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What’s Hot In Drinks

Published on Oct 15 2021 5:55 AM in Retail tagged: Trending Posts / Nestlé / Starbucks / Coffee

What’s Hot In Drinks

When lockdown restrictions were introduced across the country in 2020, all categories saw an increase in demand, as customers stockpiled goods such as tea and coffee. Donna Ahern reports. R...

When lockdown restrictions were introduced across the country in 2020, all categories saw an increase in demand, as customers stockpiled goods such as tea and coffee. Donna Ahern reports.

Research conducted by NielsenIQ on behalf of Checkout reveals that the Ambient Hot Beverages category in Ireland is currently valued at €128 million for the latest 52 weeks ending 15 August 2021.

While this figure equates to a value drop of 7.1% compared to a year ago, as the economy reopens we are seeing this value percentage figure drop back to 6.8% for the last 12 weeks compared to a year ago.

The data shows that instant and ground coffee account for the highest increase in this category and that value sales have increased by an impressive 11% for the 52 weeks to 15 August, compared to the same period last year.

A total of 2.8 million kilogrammes of instant coffee were sold during the period, which equates to 1.6 kilogrammes per household in Ireland (source: CSO 2016 Census private households).

Packaged tea bags value sales increased by 1.3% during the period, while sales of coffee beans increased by 4.2% compared to the same period in 2021.

COVID-19 Impact

A recent research reported conducted by Euromonitor states that when COVID-19 restrictions were introduced in Ireland back in 2020, all categories experienced an increase in demand, as customers stockpiled goods such as tea and coffee.

Equally, consumers spending more time at home and working from home meant that demand for these products were higher.

On 12 March, any events that involved outdoor gatherings of more than 500 people and indoor gatherings of more than 100 were cancelled and schools, colleges and other facilities were once again closed.

On 15 March, Ireland announced the closure of all pubs and bars – two days before St Patricks Day – which had a devastating impact on the on-trade business.

The report noted that the leading players in the Irish tea market – Barry’s and Lyons – are both Irish companies with a long established presence in this country.

This helped them to maintain consistency of supply when other brands experienced temporary delivery delays.

E-commerce generally performed well for all three hot drinks categories in 2020, as many consumers shifted to shopping online as a result of the pandemic.

The Euromonitor research also showed that premium products, in particular coffee, plant-based hot drinks and health-infused tea, performed well in the e-commerce channels due to consumer concerns that the lockdown would cause a shortage in other distribution channels.

Foodservice And Retail

The closure of all on-trade outlets during the lockdown period had a big impact on foodservice sales in 2020, causing significant losses for many companies.

However, Euromonitor reports that Ireland’s better than expected recovery from the virus meant that on-trade establishments reopened much sooner.

In 2018, Nestlé and Starbucks signed a global licensing deal in 2018 that granted food giant Nestlé the perpetual rights to market US coffee chain Starbucks’ packaged coffee and food service products globally. The initial agreement excluded goods sold in Starbucks coffee shops and ready-to-drink products.

However, on 27 July, Nestlé and Starbucks announced that they were extending their partnership to launch ready-to-drink coffee beverages in markets across Southeast Asia, Oceania and Latin America.

“With our expansion plans into ready-to-drink coffee, Nestlé will continue to build on its global leadership in coffee and will benefit from new growth opportunities in a segment that is developing rapidly and attracting new and younger consumers,” said David Rennie, head of Nestlé coffee brands.

Under the extended partnership, Nestlé and Starbucks will roll out products like Starbucks Frappuccino and Doubleshot to select markets in Southeast Asia, Oceania and Latin America from next year and will also develop new products.

Price Hike & Supply Deficit

Reports across the media globally on 25 August highlighted the fact that Brazilian farmers whose coffee fields were severely damaged by the worst frosts in 27 years had started taking out dead trees to make room for new plantings, with some of them planning to switch part of the affected land over to grains.

Farmers in Brazil's Minas Gerais state, the top coffee area in the country, are pruning the trees impacted by the frosts and, in some cases, are taking the trees out altogether, using tractors, when they see that the plant has died.

Clearing coffee trees for soy and corn could allow Brazilian farmers to profit from high grains prices early next year, when the crops are harvested.

However, fewer coffee trees in the world's top producer will most likely lead to years of higher coffee prices for consumers. In addition to future price hikes, the worst cold front to hit Brazil's coffee producing area since 1994 is estimated by the government to have hit 11% of the planted area, potentially hurting production prospects for the next two seasons, which will likely create a supply deficit in the global coffee market.

The Next Big Thing

According to Euromonitor, thanks to increased awareness of the health benefits of tea, any drink that emphasises immunity boosting or other health properties is set to perform above the category growth rates for the next 12 to 18 months. This means that green tea, tea with infusions and plant-based hot drinks can all expect to see sales continue and grow in that period. When it comes to coffee, Bewley’s revealed the top coffee trends for 2021 and beyond earlier this year.

Curated by Sheila Dowling, sales director and coffee expert at Bewley’s, the list highlights some of the fascinating global coffee crazes that we can expect to see over the coming months.

These include coffee brands aiming to support the physical and mental needs of consumers by using ingredients such as probiotics and CBD in their coffee roasts.

And the love of almond and oat milk is here to stay, as plant-based milk alternatives continue to grow in popularity.

According to the Bewley’s Coffee Consumption Report 2020, dairy alternatives prove to be popular among younger coffee drinkers, with 68% of 18-24-year-olds using plant-based milk alternatives.

Plant-based milk alternatives will also become more accessible across the country, with the launch of new initiatives such as Bewley’s plant-based coffee docking stations, a partnership with Alpro, that offers plant-based menu solutions to Bewley’s C-store operators nationwide.

'Exotic' Coffee

Younger coffee drinkers are also experimenting with tastes as they seek out innovative and exotic coffee flavours.

Research compiled by Mintel in 2019 found that 66% of coffee drinkers aged 16-44 are interested in trying coffee inspired by different countries.

In addition, a recently compiled Mintel report, A Year of Innovation in Coffee 2020, found that in the last year, 59% of all coffee launches featured ethical or environmentally friendly claims, specifically targeting eco-conscious consumers who seek transparency on the bean to cup process. Coffee brands are expected to prioritise two aspects of ethical consumerism, namely sustainability (both in packaging and coffee farming practices) and ethical trading with farmers.

Lab fermented coffees have also started to emerge, with pioneers of the new method using fermentation to create tastier, more flavoursome beans.

For newbie coffee drinkers, bitterness is the main barrier to trying new brews, but fermentation labs will look to solve this issue by creating a smoother bean within a lab-controlled environment.

And, finally, the world's first molecular coffee lab, Atomo Coffee, opened in 2020, signalling a new era for coffee creation.

Atomo Coffee lab founders have identified the individual compounds that make up coffee, allowing them to enhance aroma and flavour and deliver a more consistent-tasting, superior brew.

Employing a process that uses no coffee beans whatsoever, molecular coffee labs are predicted to pop up across the globe in the coming years in order to meet rising global coffee demands and help offset the effects of climate change, which threatens the future of Arabica beans.

2021 Checkout – your source for the latest Irish retail news. Article by Donna Ahern. For more retail news click here. Click sign up to subscribe to Checkout.

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