Café culture now happens at home as the nation thirsts for sophisticated variations of tea and coffee. Mick Whitworth goes shopping for decaf, green, roast, fruit, herbal, ethical....
We’ve been drinking tea and coffee since the 1600s, so it’s no wonder the sector needs refreshment. Long-time staples black tea and instant coffee are looking tired and growth is being led by products barely heard of 20 years ago.
The hot beverages market overall is in slight growth at £1.3bn, up 3.4% on last year [TNS, 52 w/e June 19, 2005].
Standard tea, worth £439.8m, is in decline, down 5.1% in the past year while standard instant coffee, at £439.95m, is doing better, up 4.1% in value.
Heavy price promotion on tea and commodity price fluctuations on coffee might confuse the picture, but everyone agrees that growth is largely coming from novel, speciality and premium beverages. Health and the growth of the ‘café culture’ are key drivers. “Tea is still the nation’s favourite drink, but it has been in decline,” says David Irwin, operations manager for PG Tips at Unilever UK Foods.
“Volume has probably been flattening out, but value is in steep decline - probably because of price wars.”
Irwin says the onus is on both suppliers and retailers to come up with more creative ways with tea and wants to see less price-cutting and more money going to innovation.
“There has been an awful lot of price-based promotion,” he says. “Shoppers stockpile product, taking value out of the category and reducing its relevance as a footfall driver.”
But Somerfield category buyer David Williams says the category would lose customers if hard promoting was stopped. “Tea is promoted aggressively compared with coffee, but tea customers expect good deals.”
Sarah Robinson, general manager for Typhoo at Premier Foods, says the tea market is increasingly split between traditional and speciality tea.
Older consumers who had a six-cup-a-day tea habit are passing away and younger shoppers, while still buying standard tea bags, do so in much smaller volumes. “Instead, they buy decaf, green tea, anything that taps health perceptions,” says Robinson.
The consequence is a 6% value growth in decaf tea and 24% growth in green tea [IRI MAT to June 22, 2005] and a 15% growth in fruit and herbal tea last year, says TNS.
Fairtrade and organic
options are also growing fast. Organic brand leader Clipper has this year launched five speciality teas and five Completely Natural fruit infusions.
In coffee, Nestlé’s Nescafé Original remains the top instant brand, but Gavin Emsden, head of customer insight and planning at Nestlé, says instant brands need to tap into changing lifestyles. In the past year, Nestlé launched Half-Caf variants of Nescafé Original and Gold Blend.
Decaf has become an essential part of both coffee and tea brand portfolios. Kraft says its Kenco decaf freeze-dried, the number one decaf instant, is worth £18m and still growing at 2.5% year-on-year [ACNielsen MAT to June 2005].
At the same time, roast and ground coffee are growing strongly, up 7% year-on-year to £99.3m [TNS]. Brand leader Douwe Egberts has just completed its first TV ad campaign for roast and ground, designed to take it to the masses. The Illy brand, which sells more than 50 million cups a year in restaurants, is forecasting a 20% uplift in retail sales after an ad campaign planned for this winter, according to UK distributor Euro Food Brands.
And ethical brand Percol has teamed up with The Body Shop to run joint promotions on fairly traded products, after a year in which Percol’s share of ground coffee rose 8.4% [TNS] with volumes up 21%.
Yet ‘real’ coffee is being outstripped by growth in instant speciality coffees
aimed at replicating café-style lattes and cappuccinos in a mainstream, convenience format. Sales in this sector were up more than a third last year.
Lavazza sales and marketing director David Rogers says this complex picture is explained by ‘repertoire shopping’. “Mum might drink Mellow Birds when no-one’s looking, but she’ll buy Gold Blend for her friends, and roast and ground for a dinner party.”
The scenario has been further complicated by the emergence of Douwe Egberts’ Senseo and Kraft’s Tassimo ‘on-demand’ drinks systems, created in league with coffee machine makers Philips and Braun respectively. Both use roast and ground coffee to make ‘perfect’ café-style drinks.
Kraft says UK coffee machine sales are up 27% year-on-year, chiefly driven by on-demand systems.
We’ve been drinking tea and coffee since the 1600s, so it’s no wonder the sector needs refreshment. Long-time staples black tea and instant coffee are looking tired and growth is being led by products barely heard of 20 years ago.
The hot beverages market overall is in slight growth at £1.3bn, up 3.4% on last year [TNS, 52 w/e June 19, 2005].
Standard tea, worth £439.8m, is in decline, down 5.1% in the past year while standard instant coffee, at £439.95m, is doing better, up 4.1% in value.
Heavy price promotion on tea and commodity price fluctuations on coffee might confuse the picture, but everyone agrees that growth is largely coming from novel, speciality and premium beverages. Health and the growth of the ‘café culture’ are key drivers. “Tea is still the nation’s favourite drink, but it has been in decline,” says David Irwin, operations manager for PG Tips at Unilever UK Foods.
“Volume has probably been flattening out, but value is in steep decline - probably because of price wars.”
Irwin says the onus is on both suppliers and retailers to come up with more creative ways with tea and wants to see less price-cutting and more money going to innovation.
“There has been an awful lot of price-based promotion,” he says. “Shoppers stockpile product, taking value out of the category and reducing its relevance as a footfall driver.”
But Somerfield category buyer David Williams says the category would lose customers if hard promoting was stopped. “Tea is promoted aggressively compared with coffee, but tea customers expect good deals.”
Sarah Robinson, general manager for Typhoo at Premier Foods, says the tea market is increasingly split between traditional and speciality tea.
Older consumers who had a six-cup-a-day tea habit are passing away and younger shoppers, while still buying standard tea bags, do so in much smaller volumes. “Instead, they buy decaf, green tea, anything that taps health perceptions,” says Robinson.
The consequence is a 6% value growth in decaf tea and 24% growth in green tea [IRI MAT to June 22, 2005] and a 15% growth in fruit and herbal tea last year, says TNS.
Fairtrade and organic
options are also growing fast. Organic brand leader Clipper has this year launched five speciality teas and five Completely Natural fruit infusions.
In coffee, Nestlé’s Nescafé Original remains the top instant brand, but Gavin Emsden, head of customer insight and planning at Nestlé, says instant brands need to tap into changing lifestyles. In the past year, Nestlé launched Half-Caf variants of Nescafé Original and Gold Blend.
Decaf has become an essential part of both coffee and tea brand portfolios. Kraft says its Kenco decaf freeze-dried, the number one decaf instant, is worth £18m and still growing at 2.5% year-on-year [ACNielsen MAT to June 2005].
At the same time, roast and ground coffee are growing strongly, up 7% year-on-year to £99.3m [TNS]. Brand leader Douwe Egberts has just completed its first TV ad campaign for roast and ground, designed to take it to the masses. The Illy brand, which sells more than 50 million cups a year in restaurants, is forecasting a 20% uplift in retail sales after an ad campaign planned for this winter, according to UK distributor Euro Food Brands.
And ethical brand Percol has teamed up with The Body Shop to run joint promotions on fairly traded products, after a year in which Percol’s share of ground coffee rose 8.4% [TNS] with volumes up 21%.
Yet ‘real’ coffee is being outstripped by growth in instant speciality coffees
aimed at replicating café-style lattes and cappuccinos in a mainstream, convenience format. Sales in this sector were up more than a third last year.
Lavazza sales and marketing director David Rogers says this complex picture is explained by ‘repertoire shopping’. “Mum might drink Mellow Birds when no-one’s looking, but she’ll buy Gold Blend for her friends, and roast and ground for a dinner party.”
The scenario has been further complicated by the emergence of Douwe Egberts’ Senseo and Kraft’s Tassimo ‘on-demand’ drinks systems, created in league with coffee machine makers Philips and Braun respectively. Both use roast and ground coffee to make ‘perfect’ café-style drinks.
Kraft says UK coffee machine sales are up 27% year-on-year, chiefly driven by on-demand systems.
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