energy, and innovation.”
According to Kantar, the retail coffee category is worth more than £1.6 billion with more than 24 million households buying coffee in the UK. As a nation, we drink 98 million cups of it a day (British Coffee Association) and Mintel are predicting that by 2028 the UK could spend more than £2.17 billion on coffee.
Increasing consumer awareness around the detrimental impact of ultra processed foods, is driving a shift to a more mindful, balanced approach to the consumption of products that are minimally processed, made with natural ingredients and deliver on both taste and nutrition.
We’re seeing a growth in demand for whole ingredients in place of artificial ingredients or products that have been stripped of fat or sugar. The Guardian recently reported that searches for the terms “full-fat milk” and “full-fat yoghurt” have soared on Waitrose’s website in the past month, up 417% and 233% respectively.
The Guv’nor, a new range of three ready-to-drink iced coffees from Tom Parker Creamery, known for its free-range creams and flavoured whole milks, launched at the end of January. The range includes three flavour varieties – Original, Mocha, and Caramel (500ml, MRRP £2.50).
Smooth and balanced, The Guv’nor Original Iced Coffee, available in 500ml (RRP £2.50) glass bottles, is made with single origin Arabica coffee, the finest raw cane sugar and free-range whole milk.
The Guv’nor Mocha Ice Coffee is a rich, chocolatey delight blending single origin Arabica coffee, finest raw cane sugar, premium cacao, and free-range whole milk.
Sweet and indulgent, the Guv’nor Caramel Iced Coffee features single origin Arabica coffee, finest raw cane sugar, sweet caramel and free-range whole milk.
The range is presented in a traditional glass bottle with a metal cap for a nostalgic touch and paper labels, making them fully recyclable and resealable. A 250ml format is also available.
“The RTD coffee market is driven by convenience and those consumers are seeking out great tasting products,” adds Yates. “When it comes to decision making, we also know that consumers are seeking out products that are well-made with quality ingredients and sustainable, so ensuring that your offer includes products that tick these boxes is essential.”
Provenance is also a key purchase consideration with 3 out of 4 UK consumers preferring products which use British ingredients, according to Nielsen CGA 2024.
Out of home purchasers of iced coffee tend to be under 35 years old, adventurous and are more likely to be female (Allegra UK Project Café 2024).
The launch of The Guv’nor is being supporting with PR activity in consumer media.
“Wholesalers need to give insights and advice to retail customers, for example, instore positioning of RTD coffee offer with morning breakfast and lunch options is ideal as most people consume RTD coffee in the morning,” says Yates. “It’s often an impulse purchase – research suggests that 6 out of 10 RTD purchases aren’t planned – so ensure they are sited in high-traffic areas. Stock popular flavour varieties such as Latte, Mocha and Caramel.”
Ian Bryson, Managing Director at Lincoln & York Coffee Roasters, comments: “Lincoln & York is a leading independent, family-owned UK coffee roaster and the private label partner of choice for retailers, wholesalers and hospitality businesses across both the UK and Europe.”
Today’s coffee consumers are more adventurous than ever before, actively seeking specialty blends and indulgent extras. Lincoln & York’s research shows that as consumer engagement with coffee grows, so does their willingness to explore new options, and pay a premium for them. Over the past year consumer penetration in the out of home coffee market is up 2.9%, despite a 7.2% increase in average coffee prices over the same period, demonstrating that consumers are willing to pay more when it comes to getting their coffee fix (Kantar). In addition, nearly half of respondents in an independent survey said they ‘always’ or ‘occasionally’ spend more to try a special blend or single origin coffee (Vypr Lincoln & York).
Quality is a key consideration for consumers when it comes to coffee – with 80% of respondents in independent research saying that high-quality coffee is a ‘very important’ factor in their purchasing decision process (Lincoln & York). However, price is also an important consideration, and it’s becoming a more important over time, with nearly half (45%) of respondents claiming that they are more price-conscious now than they were five years ago (Lincoln & York). This highlights the importance of balancing premium quality with affordability to meet evolving consumer expectations.
According to Lincoln & York’s independent research, health isn’t a primary concern for most coffee drinkers. In fact, nearly half don’t associate coffee with their overall health (Lincoln & York). Unlike some food and drink categories that battle negative health perceptions, coffee is increasingly seen in a positive light, with emerging research highlighting potential benefits such as improved gut health and a reduced risk of chronic illnesses.
Additionally, roasting coffee depends heavily on expertise rather than processing, making it a reassuring choice amid growing concerns around ultra-processed foods (UPFs). With its natural versatility and minimal health concerns, coffee remains a beverage that consumers can confidently personalise to fit their taste, dietary needs and lifestyle.
Whilst overall, health isn’t a major concern for coffee consumers, caffeine consumption is becoming a more important consideration, particularly in the afternoon. As a result, there is a significant increase in demand for decaffeinated coffee across both the out of home and retail markets. Decaf sales out of home are up 26.5% in value and 19.5% in volume over the last year (Kantar). And in retail, increased demand is evident too, with sales up 5.6% in value and 6.2% in volume year on year (NIQ). Alongside this significant growth in demand, we’ve seen improvement and innovation in the decaffeination process, improving the quality and helping decaf coffee shake-off its reputation for being bitter and lacking in flavour.
RTD (Ready-to-Drink) Cold Coffee is experiencing strong growth. Research shows that iced coffee has now become the third most popular drink among 18- to 34-year-olds, overtaking traditional favourites like the flat white and cappuccino (Lincoln & York).
Recognising the demand for high-quality iced and cold coffee, Lincoln & York is collaborating with a third party to develop a range of RTD single serve cold coffees and multi serve coffee concentrates and extracts. These innovations can be used as a grab and go option or in the case of extracts and concentrates to avoid brewing and chilling an espresso for every serve, speeding up service and ensuring consistent taste. As the use of coffee extracts becomes increasingly widespread, making the perfect iced coffee at speed will become easier than ever.
This year, indulgence and nostalgia are trends influencing coffee menus, alongside a growing demand for single-origin beans from regions like Brazil and Colombia.
According to Lincoln & York’s latest Coffee Culture Report, the classic latte remains the UK’s favourite drink. However, the indulgence trend is gaining momentum, with operators enhancing coffee offerings through syrups, creams and toppings. This is evident in the rise of luxurious menu items such as Gold Leaf Cappuccinos, the growing popularity of branded flavours like Nutella, and the increasing use of condensed milk for added richness.
Nostalgia is also making its mark, with familiar, comforting flavours being reimagined in hot beverages. Think sticky toffee, tiramisu and Bakewell Tart syrups, transforming morning lattes or evening hot chocolates into a taste of the past with a modern twist.
“Wholesalers can also tap into the growing demand for origin-specific coffees, as a large proportion of customers are now choosing their coffee based on its source,” adds Bryson. “Offering premium origin coffees from regions like Brazil, Kenya or Colombia allows wholesalers to support their customers in driving higher-margin sales. Additionally, by supplying a rotating selection of guest roasts, wholesalers can help operators keep their coffee menus fresh and engaging to encourage customers to keep trying something new and remain invested in their coffee purchasing choices.”
Hannah Southwick, Clipper Teas Senior Brand Manager at Ecotone UK, comments: “More people are buying Fairtrade tea in comparison to the previous year, with spend up by +10.7% (Kantar) which indicates a positive shift towards both premium products, and ‘premium’ ethics – where responsibly farmed ingredients are highly sought after. The challenge for us is continuing to transform the value perception of tea, which is sadly at an all-time low. While coffee is often considered an artisan beverage, everyday black tea is on the other end of the scale, which is why price perceptions often fall short of where they should be. The reality is that we need to challenge this misconception to ensure that tea farmers are paid fairly, which in turn supports sustainable tea farming and a higher quality product. As Fairtrade’s first and longest-standing tea partner, this is very close to our heart.”
Infusions is a growing segment in tea – increasing at +9% in value (Circana) compared to a year ago. The year-on-year growth in infusions is currently stronger than in black tea, as the trend of wellness has become perennial.
Ecotone decided to tap into this with the launch of a new natural and organic infusions range last year. Upon launching four new products, Clipper signposts specific need states such as ‘soothing’, ‘uplifting’, and ‘unwinding’ demonstrating how each supports wellbeing through the power of pure and natural ingredients. Each blend (Peppermint & Spearmint, Chamomile & Peach, Blackcurrant & Blueberry, Orange & Turmeric, and Ginger & Turmeric) is designed to make the most of refreshing moments and bring people closer to the natural world.
The wellness trend is also influencing the decaf segment. Clipper’s natural decaffeinated blends are driving growth with a +34.5% spend, almost double the category spend of +16% (Kantar).
Clipper is outperforming the tea category, following YoY growth of +14.5% value sales and +9.1% volume sales last year (Circana). The brand attributes this to the strength of its powerful ‘GOOD tea’ message, which is helping new consumers discover the good they can do for people and the planet by choosing organic and Fairtrade tea.
“Put simply, keep true to your ethos. Fairtrade has always been at the heart of everything we do, which is why it continues to be the lynchpin in our marketing strategy and guides us forwards as a brand,” adds Southwick.
For 2025, Clipper has invested £1.5m in extending its UK campaign, ‘There’s Tea, Then There’s GOOD Tea’, to a wider, national audience – representing the brand’s biggest media spend to date. Through TV, targeted OOH, experiential PR and an on-pack promotion, the campaign shows consumers that tea can taste good and do good too if it’s organic and Fairtrade. With a catchy tune and the iconic Clipper bird, it’s about evoking joy and playfully persuading consumers to question their tea choices and reconnect to nature.
“As shoppers discover more high quality Fairtrade and organic products, wholesalers have their role to play in helping retailers meet the demand, says Southwick. “Stocking a broad range of products to meet all taste preferences including black, green, decaf and infusions teas, alongside larger packs for stock-up purchases, is a great place to start.”
Philip Rayner, Founder and CEO of Glebe Farm Foods, comments: “Although alternative products are typically expensive, free-from shoppers tend to prioritise little treats over essentials when budgets tighten, highlighting the appeal of indulgent food options in times of uncertainty (Mintel). Sales of free-from products are on the rise in both value and volume, with the category valued at £329.2m as of 2023, an increase of 10.3% (The Food Foundation). Glebe Farm’s rich, creamy and naturally sweet oat milk, PureOaty offers both health and indulgence, perfect for recreating barista-quality coffee – a must-stock item.”
Glebe Farm products are certified 100% gluten-free by coeliac UK, allowing consumer and distributor peace of mind. The purity of Glebe Farm’s gluten-free oats are so well renowned that they are currently used in the production of many well-known oat-based products from brands such as Nairns, Happy Crunch, Eat Natural, Rolla Granola and more.
Plant-based milks are now firmly mainstream throughout the UK with 32% of people using alternatives alongside traditional dairy milks (Mintel). Total dairy alternative milk UK sales rose by MAT £21.5m from 2022 to 2023, with oat milk rising by 48% in consumer sales over the same period . Challenger brands, such as PureOaty, are driving dairy alternative milk category growth, with PureOaty sales increasing by MAT 61.3% to June 2023 (Nielsen).
Over a third of current oat drinkers say that they’ve noticed positive changes in their health over the past year because of switching to oat (Glebe Farm). Glebe Farm Foods is proud to be able to support a wider customer base with its dairy-free products. The largest percentages of regular buyers remain loyal to the category for health-related reasons such as lactose intolerance, the good nutritional profile of dairy alt milks, digestive ease and to prevent health problems, so it is essentially that Glebe Farm Foods continues to respond to demand for healthy dairy alternatives (Nielsen).
The total food and beverage category has grown by 8.1% to £220.3 million, and Mars Chocolate, Drinks & Treats (MCD&T) is driving growth with its hot chocolate range, delivering an impressive 22.5% increase in sales (Kantar).
MCD&T’s hot chocolate products now account for more than 15% of the hot beverages market. Known for its rich taste and bolstered by a trusted brand reputation, Galaxy Hot Chocolate has become a go-to for at-home indulgence and leads the way contributing 80% of the range’s sales.
The brand remains a key player in the hot beverages market, consistently capturing consumer interest through innovative flavours and convenient formats.
Recent seasonal and exciting innovations, such as Galaxy Pink Hot Chocolate, have attracted over 300,000 new UK households to the brand (Circana).
Kerry Cavanaugh, General Manager at Mars Chocolate Drinks & Treats, comments “We’re delighted to see the MCD&T range continue to resonate with consumers, achieving an impressive 22.5% growth in sales, reaching £33.3 million.
“Our star performer, Galaxy Instant, remains a standout success, with sales climbing 28.3% to an impressive £27.4 million.”
Comments are closed.