Hot beverages are in value growth of +2.6% in 52 w/e 16.07.23, according to the SmartView Convenience report by TWC.
Volume sales are in YOY decline, with growth driven by price rises.
Tea is the strongest performing sub-category within hot beverages, with growth of +4.6% (52 w/e 16.07.23).
Coffee is a much bigger category (£66mn in independent convenience) but is growing at +1.9%.
Filter/ground coffee is up +11% YOY, while instant is down -2.3%.
Decaf is bucking the trend in instant, growing +8.4%.
There is some evidence of premiumisation within tea, with specialty tea bags and specialty leaf tea both outperforming standard, however standard accounts for over 80% of sales.
Drink now iced coffee is showing exceptional performance, with +17.9% YOY growth (52 w/e 16.07.23).
Dan Adams, Senior Category Development Manager for Tata Consumer Products, comments: “With 100 million cups drunk each day, tea is the nation’s hot beverage of choice (ITC), but as shoppers pay closer attention to their weekly spend, how best to maximise the opportunities in tea? With the current economic environment, value is a key deciding factor on what to buy, matched by the need for any spend to deliver on taste and quality.”
Everyday black with decaf remains the teas of choice for most households, with the top three tea brands accounting for over 61% of total sales (Nielsen), it is here that the majority of price promotions have maximum benefit.
All Tata Consumer tea brands will be featuring price promotions during the Autumn months.
“A well-timed promotion is good for the brand and the retailer and a valuable tool to demonstrate value to shoppers,” says Adams.
Even outside promotion, tea is a good value offering, and with more households buying Tetley than any other tea brand (Kantar June 2023), Tetley is a good value brand to offer. Awareness and familiarity of the brand helps attract browsers’ interest to other areas at fixture like green and herbals.
Spreading the message of superior taste, Tetley and its sister brands Good Earth and teapigs are taking to the streets this year with its biggest sampling campaign to date, geared to reach multiple thousands of shoppers across the three brands.
“It’s about reaching the right audiences with the right products and surprising them with something they may not have considered for some time,” explains Adams. Reappraising tea and the variety available to meet all tastes and budgets will help reignite interest in the category.”
Original black teas are the mainstay of tea accounting for 72% of sales. Tetley Original is a strong everyday black tea buy and a mix of pack sizes here to cater to different shopper missions is sensible.
Decaf remains a key opportunity, currently it accounts for 9.4% of category sales in the mults and 9.1% in total market, both up just slightly 0.3% yoy.
“Making sure decaf is prominently shown and the decaf selection is carefully curated on the basis of taste, will help sales and repeat purchase,” suggests Adams.
“With smaller stores in particular, our advice is not to overstretch the offering, focusing on a core range with the right mix of pack sizes in the most shopped sectors of original black and decaf will attract both regular top up shoppers, and those making small changes to how they shop as they work to manage household budgets.
“We’re very much moving into the territory of helping customers to choose well and sell well.”
Media attention to the need to dispose of everyday items like tea bags more sustainably has sustained shopper interest in plant-based tea bags.
With multi million pounds of investment, Tetley has made a giant leap forward on its sustainable journey with the roll out of plant-based tea bags and the introduction of the most significant change to its pack format in 30 years.
Available to convenience this autumn, Tetley has introduced a new carton pack to replace its softpack packaging for its black tea range, Tetley Original; decaf; Extra Strong and Gold.
With the transition, Tetley will hit a major milestone of 97% of its packaging being reusable, recyclable or compostable in line with its commitment to the UK Plastics Pact to achieve 100% by 2025.
The compact design is around 25% smaller than competitive packs, meaning more efficient transportation and use of shelf-space in store; ease of like for like replacement; plus of course saving space in home cupboards.
The tea bags themselves are made from plant-based materials which after use can be sent for composting via kerbside food collection by councils for disposal.
On completion of the roll-out of biodegradable bags 270 tons of non -biodegradable plastic will have been removed from its tea bag production. Once the transition of all softpack packaging to the new carton format is complete, Tetley will have removed 34.6 million pieces of non-recyclable multi-layer laminate from its waste stream.
Adele Ward, Clipper Teas Marketing Director at Ecotone UK, comments: “While the black tea category is facing challenges, Clipper increased its penetration compared to last year, by 8.4% (source: Kantar 52 w/e 11 Jun 2023), guided by consumers looking to do the right thing.”
Fairtrade tea is outperforming black tea with 15.1% growth, compared to +7.1% for non-Fairtrade tea in value (source: Kantar 11 June 2023). Clipper was the first Fairtrade tea brand in the UK, with a fierce commitment to natural and organic ingredients that support biodiversity. Its tea bags are also unbleached and biodegradable, and its larger packs are fully recyclable.
Wellness is a trend which is continuing to have notable positive impact on decaf. A growing number of Brits are looking to cut back on caffeine, with almost a third being wary about their caffeine consumption (source: CSA Brand equity tracker, March 2023).
Clipper uses the natural CO2 decaffeination method, ditching all nasty chemicals. The brand boasts the most natural decaf offerings in the UK – which is all part of the full Clipper package.
Reports across the wider food sector have indicated that the impact of the cost-of-living crisis is causing consumers to trade down to less sustainable products due to finances. However, this is proving less prevalent within tea with 50% of consumers happy to pay more for a tea that is ethically and sustainably made (source: CSA Brand equity tracker, March 2023).
Clipper’s infusions are outperforming the category YOY at 81.6% increase in value sales, and +66.5% increase in volume (source: IRI 52 w/e 15 July 2023).
Lesley Parker, Brand Controller for Cafédirect at distributor RH Amar, comments: “With sales topping £18.5 million in retail over the last year, distribution has now reached 90% of the market (IRI), and recent launches adding a further £364k at the till during the first half of 2023, Cafédirect has been causing an even bigger stir this year with the launch of new recyclable packaging, a new brand vision, new products, and a new campaign that will reassure consumers they really are making a difference when they choose Cafédirect.”
Famous for working directly with farmer cooperatives around the world for more than 30 years with the aim of improving smallholder farmer livelihoods, Cafédirect is already popular with a wide group of shoppers who love that they’re getting great coffee that also has a purpose.
“And with the nation’s discerning coffee drinkers continuing to trade up to premium options at home, there has never been a better time to take this message further, as well as giving shoppers even more reasons to choose Cafédirect,” explains Parker.
Among them is a new look and feel for the Cafédirect family of products as part of a brand revitalisation programme for 2023. An evolved logo now gives the brand an even more distinctive and characterful presence on shelf, whilst a move to recyclable polyethylene across the brand’s Blends and Single Origins pouches – coupled with new 100% premium recycled tin across its instant range – means that 99% of its packaging became recyclable from April.
“With new pouch packaging that is recyclable with soft plastic bags at large supermarkets, we are providing a solution here and now, whilst a Government commitment to providing flexible kerbside collections nationwide by 2027 means we are contributing to both the short- and medium-term solutions that all shoppers ultimately want to see from their favourite brands,” adds Parker.
With an aim of being instantly recognisable as the coffee brand that’s better for everyone, a high impact marketing campaign from this spring has been playing out across social and digital channels, alongside a new look website.
“Featuring our new ‘Better for Everyone’ strapline and logo, which will also appear on all packs alongside an infinity coffee bean and coffee cup logo, our aim is to communicate how we are making a positive impact on the world,” explains Parker. “As a result, shoppers can be reassured that our coffee not only tastes great but also that we are doing good by sourcing our coffee direct from our growers who are guaranteed a fair price.
“We have been working directly with farmer cooperatives around the world for more than 30 years, and it’s important that we continue to communicate this so that shoppers can make an informed choice.”
As well as rolling out a new look across its existing range of Single Origin and Blended beans, decaf, instant, and roast & ground, Cafédirect is introducing two new ranges to its line up.
Available now, the new blended range of roast & ground coffees with the promise to contribute to making ‘better lives, better planet, better coffee’ whilst having a direct impact on people and planet:
Empower (RRP: £4.45) is Cafédirect’s smoothest coffee to date, medium roasted for a balanced flavour and natural sweetness. Promoting gender equality and women-led enterprises, Cafédirect will be supporting projects that offer training and help to female growers that will improve the quality and yield of the crops they sell, as well as giving them the technology they need to sell their product collectively and improve their negotiating power.
Taking action against climate change, Restore (RRP: £4.45) is a vibrant, well-rounded coffee roasted medium-dark to deliver a deliciously nutty taste, and is the result of a partnership with Producers Direct to provide training, funding, technology and technical support for farmers to adapt to and mitigate against climate change. Not only does this help to restore the land and biodiversity, but it also improves yields and coffee quality, boosting incomes and community health and welfare. Producers Direct also established Centres of Excellence in Peru and Uganda, which are farmer-run enterprises that provide complete comprehensive environmental support.
Thrive (RRP: £4.45), meanwhile, is a dark roasted coffee blend that delivers a rich, intense flavour, profits from which will be invested in future coffee production by fostering employment opportunities from farming and selling, to logistics and digital specialist roles. Scholarships will be made available to support young people in communities with professional skills, whilst low-interest loans – usually unavailable to young people in agriculture – will be offered to support youth-led agri-enterprises.
Also available now, a range of new freeze dried, single origin instant coffees will allow coffee lovers to enjoy the Cafédirect roast & ground taste in an easy to prepare format, available in Decaf Machu Picchu, Machu Picchu, and Mayan Gold variants (RRP: £4.50). As well as featuring colour-coded lids featuring Cafédirect’s infinity coffee bean and coffee cup logo, under-lid inserts will feature QR codes to help shoppers discover more about their favourite Cafédirect coffees, as well as encouraging them to try the instant range’s roast & ground siblings.
Adrian Hipkiss, Marketing Director at Boost Drinks, comments: “Now worth £230m (IRI), the RTD Iced Coffee category is growing rapidly, with Symbols and Independents sales having now grown to over £44m (IRI).”
Caramel (+36%), Mocha (18.4%), Espresso (+16%) and Latte (+14%, IRI), all of which feature in Boost’s offering, are the top four flavours in the space and account for 84% of the category’s sales value. Boost is now the second largest selling and 1st fastest growing RTD Iced Coffee brand in unit sales (IRI), with its 250ml variety being the biggest selling format, witnessing +19% value growth (IRI).
Iced beverages continue to be a popular option for consumers as an afternoon pick me up or a convenient beverage that travels well when on the go.
“We know that the RTD Iced Coffee category is growing rapidly at +24% volume and +31% value YOY (IRI), providing a huge opportunity for retailers to draw customers in and maximise sales,” adds Hipkiss. “To successfully capitalise on this trend, retailers and wholesalers should provide enough space to allow for future growth in the category and stock fast growing brands such as Boost.”
Amy Burgess, Senior Trade Communications Manager at Coca-Cola Europacific Partners (CCEP), comments: “The ready-to-drink (RTD) chilled coffee sector is a key driver of growth within soft drinks, now worth £280.5m and up 15.5% in value over the past 12 months (Nielsen) – adding an extra £37.6m in value over the last year (Nielsen). And the segment is still in volume growth, demonstrating that more shoppers are buying RTD coffee more often (Nielsen).”
RTD chilled coffee is incredibly diverse, in terms of flavours, formats and caffeine intensity – and brands continue to innovate. That means the segment is constantly increasing its appeal to more consumers on more occasions.
Costa Coffee’s RTD range is outperforming the segment by some margin, up 59.4% in value (Nielsen) and up 47.5% in volume (Nielsen). This success can be put down to the widespread popularity of Costa Coffee, the nation’s favourite coffee shop for the last 13 years, and the quality of what’s inside the can. It is also one of the only full ranges in the segment to be 100% HFSS-compliant.
Featuring Lattes, Flat Whites and Frappés, the range caters to a broad variety of different tastes and occasions, and offers a choice of low intensity, medium intensity and high intensity, where distinct audience groups have an option on the various different levels of caffeine, coffee flavour and sweetness.
Emma House, Commercial Planning Manager at Cocoa Canopy, comments: “While coffee and tea tend to dominate the category, the hot chocolate segment is seeing strong year on year growth. Consumers are seeking out of home experiences at home, this is evident in the speciality sector and with younger shoppers.”
While price is key, consumers are still seeking that sweet spot of affordable indulgence and great value, which Cocoa Canopy’s 225g packs deliver. Hot chocolate is also not only a seasonal purchase but is becoming an all-year-round purchase with the versatility of enjoying drinking chocolate over ice throughout warmer months.
Premium drinking chocolate is increasing in popularity as is consumers seeking products that recreate the barista experience at home. As the only UK brand that’s made from real chocolate beads, Cocoa Canopy is in an excellent position to capitalise on this.
Millennials and Gen Z are drinking less alcohol yet still look for products that are mood boosting for either downtime or recharging and consumers are becoming increasingly aware of ingredients and therefore are moving to cleaner labels – Cocoa Canopy only have a handful of simple ingredients and provide drinking chocolate with the focus being on the actual chocolate itself.
The brand’s bestselling blends of drinking chocolate beads include Rich Dark, ‘Milk & Dark’ and Smooth Milk 225g packs. Also quickly gaining more popularity is the newest blend, Salted Caramel, as consumers continue to embrace this popular flavour combination. Each of the blends can be enjoyed either hot or over ice and with your milk of choice, making Cocoa Canopy drinking chocolate extremely versatile and easy to customise.
Lee Hyde, Senior Beverage Expert, MONIN, comments: “The UK branded coffee shop market is now the largest and most advanced market in Europe. It has seen a huge increase in market value in the last 12 months, rising by 11.9% (Allegra Project Café 2023).“
Lattes, cappuccinos and mochas are all growing in popularity and the humble hot chocolate is enjoying a resurgence at the moment – it’s currently ahead of the flat white as the third most ordered hot drink in the coffee shop sector(Allegra Project Café 2023.
With the cost-of-living crisis hitting homes hard, consumers are looking for affordable permissible treats, providing the coffee sector with a huge opportunity.
“Wholesalers should be stocking up on unusual syrup flavours that their coffee shop customers can use to add excitement to their beverages,” adds Hyde. “We expect to see more flavour combinations such as banoffee and spicy mango to offer a more innovative aspect of indulgence. MONIN’s portfolio offers a range of syrup flavours which are versatile with the seasons and can be used all year round to add an indulgent twist to drinks menus.”
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