Rising prices due to high inflation continued to put pressure on demand for hot drinks in 2023 as consumers prioritised essentials when spending. Nonetheless, growth remains positive across the market, with consumers opting for more affordable brands and smaller pack sizes, rather than avoiding hot drinks altogether.
Total volume sales of hot drinks increased for the first time in three years during 2023 as on-trade sales continued to recover from the dramatic decline registered at the peak of the COVID-19 pandemic in 2020 and off-trade sales returned to positive growth first time since the onset of the pandemic. However, growth rates across both channels remain under pressure due to high inflation and the rising cost of living, which is having a particularly negative impact on sales in categories that are regarded as non-essential.
Hot drinks are generally considered a breakfast drink in Ghana, with children and young teenagers tending to prefer malt-based hot drinks such as Milo and adults, particularly women, favouring tea. In addition, all types of hot drinks continue to be consumed as a substitute for snacking, especially during the mid-morning or later in the evening.
With high inflation still eroding consumer purchasing power to a large degree during 2023, many local consumers continued to favour more affordable brands as a way of limiting expenditure. Thus, as average unit prices have soared across all hot drinks categories at a time when no corresponding increases are being seen in wages and salaries, new, more affordable brands have emerged to cater to the needs of a population that was already generally highly price-conscious.
Ghana’s road system is better developed than in other parts of sub-Saharan Africa. However, the distribution of consumer goods across the country to more remote, rural areas remains problematic and time consuming as rural roads are still bad.
Retail volume sales of hot drinks are set to increase steadily over the forecast period, underpinned by population growth, rapid urbanisation and long-term economic development, all of which is set to expand the urban middle class, a group that forms the core consumer base for hot drinks. Sales ae expected to return to pre-pandemic levels by 2027, with high inflation and pressure on household spending set to continue undermining growth prospects across the industry.
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This report originates from Passport, our Hot Drinks research and analysis database.
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