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July 21, 2014

Shopper Insights in Action Conference 2014 – IIR – Event Recap

Howard TelfordAnalyst Insight by Howard Telford - Beverages Analyst

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This past Wednesday, the 14th annual Shopper Insights in Action conference concluded in Chicago, Illinois. As always, the event focused on strategies to improve shopper activation across all kinds of consumer retail categories and channels, providing the shopper side of consumer marketing (and its research suppliers) an engaging forum to share ideas and success stories.

From a beverages and food service perspective, the three-day event at Navy Pier left me considering the need to address three, macro-level organizational challenges in the drinks industry:

1.       Using ‘big data’ more effectively

As the event’s exhibit hall demonstrated, there are a myriad of methodologically different ways to collect, measure and interpret the in-store responses of consumers to your products and shelves. As an industry that frequently delivers and merchandises its products through a two-tier bottling system (or other independent direct delivery partners), measuring the effectiveness of in-store activity - displays and product location - is vital. How can marketing and channel management teams demonstrate that ‘soft’ information on shopper response, preference or opinion is robust and indicative of volume growth or incremental revenue? Brands and their retail partners must work harder to interpret and contextualise data and insights in order to effectively advocate for change within their businesses.

Research focused and data literate leadership certainly helps. Keynote speaker Sir Terry Leahy, former CEO of Tesco plc, spoke about the need to improve the dissemination and understanding of data within large retailers and other organizations. As research tools become more powerful and useful – from generating understanding of potentially new, developing markets, to specific, localised consumer segments and their behaviours – it remains important that these insights are clear and actionable while reaching the right pairs of eyes.   

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July 19, 2014

Function and Local Ingredients Drive Hot Drinks Sales in Peru

Dana LaMendolaAnalyst Insight by Dana LaMendola - Beverages Analyst

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Our research indicates that Peru will be the fastest-growing hot drinks market in Latin America increasing by 36% to reach US$ 818 million  by 2018. The Peruvian economy has skyrocketed in recent years, with Peru recording the fastest growth in total GDP in the region between 2008 and 2013, a trend that is expected to continue in the forecast. Rising disposable incomes are not only increasing consumer expenditure on food and non-alcoholic beverages, but are also creating more demanding Peruvian consumers. Hot drinks that are having the most success are those like fruit/herbal teas that have a functional position and other plant based hot drinks that appeal to local Peruvian traditions through the use of local ingredients

 

Demand for Health and Wellness Benefits

Peru is expected to be the fast growing tea market in Latin America over the forecast, increasing by 59% in retail value to record the second highest absolute value growth after Brazil. In Peru, tea is already nearly as popular as coffee in terms of at-home consumption. In 2013, per capita retail brewed volume was 6 litres, just slightly below coffee which was 6.8 litres. Although black tea (both standard and speciality) is the most traditional type of tea consumed in Peru, health and wellness trends are causing less mature categories like fruit/herbal tea and green tea to attract increasing consumer interest because of their perceived health benefits. These alternative tea types also carry a higher price tag, particularly fruit/herbal which in 2013 retailed at more than five times the unit price of black tea.

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July 12, 2014

Coffee Shops are Best Positioned to Benefit from Mobile Payments

Dana LaMendolaAnalyst Insight by Dana LaMendola - Beverages Analyst

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Starbucks is the reigning poster-child for mobile payment implementation in US consumer foodservice. While its popular loyalty programme and early move into mobile payments contribute to Starbucks’s celebrity status, the company’s success is also reflective of the particular compatibility of specialist coffee shops and mobile payments. In fact, coffee shops might be the best positioned for mobile payments out of all consumer foodservice operators.

The reason that specialist coffee shops are so well positioned is that their primary offering – coffee – is an everyday and oft-repeat purchase. Indeed, in 2013 US consumers averaged over one cup of coffee per day. A large number of coffee shops purchases are made by commuters looking for their morning jolt on the way to the work.  The high frequency of purchases by coffee shops patrons make these consumers prime candidates for the streamlined payment methods and loyalty benefits afforded by mobile payment technologies. Furthermore, coffee shops are most attractive to demographics that have both access to and interest in mobile technology: affluent consumers, and younger tech-savvy consumers like students.

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July 10, 2014

Five Key Takeaways from Starbucks' M-Commerce Success

The Starbucks mobile payments app has provided one of the best case studies for how to drive consumer adoption of in-store purchases made via a mobile phone. For retailers or foodservice operators looking to replicate Starbucks’ success, there are several best practices to keep in mind before developing, implementing and launching a mobile payment app.

 Join Euromonitor in attending the Connect Mobile Innovation Summit in Chicago, IL from August 18-20th. Senior Consumer Finance Analyst Michelle Evans will be there with many others to learn more and talk about mobile payments in the foodservice industry.

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July 3, 2014

Instant Coffee: Versatility and Convenience Drive Growth

Instant-Coffee-GB-Sample-Slide

Although fresh coffee dominates the overall coffee industry, instant coffee continues to gain share, thanks in large to its appeal amongst new coffee drinkers. The convenience, versatility, and branded experience of instant coffee make it an attractive consumer product in emerging coffee markets, while in established markets, instant coffee seeks to shed its commodity image to sustain consumer interest.

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June 24, 2014

What Next for Mondelez’s Hot Drinks Following the JDE Deal?

Hope.LeeAnalyst Insight by Hope Lee - Senior Beverages Analyst

Once coffee leaves the Mondelez family, other hot drinks such as chocolate-based flavoured powder drinks will be the main hot beverages left. Other hot drinks together with the powder concentrate brand Tang will form Mondelez’s major beverage business following the deal with DE Master Blenders to create Jacobs Douwe Egberts (JDE) and will account for an insignificant share of its global fmcg sales. In the days of Kraft, chocolate-based flavoured powder drinks appeared to be a minor area of its beverages business. Euromonitor International believes that there may be substantial cross-branding opportunities for the Cadbury brand, which may have encouraged Mondelez to retain its chocolate powder drinks. Mondelez is the world’s largest chocolate confectionery maker and the ingredients used in its chocolate powder drinks (cocoa) are similar to those used in its confectionery. Therefore, procurement-wise, it makes sense to keep cocoa-centric Cadbury in the family.

 

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June 9, 2014

Unilever Highlights its Premium Tea Fusion Machine at the London Caffè Culture Show

Hope.LeeAnalyst Insight by Hope Lee - Senior Beverages Analyst

London’s Caffè Culture Show is an exciting annual event for foodservice operators, attended by a wide range of European businesses, including premium beverage manufacturers, beverage machine makers and artisanal bakery operators. At this year’s event, held at London’s Olympia over 14-15 May, Euromonitor International’s analysts observed that premium tea players were busying promoting leaf tea while capsule makers showcased the convenience of their Nespresso-compatible capsules.

Although there are no clear statistics regarding the actual sales of Nespresso-compatible capsules, Euromonitor International forecasts that over 2013-2018 the coffee pod category globally is set to achieve a net increase of US$5.5 billion, with such growth potential continuing to attract new manufacturers of Nespresso-compatible capsules. Having seen its category share fall, Nestlé needs to seriously rethink its strategy with regard to how to defend its global position. The pending merger of Mondelez’s coffee unit with DE Master Blenders’ hot drinks business could make the situation even more challenging for Nestlé.

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June 1, 2014

Three Key Segments Driving Hot Drinks in the UK

 

There are three main segments driving the growth of hot drinks in the UK. First is the coffee segment, driven by large chains such as Costa Coffee and Starbucks. Not only are these chains continuing to expand their outlets in the country, but new innovations such Costa’s Express machine are making it even easier for consumers to consume coffee on the go. The tea segment is also driving sales of hot drinks as tea shops continue to cater to current trends such as green and herbal teas. Finally, the large number of independent coffee and tea shops in the UK are driving sales of hot drinks. Innovation is key in this segment, and many small coffee shops are focusing on quality ingredients and a different experience and environment than chain shops.

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May 30, 2014

Herbal Remedies and Wellness Concerns Drive Tea Sales In Brazil

Dana LaMendolaAnalyst Insight by Dana LaMendola - Beverages Analyst

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According to Euromonitor forecasts, Latin America will be the fastest growing tea region between 2013 and 2018, increasing by 31% in retail value to reach US$1.7 billion.  Brazil is expected to account for more than half of Latin America’s absolute value growth, recording the third fastest retail value growth of any global market, behind only Cameroon and Peru. Brazil’s strong coffee tradition both in terms of consumption and production often obscures the country’s indigenous tea culture which is tied heavily to the perceived medicinal qualities of herbal teas. As health and wellness concerns increasingly taking centre stage in consumer decisions, Brazilian interest in tea is likewise on the rise.

 

Strong Tea Growth Despite Preference for Coffee

The Brazilian tea market is expected to increase by US$ 219 million over the next five years, marking the sixth largest absolute value growth of any global market, trailing only China, India, Pakistan, Indonesia, and Russia. This is even more impressive given the fact that it is the only market among these growth leaders where tea is secondary to coffee as the country’s favourite hot drink.  Indeed the average Brazilian drank nearly 60 cups of coffee for every one cup of tea in 2013. While tea is unlikely to rival coffee anytime soon, the steady high-single digit growth of the Brazilian tea market will enable it to jump five places over the next five years, moving from the 20th largest market in the world in 2013, to the 15th largest market by 2018.

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May 28, 2014

How to Succeed in the North American Pod Coffee Machine Market: It is Not Just Coffee Size Which Counts but Also the Business Model

Lorenza_DellaSantaAnalyst Insight by Lorenza Della Santa - Senior Consumer Appliances Analyst

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Nespresso’s business model (one brand, one drink) will continue to have a tough time in the US. Consumers there are very loyal to their favourite hot drinks brands and will pay a premium for a Keurig coffee machine because it brews all their favourite branded drinks at the touch of a button and at a price that is still perceived as reasonable. To succeed, it will not be enough for Nespresso to focus on coffee size. The right pricing and brand awareness are even more important.

 

North American Consumers are Loyal to Just a Few Coffee Brands…

The North American fresh coffee market is very concentrated, with the top two companies, Green Mountain and JM Smucker, jointly commanding almost 40% of fresh coffee volumes. Despite volume sales just one fifth of JM Smucker, Green Mountain is North America’s most valuable coffee company as almost all of its sales derive from its Keurig pods.

In 2013, Keurig accounted for over 74% of fresh coffee pod sales in the region. This was no surprise considering the fact that Green Mountain is the owner of North America’s biggest pod coffee machine manufacturer, Keurig. In 2013 alone, Green Mountain sold 10.4 million Keurig brewers, accounting for a 40% volume share of the world’s single-serve coffee machine market.

Continue reading "How to Succeed in the North American Pod Coffee Machine Market: It is Not Just Coffee Size Which Counts but Also the Business Model" »

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Recent Posts

Shopper Insights in Action Conference 2014 – IIR – Event Recap

Function and Local Ingredients Drive Hot Drinks Sales in Peru

Coffee Shops are Best Positioned to Benefit from Mobile Payments

Five Key Takeaways from Starbucks' M-Commerce Success

Instant Coffee: Versatility and Convenience Drive Growth

What Next for Mondelez’s Hot Drinks Following the JDE Deal?

Unilever Highlights its Premium Tea Fusion Machine at the London Caffè Culture Show

Three Key Segments Driving Hot Drinks in the UK

Herbal Remedies and Wellness Concerns Drive Tea Sales In Brazil

How to Succeed in the North American Pod Coffee Machine Market: It is Not Just Coffee Size Which Counts but Also the Business Model