The global hot drinks industry continues to record strong growth, with greater consolidation of the industry through merger and acquisitions as well as partnership with retailers and foodservice players. At the same time, regional players from Asia Pacific have expanded their presence, challenging the global players for a share of the coffee market. Over the next few years, challenges remain for hot drinks companies navigating economic downturn, inflationary pressures and climate change.
This report comes in PPT.
The domination of coffee industry is seen through leading coffee companies such as Nestlé and JDE. While consolidation has slowed down considerably, this is still evident through acquisition of small established coffee brands which have been successful in innovation. On the other hand, with the breakup of Unilever, the tea industry is shifting towards greater fragmentation.
Inflationary pressure continues to be the key concern for the industry, although it has stabilised in 2023. With the rising cost of coffee beans attributed to the impact of climate change, coupled with increased operating costs in supply chains, hot drinks companies have varied in the extent of passing on these costs to consumers.
Hot drinks companies are committed to pushing for sustainability, such as sustainable packaging and reaching net-zero emissions by 2050. While companies have been proactively taking steps through partnerships and enhancing sustainable practices, challenges remain due to the process of implementation and cost of sustainable materials.
With climate change impacting the supply of coffee, new production methods for coffee are set to emerge to cater to rising demand, such as the usage of upcycled “beanless” products to mimic the taste of coffee. In tea, which has been associated with a strong health position, new innovations involving formulation enhancement, ranging from healthy ingredients such as vitamins to botanical ingredients, are set to emerge appealing to health-conscious consumers.
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