Tea has long been an essential purchase for shoppers, either as a top up or included in their regular shopping baskets.
Over the past couple of years, as a response to the pandemic and subsequent closure of cafés, sales of hot beverages increased in the wholesale channel.
Sales have more recently levelled out, with shoppers seeking choice and variety from their favourite brands to enjoy at home.
“Wholesalers should consider stocking a variety of tea blends in different pack sizes to offer choice in flavour and format,” comments Des Kingsley, Chief Executive Officer at Typhoo Tea Ltd.
Typhoo Tea Original, Decaf and Gold are staples in the Hot Beverages fixture, with a mixture of pack sizes from 40s and 80s to 240s.
“Decaf is a must stock as one of the fastest growing sectors of the tea market,” adds Kingsley. “Wholesalers should consider stocking Typhoo Decaf in their core range as more and more consumers swap one or more of their regular brews for the decaf variant.”
Typhoo kicked off 2022 with its first brand campaign in almost five years. The first phase of the ‘OO Please campaign included a huge consumer stunt with visual projection, mass experiential sampling, radio advertising and sponsorships, PR, and social media.
“We are very confident that, as we increase our marketing focus and distribution, demand for our iconic, quality brand will be particularly strong amongst the nation’s tea shoppers,” says Kingsley. “We want to put Typhoo back at the forefront of shoppers’ minds and deliver profitable growth in the UK and internationally. We’re advising retailers to stock up on Typhoo Tea’s bestsellers as product and brand awareness will be at an all-time high.”
Helen Boulter, Multi Sector Sales Controller at Taylors of Harrogate, comments: “Stocking the bestselling lines plays a huge part in making the most of price marked pack offerings in the hot drinks sector.
Wholesalers can maximise sales by ensuring a strong, visible presence in-depot, as well as online and through the use of leaflets promoting PMPs.”
Taylors of Harrogate’s top sellers within convenience are the Yorkshire Tea 80s PMP pack, followed by the 40s PMP pack. Another great seller is Yorkshire Tea Decaf which is up 13.7% in value and 18.9% (IRI and Kantar) in volume retail at total market level, over the last year.
Standard black tea holds the largest share in the tea category, accounting for £368m in value retail sales (IRI and Kantar). Across the total market, Yorkshire Tea is the UK’s number one standard black tea brand with more than a third (33.6%) of the entire market share (IRI and Kantar). Similarly, Yorkshire Tea Decaf is the number one Decaf brand, with a 29.7% share (IRI and Kantar). The Decaf tea category is now worth £57.8m (IRI and Kantar) in value sales across the market and is a sector that is experiencing continued growth.
Decaf continues to experience growth in the tea category with the decaf market increasing by 2.4% compared with last year (IRI and Kantar). While some shoppers are switching to decaf from standard black tea, there are also incremental sales in this category, with consumers enjoying a caffeinated brew in the first part of the day, then switching to a decaf option in the afternoon and before bed (Kantar). Decaf can help in trading up shoppers within the tea category, with Decaf having a higher pence-per-cup than standard black tea.
“As end-consumers expand their at-home repertoire, wholesalers should stock a range of product types within a given category so that independents and convenience stores are able to offer their customers a select choice of quality products,” adds Boulter. “The growing popularity of decaf tea, for example, indicates that a wider portfolio should be stocked to appeal to a more diverse range of shoppers. In particular, offering a recognisable and well-loved brand such as Yorkshire Tea Decaf, which comes in a 40s PMP pack, will exceed expectations and entice custom.”
Mark Popplewell, Customer Category Lead, Nestle UK&I Beverage, comments: “There is definitely a trend for consumers replicating their favourite coffee shop at home. As shopper missions are adapting, almost 35% of consumers have said that they prefer replicating their coffee shop experience at home (HIM).”
The higher PPC segments tend to do better in this segment as consumers are looking for a more elegant and premium coffee. Indulgence is the main occasion for this category of coffee. It can be to indulge in a well-deserved sweet treat or to enjoy the premium products that the coffee category has to offer. Additionally, OOH Coffee can act as an alternative to alcohol to bring people together while enjoying a beverage.
“This is evident through the rapid increase in the number of coffee shops that you see on the high street, but it also exists in home as coffee can bring friends and family together,” adds Popplewell.
The best performing SKU within this category is Nescafé Dolce Gusto Cappuccino with value sales over £1.3m equating to almost 7% of the category from one single SKU (IRI).
The beverages category for total grocery outlets is worth over £2bn with the biggest share being from the hot coffee segment which is accountable for over 63% of the share, worth £1.3bn (IRI). In traditional wholesale and convenience, coffee is worth £184m, worth 65% of hot beverages market share (IRI).
Decaf coffee is worth 4% of the wholesale and convenience market with value sales amounting £8.9m (IRI). Decaf tea is worth 5.1% of the wholesale and convenience market amassing value sales of £3.6m (IRI).
Overall decaff coffee is on the rise, growing +3.7 per cent MAT growth. 70 per cent of decaff shoppers also buy caffeinated and whilst for many, decaff serves as an incremental cup often consumed later in the day to help unwind, for others decaff is simply a health and wellbeing choice. This year Nestlé has launched a new Pure Soluble 95g PMP range.
NESCAFÉ Azera has partnered with independent Manchester-based coffee roastery, Grindsmith, to create the UK’s first craft coffee in instant format. Through this unique partnership, NESCAFÉ Azera and Grindsmith combined the worlds of instant and craft, to develop instant coffee with all the quality consumers would expect from their local coffee shop.
“Convenience shopper missions are changing as we continue to spend more time in home with main shop and planned top up shops being more important in the channel,” says Popplewell. “Therefore, leading to larger basket sizes and higher spend in convenience stores. However, it also means that shoppers are more likely to purchase large pack formats so wholesalers should provide these for their customers.”
Another big trend in the coffee category is lifestyle changes with many shoppers choosing dairy alternatives or buying into decaf to control their caffeine intake. These trends can boost wholesalers’ sales if they understand the opportunity to cater for more coffee buyers.
“Amongst the wide breadth of opportunities available for wholesalers to use at their advantage, the biggest and arguably most profitable is by taking a more pro-active approach rather than reactive,” claims Popplewell. “For instance, rather than just stocking in products from segments which are on the rise, predicting and forecasting trends allows wholesalers to be in the driving seat and ahead of competition when these do come into fruition.”
Wholesalers trading within the beverages category can benefit from a lot of support in relation to key metrics/insights, key measures, and advice on the premiumisation journey of a traditional beverage shopper. They can do this by getting touch with the Nestle CCM (Customer Category Managers) who will give an objective view of the category and give invaluable advice on fixturisation and shopper behaviour.
Lesley Parker, Brand Controller for Cafédirect at distributor RH Amar, comments: “With total retail category sales of coffee soaring by +8% year on year and currently at £1.5bn (Kantar), it’s clear that stay at home Brits have been continuing to replicate their usual coffee shop experience.”
Cafédirect, which features its Fairtrade positioning on every pack and invests 50% of all profits into Producers Direct – a UK charity that works directly with farmers to improve sustainability and livelihoods, right across the coffee growing world – continues to be one of the key drivers of this trend.
Retail sales of its range of Single Grind, Freeze Dried and Beans surged by +28% in value (Nielsen) in the last year, as the brand continued to capitalise on an increased demand for more premium offerings.
Star performers in the range included the brand’s 227g caffeinated and decaf roast and ground versions of its best-selling Machu Picchu offering, roast and ground Mayan Gold (227g), and a big pack 750g version of Machu Picchu. All four featured in the top 10 highest growth drivers in 2021, whilst the 227g caffeinated version of Machu Picchu the category’s fastest-growing product overall (Nielsen).
“A busy promotional programme for Cafédirect in 2021, coupled with a high-profile TV advertising campaign, new packaging and the introduction of new products has seen sales of the brand go from strength to strength and cement its position as a key growth driver for retailers of all sizes,” explains Parker.
“New listings throughout all retail channels have also helped the brand to secure a 6.8% share of all coffee sales (Nielsen), and the majority of the brand’s growth (85%) has come from increasing demand for Cafédirect’s popular Single Origins range – including our Machu Picchu, Mayan Gold, Colombia Reserva, and Kilimanjaro offerings – as consumers look to experiment at home and replicate their favourite out of home drinking experiences in the comfort of their own homes.”
Cafédirect unveiled a pipeline of new product and packaging developments in 2021, including a new look for Single Origins featuring bold, on-pack graphics and the introduction of new Colombia Reserva (RRP: £3.99, 227g).
New for 2022 is a Freeze Dried Instant Decaf Machu Picchu Coffee (RRP: £4.50, 100g), which will join Cafédirect’s popular instant line up from the New Year, ahead of the introduction of a whole bean sibling for filters and cafetières in spring (RRP: £4.50, 227g).
“Our research and category insights show there is a real opportunity for retailers to help shoppers grow their coffee repertoires and experiences, as well as to capitalise from growing new trends, and NPD will play a key role in continuing to grow interest in the category from both new and existing shoppers,” says Parker.
“Offering whole bean products is a great way to expand shoppers’ interaction with the category, whilst adding two new Machu Picchu formats to our caffeine-free range is a direct response to a huge spike in demand for decaf products, with decaf Roast & Ground products currently growing nearly three times faster than their caffeinated equivalents.”
Building on the success of two rounds of TV advertising support behind range hero Machu Picchu in 2021, Cafédirect will be back on air, and across social and digital platforms, with a £1 million+ campaign in 2022 across Channel 4, ITV Hub, YouTube, Facebook, and Instagram.
Focusing on up to three key bursts throughout the year – including Spring, Summer, and Autumn – the 2022 campaign will feature the addition of a new end frame focusing on the brand’s new, high growth Mayan Gold variant.
Promotions will also feature as part of Cafédirect’s support package for retailers throughout the year, whilst being careful not to detract from the brand’s continuing ability to drive full price sales for retailers across the year.
“With penetration and brand awareness for Cafédirect growing strongly year on year, we have a clear opportunity to work with our retail partners to make Cafédirect an increasingly important sales driver for retailers of all sizes. This continued investment behind the brand is testimony to the size of the opportunity for Cafédirect and the premium coffee category in 2022 and beyond,” adds Parker.
Adrian Hipkiss, Marketing and International Business Director at Boost Drinks, comments: “Within the ready-to-drink (RTD) Iced Coffee sector, 75% of the sales value is made up of four flavours – Latte, Caramel, Espresso & Mocha (IRI) – and we’re proud to offer all four of these flavours, with our latest addition, Boost Mocha, which we launched in March.”
The market for Iced Coffee is significant and is now worth £194m (IRI) with Symbols & Independents sales grown to over £35m (IRI). The growth of this category is at +30% volume and +31% value YOY (IRI), which makes it the current fastest growing category within Soft Drinks.
“Because of this, and with warmer weather coming, it’s important to give iced coffee products ample fridge space to capitalise on future growth and meet consumer needs,” adds Hipkiss.
Boost is now the #2 largest selling & 1st fastest growing RTD iced coffee brand in unit sales (IRI). In addition to this, currently it is the only brand operating in Energy Stimulation, Sports Drinks, RTD Iced Coffee and Protein Shakes categories selling over 38.3m units within the past year (IRI).
Recent research shows that 75% of the sales value within RTD Iced Coffee is made up of four flavours – Latte, Caramel, Espresso and Mocha (IRI). Boost is already selling all of these flavours as the brand continues to grow its iced coffee offering.
With the impressive growth trajectory of the RTD Iced Coffee sector, Boost anticipates a strong summer for the category, particularly as 30% of hot coffee drinkers are opting for iced variants during the warmer months to get their coffee fix (Cousins Davis).
“We encourage retailers to ensure they have a separate space for their iced coffee drinks, instead of mixing them in with other soft drinks such as energy. This ensures any possible confusion of the drinks being perceived as coffee flavoured energy drinks, as opposed to actual coffee-based products is removed,” says Hipkiss.
“Retailers need to ensure they can meet this demand to lock in repeat custom. Reliability is a huge factor in the consumer journey when it comes to choosing where to shop, so ensuring the drinks are always chilled and available will allow the opportunity to capitalise on the growth opportunity of this booming sector.”
To support the coffee line, Boost will be taking part in digital and depot activations to help launch this into the trade market. This will be supported by distribution driving activity to over 10,000 independent retailers. Furthermore, the brand will be undertaking experiential activity involving sampling and activations through social media support.
The Choose Now campaign is live and continuing into 2022 as Boost’s biggest marketing campaign to date. The campaign is wide reaching and features across Out of Home advertising, as well as TV advertisement and Broadcasting Video On-Demand adverts. These are targeted towards programmes with a strong student and young adult viewership, driving further awareness of the Boost range across all demographics.
The 2021 CSR campaign which reinforced the message that community is at the heart of everything Boost Drinks does, is set to continue into 2022. The ‘Choose Now Change Lives’ campaign allowed Boost to support a large variety of organisation such as university societies, sports teams and voluntary groups that benefit their community and have a positive impact on people’s lives. This is something Boost champions by working with local independent retailers and is a project that will continue this year.
“A key factor within maximising sales to retailers can be boiled down to the positioning within the depot and using exciting displays. Digital aspect of advertising are also just as important; wholesalers should be using banners and other disruptive formats on their websites. To support this, email mailings and app-based promotions such as push notifications are key to helping drive further sales,” Hipkiss continues.
“Advertising is often overlooked at a wholesale level but is critical to driving sales from retailers. Wholesalers should ensure they draw attention to attractive price points, deals and cross-promotions with eye-catching POS, to support those purchases.
Hannah Morris, Category Team Leader, Jacobs Douwe Egberts, comments: “The consumer demand for out of home coffee consumption tends to drive many of the retail coffee trends, with consumers looking to recreate their favourite coffee-shop style beverages.
Kenco Duo enables consumers to create coffee-shop style drinks at home with that signature magic swirl, without any fuss. Kenco has sold almost £12m value sales in the MAT in convenience (Nielsen) and tapped into the wider market trend, with consumers looking to replicate their favourite coffee-shop style from home. Kenco specialities have particularly benefitted from this trend, seeing double digit value sales growth of +33% in the MAT (Nielsen).
Flavours also make up an important segment within specialties, growing ahead of the market, +26% RSV L2Y. The category is growing +16% (Nielsen), and makes up 30.5% of the specialities market.
“For retailers, by adding specialty ranges such as Kenco Salted Caramel Duo, they can tap into trends, allowing consumers to re-create some of the additional theatre from their favourite coffee shops at home, to ensure they meet and exceed the demands of their shoppers,” adds Morris.
Cold coffee is one of the fastest growing trends within out of home consumption, being valued at £211M RSV (Nielsen) last year. For wholesalers, stocking convenient, indulgent iced coffee options can help to maximise their coffee sales. JDE’s latest launch, Kenco’s Iced/Hot Latte perfectly fits into this trend, offering two flavour variants- Salted Caramel Latte and Vanilla Latte, that consumers can conveniently create for that perfect Iced Latte at home by adding cold water.
“To maximise coffee sales, wholesalers should remain on top of the latest consumer trends, and utilise clear signposting to encourage customers to buy on impulse,” says Morris. “Merchandising by sub-category can be an effective way of increasing visibility on those in-demand products. Engaging point of sale can also prove to be effective at increasing visibility for popular, on-trend flavours to boost sales.” Susan Nash, Trade Communications Manager at Mondelez International, comments: “The hot chocolate segment as a whole is in strong year-on-year growth (Nielsen), proving its ongoing relevance to shoppers throughout the year.”
Mondelez International’s extensive range includes Cadbury Hot Chocolate, Cadbury Instant, Cadbury Highlights, Cadbury Bournville Cocoa Powder, Fry’s Hot Chocolate, and premium brand Green & Black’s Cocoa and Hot Chocolate – with products tapping into the Drinking Chocolate, Instant Chocolate and Cocoa sub-categories. Cadbury is the UK’s number one hot chocolate brand and is growing at 8.7% year-on-year (Nielsen).
“Balance and wellbeing remain important considerations for many, which provides an opportunity for wholesalers and retailers,” adds Nash.
Cadbury offers a lighter alternative to enjoy hot chocolate through the Cadbury Highlights brand. Cadbury Highlights Milk Chocolate has the smooth, milk-chocolatey taste of the number one chocolate brand, with a recently improved flavour and pack-design, to give strong standout on shelf. At only 38 calories per cup, the product meets shopper demand for lower calorie options.
“Elsewhere, consumers increasingly say that if they are going to have a treat it should be something they really enjoy, so premiumisation is a key trend within the hot chocolate category,” says Nash.
Mirroring this, premium hot chocolate brand Green & Black’s has grown by 8.2% over the past year, with the organic market also in growth (Nielsen). The brand’s hot chocolate is made with the finest organic cocoa beans which are ethically sourced, reflecting the values of the Green & Black’s brand.
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