The UK hot beverages market was worth more than £1.35 billion in 2007 and was showing value growth of 2.1 per cent, fuelled by increased spend per trip and aided by premiumisation.
The main growth areas in the category are roast and ground coffee and standard tea, bringing in £15.5 million and £17 million extra respectively over the previous year. A total of 82 per cent of hot drinks are consumed at home. Tea is the most popular breakfast drink, while a morning coffee break provides an energising pre-lunchtime boost.
There is no doubt that the take-home market has benefited from the rise of the cafe culture and ground coffee has been the real beneficiary. Roast and ground is worth £132 million, with growth of 13 per cent. It performs well, despite little change in shopper numbers, as people spend more per kilo and purchase more frequently. Price is being driven up by premium products, such as Fairtrade. Instant coffee is declining in both volume of serves (-2.5 per cent) and value (-0.6 per cent), though premium offerings, such as connoisseur coffees like Alta Rica, are performing better.
Tea, although in volume decline, is growing ahead of hot beverages at 3.9 per cent in value. Much growth has been down to the performance of green, speciality, fruit and herbal tea. However, the standard sector has benefited from the Kenyan tea drought, which forced prices up in 2007, while higher value decaffeinated, premium, organic and Fairtrade teas are performing well. A shift back towards branded offerings is driving up the price, with brands commanding a 79.4 per cent share of the market, up from 76 per cent in 2006.