Coming to the boil

Beverages to go and hot beverages is a very wide category when you think about it. It includes coffee pods and tea bags, jars of instant and bags of quality ground Arabica, pods galore, loose leaves, sachets of malt drinks and hot chocolate, and it also encompasses in-store hot drinks to take-away – and increasingly iced tea and coffee as well.

But other beverages to go can qualify, too – single-serve drinks from the soda category, and the energy, protein and sports sectors as well – food-to-go intersects with it, as do the increasingly popular meal-deal offers.

Drink now or drink later might be called the two faces of the beverages to go and hot beverages coin, and a beverage can be (according to the dictionary definition) anything you want to imbibe – let’s leave RTDs and cocktails out of it just now, because our feature on them can be found elsewhere in this issue.

Traditionally our beverages features concentrate on hot drinks, tea and coffee, and hot milk drinks (but why not also cold? See our Chilled and Frozen feature), for immediate consumption or back home. But things are changing, and the category is growing, which is perfectly fine if it helps retailers’ revenues and profits.

What we see is more interest from producers in entering the category with new and different products – more cold and iced drinks (especially coffees) and more sports, protein and energy drinks, giving evidence perhaps that they see consumers opting for such a beverage more often, whereas in the past they might have chosen a traditional drink.

At the same time, it is clear that the market for teas and coffees has also widened, partly due to the change of habits occasioned by the lockdown. Shoppers, working or spending more time at home, began to take their caffeinated refreshment seriously – alongside their well-being, another heightened development out of the pandemic.

As a result, we have seen some near-professional standard focus on coffee by householders, who are demanding ever-more fabulous products, and the cup of tea, as one producer puts it, is less “builder” and more exotic and premium instead, both in terms of health benefits and tastes.

Hot, hot, hot coffee

Lesley Parker, Brand Controller for Cafédirect at distributor RH Amar, says that with total retail category sales of coffee soaring by eight per cent year on year and currently at £1.5bn, it’s clear that stay-at-home Brits have been continuing to replicate their usual coffee shop experience, meaning that the premium coffee is making further inroads into the home and beyond the café.

“Retail sales of its range of Single Grind, Freeze Dried and Beans surged by +28 per cent (value) in the last year, as the brand continued to capitalise on an increased demand for more premium offerings,” she told Asian Trader.

Paul Junor, revenue and category growth controller at Jacobs Douwe Egberts (JDE), likewise detected a move toward a wider and more premium coffee demand across the nation:

“With more than 24 million households in the UK buying coffee, the demand for retailers to stock a diverse range across the category has never been more important in this channel, especially as convenience and independent retailers continue to lead growth for the category. More specifically, we know that 61.4 per cent of consumers are looking for coffee-shop quality drinks to enjoy in the comfort of their own homes.”

Junor believes that with coffee shop trends making their way into the home, consumers are now looking to trade up with products that allow them to easily recreate their favourite coffee-shop experiences. This trend is being proven through the immense growth within the specialities and mixes segment. “In fact, we know that one in three UK households are now buying these specific products, gaining greater penetration than any other in the last six years with the segment now worth over £220 million,” he says. What’s more, these products are also key at recruiting a younger shopper and therefore expanding the popularity within the coffee category.

“Over the past year, JDE has continued to support retailers by offering new innovations to attract new and existing customers to the category. From packaging upgrades to new products across instant, specialities, and capsules, there is a big opportunity available for retailers to make the most of the demand.”

Meanwhile, star performers in the Cafédirect range included the brand’s 227g caffeinated and decaf roast and ground versions of its best-selling Machu Picchu offering, roast and ground Mayan Gold (227g), and a big pack 750g version of Machu Picchu. All four featured in the top 10 highest growth drivers in 2021, whilst the 227g caffeinated version of Machu Picchu the category’s fastest-growing product overall.

“A busy promotional programme for Cafédirect in 2021, coupled with a high-profile TV advertising campaign, new packaging and the introduction of new products has seen sales of the brand go from strength to strength and cement its position as a key growth driver for retailers of all sizes,” Parker explains, adding that new listings have helped the brand to secure a 6.8 per cent share of all coffee sales, and the majority of the brand’s growth (85 per cent) has come from increasing demand for Cafédirect’s popular Single Origins range – “including our Machu Picchu, Mayan Gold, Colombia Reserva, and Kilimanjaro offerings – as consumers look to experiment at home and replicate their favourite out of home drinking experiences in the comfort of their own homes.”

Junor says that Kenco Duo is tapping into the market trend for coffee-shop worthy beverages, all without the need for a coffee machine. “Having seen an increase of 15.6 per cent vs. 2020, Kenco Duo is a must stock for retailers wanting to drive sales.”

He adds that coffee-shop branded products, like the Tassimo Costa range, continue to be highly popular. With options from Cappuccinos to Lattes, shoppers can bring versions of their usual Costa experiences into the home, presenting a real opportunity for retailers as shoppers look for coffee shop-worthy beverages at the touch of a button.

“We know there are many different types of coffee drinkers out there – from those that enjoy a classic hot latte and some that would prefer an iced latte to go,” says Junor. “Therefore, it is important to offer consumers the opportunity to personalise their coffee, with a special focus on flavour, too. In particular, we have seen the iced specialties coffee segment grow 3.9 per cent vs. 2020 showcasing the opportunity for retailers to drive growth by offering iced coffee options for shoppers to make at home.”

Lesley Parker reminds us that Cafédirect unveiled a pipeline of new product and packaging developments in 2021, including a new look for Single Origins featuring bold, on-pack graphics and the introduction of NEW Colombia Reserva (RRP £3.99, 227g).

She says that new for 2022 was a Freeze-Dried Instant Decaf Machu Picchu Coffee (RRP £4.50, 100g), which joined Cafédirect’s popular instant line up at the start of the year, ahead of the introduction of a whole-bean sibling for filters and cafetières, now available (RRP £4.50, 227g).

“Our research and category insights show there is a real opportunity for retailers to help shoppers grow their coffee repertoires and experiences, as well as to capitalise from growing new trends, and NPD will play a key role in continuing to grow interest in the category from both new and existing shoppers,” said Parker.

Junor says that Kenco’s Iced/Hot Lattes create even more consumption occasions as they can be served perfectly iced or hot, with iced lattes perfect for summer and hot lattes ideal for the winter months.

Turning to traditional instant, Kenco Smooth, Kenco Rich and Kenco Decaf, use a special blend of premium coffee beans and roasts them with care and expertise to create a rich flavour and irresistible aroma. Kenco Decaf 100g remains the number one brand for instant decaf.

Junor adds that having revolutionised the capsule market since its launch of aluminium capsules in 2017, L’OR capsules are now worth £15.5m in retail sales. Tapping into the demand for diverse coffee flavours, this year L’OR launched its new L’OR Flavours Collection Nespresso Compatible Capsules, developed by L’OR Coffee Artists. Available in three indulgent flavours, L’OR Chocolate, L’OR Caramel and L’OR Vanilla, the range of rich espresso with a hint of natural flavour are compatible with Nespresso Original Machines and offers consumers an indulgent treat to enjoy at home.

L’OR has now also launched L’OR Artiste – which Junor describes as a range of the finest, instant coffees on the market. Offering shoppers something a little more special.

Cafédirect’s Parker adds that, building on the success of two rounds of TV advertising support behind range hero Machu Picchu in 2021, Cafédirect is back on air, and across social and digital platforms, with a £1 million+ campaign across Channel 4, ITV Hub, YouTube, Facebook, and Instagram.

Tea – what’s your cuppa?

If coffee looks as if it is being transformed by innovation and NPD, just try tea.

Tracey Wakelin, who is Global Head of Marketing at exotic specialists Ahmad Tea, explained that there has been a “surge of interest” in health and wellness since the start of the pandemic that has created huge demand for wellness teas across the independent convenience channel – as consumers look for healthy swaps to help them stay nourished and feel good.

“We’ve seen growth in demand for our classic Green Teas (Green Tea Pure and Mint Mystique) which are known to have a calming, cleansing effect to revive and refresh. With the summer heatwave, we’ve also seen green teas being served in new formats – over ice with a slice of lemon – for a light, refreshing serve,” she elucidates.

“Functional herbal teas are also a key growth driver, particularly those with a focus on productivity and relaxation. Our Great Taste 2-star award-winning Natural Benefits collection of herbal and green tea infusions with added vitamins and botanicals is testament to this. The six blends – Energy, Beauty, Immune, Digest, Slim and Sleep – have been designed to support consumers when they need it most, whether they’re looking for a morning energy boost or a restful night’s sleep.”

Wakelin says that with the health and wellness boom, another rising trend is decaf tea, in demand from consumers looking for easy ways to support a healthy lifestyle. In fact, she believes, the decaffeinated market is set to soar over the next few years.

“Our new Decaffeinated Teas have been carefully curated to meet this demand. Featuring four full flavoured varieties – Decaffeinated Pure Black Tea, Decaffeinated Pure Green Tea, Decaffeinated Earl Grey and Decaffeinated Indulgent Selection – the range offers consumers the full-bodied flavour they expect from Ahmad Tea, without the caffeine.

“What’s really exciting about our new Decaf collection is not only the wide range available (the collection includes black, green and flavoured teas) but also the depth of flavour. This is something often lacking in decaf tea, but ours offer the same signature flavour the brand is renowned for.”

George Phillips, Commercial Director at Wanis teas agrees, and reveals that whilst sales of traditional black or “builder’s” tea have seen a steady year-on-year decline of around three per cent since 2013, sales of fruit and herbal teas have increased by 24 per cent and green tea by 41 per cent (!) in the past five years, with year-on-year growth of eight per cent.

“Tropical Sun Foods, best known for products such as Jerk Seasoning, Cassava Chips and Coconut Water, have no less than 21 products in their herbal tea range,” says Phillips, who puts the growth of the herbal tea market down to younger consumers. “We believe this trend is driven by younger consumers who are seeking out more adventurous hot beverages, or those with perceived health benefits.”

He adds that with demand increasingly exponentially, particularly with more people working from home, fruit and herbal tea is a subcategory with huge potential: “There are very compelling reasons for impulse and convenience retailers to increase their offering in-store, not least to ensure they are capturing an ever-wider consumer base,” he advises.

There are 21 teas in the Tropical Sun range, and they are being supported by a multi-channel marketing campaign including television adverts aimed at South Asian consumers on channels such as Star, Utsav Plus, Utsav Gold, Sony SET Asia and Sony SAB. Containing all natural ingredients, the Tropical Sun “Teas of the World” range are caffeine-free, promoting calm wakefulness and have received accolades including Great Taste Awards for Sorrel & Ginger Tea and Instant Ginger Tea.

We also look forward to sampling such brews as Cerassie, Neem and Tulsi.

Sweet and chocolatey

With the nights starting to close in and the weather beginning to turn cooler, there is no more enticing prospect than a hot chocolate or comforting flavoured milk-based beverage to warm the cockles of the heart.

Michelle Frost, who is general manager at Mars Chocolate Drinks and Treats (MCD&T), says that by the end of 2021, sales within the Hot Milky Drinks category had returned to pre-pandemic levels with a value of £209m, and were actually back in modest growth, at 0.1 per cent. She says that hot chocolate represented 67 per cent of these sales with a four times higher growth figure of 0.4 per cent.

While sales have dipped over the past six months (especially the sweltering summer ones), Frost believes that there remains enormous growth potential within the category.

“Instant drinking chocolates, such as Galaxy Hot Chocolate have become a household staple rather than a luxury choice,” she says. “Consumers have changed the way they view hot chocolate, and it is no longer purely an evening drink but enjoyed all day long and throughout the year. People are having fun with it, getting creative with toppings and sprinkles.”

Frost believes that the way forward in the category is through new incremental hot chocolate purchases.

“We launched a number of limited-edition product packs last year, with seasonal flavours and inclusions such as sprinkles. These packs, which could be viewed as a family treat or as gifts proved incredibly popular and we have more such launches planned for the future.

“We have also introduced exciting limited-edition flavour innovations for our core Galaxy Hot Chocolate, which is attracting a new younger shopper to the category.  This has already increased our under 45s purchasers by almost 10 per cent when compared to the category as a whole.”

Over at Mondelēz International, Trade Communications Manager Susan Nash says that the Hot Chocolate segment as a whole is in strong year-on-year growth, “proving its ongoing relevance to shoppers throughout the year”.

Mondelēz International’s extensive range includes Cadbury Hot Chocolate, Cadbury Instant, Cadbury Highlights, Cadbury Bournville Cocoa Powder, Fry’s Hot Chocolate, and premium brand Green & Black’s Cocoa and Hot Chocolate – with products tapping into the Drinking Chocolate, Instant Chocolate and Cocoa sub-categories.

Nash says that Cadbury is the UK’s number one hot chocolate brand and is growing at 8.7 per cent year-on-year.

“Balance and wellbeing remain important considerations for many, which provides an opportunity for retailers,” Susan explains. “Cadbury offers a lighter alternative to enjoy hot chocolate through the Cadbury Highlights brand. Cadbury Highlights Milk Chocolate has the smooth, milk-chocolatey taste of the number one chocolate brand, with a recently improved flavour and pack-design, to give strong standout on shelf. At only 38 calories per cup, the product meets shopper demand for lower-calorie options.

The hot choc season is just starting as the ice cream choc season ends…

Ice and energy

But that’s not to say that all ice is just for the summer. On the contrary, the coffee companies, as we have seen above, are very enthusiastic about their iced-coffee offerings, and the energy boys, such as Boost Drinks, have also seen the crossover potential between their own energy domain and iced coffee through the caffeine connection. Hence, the category expands and grows more exciting. This also lets in sports and protein “soft drinks” to be merchandised within the bevs-to-go category as well, as Boost’s Marketing and International Business Director, Adrian Hipkiss, told Asian Trader.

Now worth £209m, the RTD Iced Coffee Category is growing rapidly, with Symbols and Independents sales having now grown to over £41m, he explained.

“With 80.5 per cent of sales value made on four flavours – Latte, Caramel, Espresso and Mocha, Boost is now the #2 largest selling and 1st fastest growing RTD iced coffee brand in unit sales and building on its RTD Iced Coffee range with the addition of a Mocha variant. Adding Mocha to the portfolio allows Boost to capture the consumer demand and provide more choice for customers.”

Such expansion of the market provokes NPD and this year, Boost Drinks duly diversified its portfolio with new products in both coffee and stimulation. “The brand is building on its RTD Iced Coffee range with the addition of a Mocha variant,” says Hipkiss. “Within the RTD Iced Coffee sector, 80.5 per cent of the sales value are made up of just four flavours – Latte, Caramel, Espresso & Mocha – adding Mocha to the portfolio allows Boost to capture the consumer demand and provide more choice for customers.”

He believes that the RTD iced coffee category is growing rapidly and recommends that to capitalise on the future growth, retailers should stock fast-growing brands such as Boost’s RTD Iced coffee range, while allowing for sufficient fridge space to successfully highlight the range of products on offer.

“Supported by a cross-channel media strategy with touchpoints across OOH, social, trade advertising and a depot activation, Boost’s new Mocha variant is set to seek maximum exposure,” Hipkiss concludes. “Backed by high-impact advertising Boost seeks to drive maximum brand awareness and hopes to amplify consumer and retail trial and engagement around the new Mocha variant.”

Are beverages the new soft drinks? From the energy of the category, it might well seem that way.