Hot Drinks in Australia

Abstract

Why buy this report

• Get insight into trends in market performance
• Pinpoint growth sectors and identify factors driving change
• Identify market and brand leaders and understand the competitive environment

Product coverage

Coffee; Other hot drinks; Tea

Executive summary

Hot drinks growth continues

In 2007, hot drinks in Australia continued to grow with total volume growth of over 3%. On-trade volume sales posted stronger growth than off-trade volume sales in 2007 due to the rising number of on-trade specialist coffee shops and other cafés/bars in Australia. The 2007 result was driven mainly by coffee, where the trend toward fresh coffee continued.

Premiumisation changing the face of hot drinks

Across hot drinks, there is evidence of a trend towards premiumisation, particularly in tea and coffee. The traditional category leaders -- black standard tea and instant coffee -- are gradually but continuously being eroded by premium-priced other tea products and fresh coffee.

Major suppliers continue to increase dominance

In hot drinks, where new topical concerns, such as fair trade and quality and authenticity, are emerging, suppliers devoted to these issues are making very little impact as the major suppliers continue to dominate and even improve their positions. During the review period, Nestlé Australia Ltd led hot drinks in terms of value sales, followed by Unilever Australia Ltd. Multinationals continued to lead hot drinks, as they offer a wide variety of hot drinks products.

Café culture aids new product adoption

The café culture, whilst often attributed with being part of the reason for the strong growth in off-trade fresh coffee, has also served as a catalyst for the growth in specialty tea products. This is especially true of black speciality tea, such as Chai, where consumers' first experience has often been in the on-trade. This is an example of off-trade growth being influenced by a trend first seen in the on-trade channel.

Supermarkets/hypermarkets continued to dominate hot drinks, while other grocery retailers, including tea specialty retailers, grew its volume share of hot drinks in 2007.

Hot drinks to achieve total volume CAGR of over 2% during the forecast period

The key drivers of growth during the forecast period will continue to be premiumisation and indulgence. Renewed interest in tea -- through products such as green tea, white tea and chai -- will stimulate growth, as will the proven ability of fresh coffee to attract younger consumers into off-trade coffee consumption. Similarly, other hot drinks growth will be driven by innovative products, such as those offering greater indulgence, and also fortified products.