The convenience of hot drinks for local consumers is becoming increasingly significant due to the penetration of the pod format in tea, malt-based and chocolate-based flavoured powder drinks. This format offers consumers the flexibility to experiment with brewing new drinks with familiar home coffee machines.
As retail and foodservice players are at odds to retain their customers, they are heavily relying on the convenience trend, as evident with new product developments that have ventured into the local market. Demand for fresh ground coffee pods, standard fresh ground coffee and instant coffee remains elevated due to the emergence of foodservice players such as Blue Bottle and NOC offering their brands through retail.
Coffee machines for home usage have dominated the local market in the past year, with both foodservice and retail brands marketing their coffee brands as compatible with Nespresso or Nescafé Dolce Gusto pod coffee machines, thereby encouraging consumers to experience premium quality coffee at home. With major foodservice brands such as Starbucks entering retail with premium instant coffee mixes, consumers can easily find an instant version of Starbucks staples to enjoy at home consumption.
During the second half of 2022, consumer foodservice players remained resilient as offices introduced hybrid working arrangements that allowed the public to work from cafés, thereby permitting them to maintain their business operations and customer base. However, businesses also allowed employees to continue working from home for part of the week, resulting in stable retail demand for hot drinks.
Foodservice sales of hot drinks continue to recover due to the full relaxation of pandemic guidelines in Hong Kong, combined with consumers' own desire to create memorable experiences outside of their homes. To expand their reach, foodservice players are penetrating the retail channel by providing premium-quality coffee in convenient packaging and different formats, such as fresh coffee beans, pods and filter coffee, which allow at-home consumption.
Within the highly competitive landscape of hot drinks in Hong Kong, consumers are exposed to a wider range of products from both retail and foodservice brands to enjoy at home. With the rise of the pod format in hot drinks, the convenience element is highlighted, with significant potential for premium coffee speciality brands, tea brands, malt-based and chocolate powdered brands to infiltrate retail through the use of pods, thus tripling the usage of pod coffee machines at home.
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