The frugality of the “less but better” trend has persisted in the US since the inflationary woes of 2022, with many consumers choosing to maintain or increase their at-home consumption of hot drinks, even as more opportunities arise for foodservice consumption occasions. Coffee and tea have maintained price inelasticity, while the attachment to coffee shops has started to drift.
Cold coffee and tea continues to be the dominant theme in hot drinks in 2024, as younger generations show seasonal agnosticism about their desire to consume chilled offerings. RTD tea has long been the dominant form of cold consumption, but RTD coffee and yerba mate are increasingly growing their volume shares.
The fallout of Unilever’s exit from hot tea is still playing out, with Ekaterra transforming into Lipton Teas & Infusions, and hoping to revive the struggling black tea bags category. Unilever is still betting on the potential of tea in the US, but largely within both the non-alcoholic and alcoholic segments of RTD tea through its partnerships with PepsiCo and FIFCO respectively.
E-commerce has continued to be the key story in retailing in 2024, but less so than it was during previous years. The pandemic period was a massive accelerant for the adoption of e-commerce in retailing in general, and in grocery categories specifically.
Even as consumers are looking to reduce their spending, sales of hot drinks in foodservice soldier on, and volume sales are expected to continue to rise slightly in the US in 2024. In spite of surging prices, driven by labour shortages in foodservice, coffee and tea in restaurants and cafés have strangely benefited from these circumstances.
Retail and foodservice volume sales of hot drinks are expected to remain relatively stable in the US in the forecast period, given that the consumption of such products is essential to many people’s daily routine, and the low price floor for caffeination gives access to all. While the industry has weathered the high inflation and commodity costs of the last two years, the future remains uncertain without a clear solution to supply chain problems and the climate crisis.
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