The volume performance improved in the Western European hot drinks market in 2024, albeit still remaining marginally negative. Although inflation has eased, prices continue to rise, negatively impacting volume sales, but boosting the value performance. The health and wellness trend continues to drive sales of fruit/herbal tea, while fresh coffee beans was another product defying the general gloom surrounding much of the industry at the end of the review period.
This report comes in PPT.
There is increasing pressure on mid-priced items in the German market, as there is rising polarisation between premium products and lower-end brands or private label. While some consumers are still able to spend money on premium brands, many consumers have reacted to the rising prices by looking to save money on food and beverages, either by buying private label products or taking advantage of the discounts offered by grocery retailers.
Modern grocery retailers, particularly supermarkets, hypermarkets and discounters, dominate the retail distribution of hot drinks in Western Europe. Discounters were gaining share in most countries in recent years, as their low prices and wide range of private label lines met the needs of price-sensitive consumers in a time of rising prices. E-commerce remains a relatively small channel in most countries, although it accounts for almost a quarter of retail sales value in the UK.
Coca-Cola-owned Costa Coffee has been enjoying great success in the UK market, utilising a number of strategies to achieve this. In addition to driving the development of the vending channel and expanding into instant coffee mixes with new flavours such as Salted Caramel Latte, Creamy Cappuccino and Millionaires Mocha, it also implemented substantial promotions, significantly lowering prices on various products, in the face of the cost-of-living crisis.
Although some countries, such as France, have already seen foodservice sales return to their pre-COVID-19 levels, others, like Germany, have yet to achieve this. While society has long since fully reopened, there is still an element of hybrid working as a hangover from the pandemic, with many office workers still working from home on at least some days a week, and continuing to use the coffee machines they purchased in lockdown to provide them with a foodservice-style hot drink.
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