While overall demand for hot drinks in South Africa continues to rise, value sales growth is more dynamic. This is because while overall inflation levels in the country have declined in 2024 compared to previous years, they remain elevated within the food and drinks space, causing higher input costs for manufacturers and a decline in consumers’ purchasing power.
Following a considerable drop in demand during the pandemic, foodservice volume sales of hot drinks have fully recovered in 2024, based on two key factors. First, the direct negative impacts of the pandemic, such as limited freedom of movement and ability to visit bars, restaurants or cafés, is no longer present, although structural impacts remain.
While the competitive landscape of hot drinks in South Africa is relatively mature, with major players such as Nestlé, Jacobs Douwe Egberts and Unilever ranking highly, there is still ample opportunity for growth from smaller players, as well as private label. Much of the success seen by these smaller players is the result of higher levels of localisation as a way to mitigate rising prices.
Sensitivity to price remains a significant factor for many South Africans, prompting retailers to adjust their strategies and focus on volume sales. As a result, promotions, including 2-for-1 and discount offers, remain prevalent across retailers, e-commerce platforms, and mobile app purchases.
The absence of consistent power outages in South Africa towards the end of 2024 has improved consumer demand for hot drinks through foodservice. Importantly, affluent consumers are substituting their at-home coffee drinking habits (such as the use of coffee pod machines), to coffee specialists, based on their preference for premium quality and a wider range of coffee types.
Over the forecast period, the health and wellness trend is likely play a significant role in influencing the performance of hot drinks in South Africa. This is because local consumers are expected to become increasingly concerned about ingredients listed.
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Hot Drinks
This report originates from Passport, our Hot Drinks research and analysis database.
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