British consumers continue to turn away from tea and towards coffee, with the latter set to maintain stronger retail current value growth in 2023, mainly driven by a surge in prices. Retail volumes are expected to fall in all major hot drinks categories in 2023, even in those which had been consistently expanding, such as fresh ground coffee pods.
In 2023, overall hot drinks is expected to witness modest retail current value growth, but a drop in retail volume sales, due to the cost-of-living challenges. Inflationary price rises have made consumers more cautious about their purchases.
Nestlé UK is expected to maintain its lead in hot drinks in value terms in 2023, mainly due to its strong presence and success in coffee. The player recently expanded its instant coffee range, introducing new flavours, including Nescafé Gold Chocolate Caramel Brownie Mocha Instant Coffee, and Nescafé Gold Sticky Toffee Pudding.
Discounters is expected to continue to be the winner in terms of the distribution of hot drinks in value terms in 2023, as inflationary price rises take a toll on consumers, forcing them to trade down from more traditional channels such as supermarkets and hypermarkets. As a result, both the latter are set to see marginal declines in their value shares for another year in 2023.
The foodservice channel is expected to continue to experience a volume rebound in 2023, contributing to retail volume decline. The return to normality owing to the end of the pandemic status in 2023 has led consumers to go back to the office, invariably contributing to the rebound for foodservice and a decline for retail.
Over the forecast period, hot drinks is set to grow. Retail volumes are expected to record positive growth from 2025, after being impacted by the current inflationary environment.
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Hot Drinks
This report originates from Passport, our Hot Drinks research and analysis database.
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