Coffee pods brewing up growth but black tea is on the decline

The UK market for hot beverages continues to benefit from the consumer trend towards premiumisation and demand for variety, with ground coffee, premium instant coffee, the pod market and the green, herbal and fruit tea categories driving overall growth of 1% in sales of hot beverages over the year ending 23rd May 2015.

That’s according to Key Note’s latest report, Hot Beverages.

Hot beverages market forecast to record annual growth at a limited pace

Changing consumer demand is having a significant impact on the UK hot beverages market, with sales in the traditionally strong black tea category falling annually between the years ending May 2011 to 2015. Despite the strong historical and cultural association between Britain and black tea, consumers seem to be turning away from their traditional hot beverage preference, instead increasingly favouring high-quality coffee products or the variety in flavour provided by the green, fruit and herbal tea sectors.

Demand for such products has been driven, primarily, by the proliferation of coffee shops — and coffee shop culture — across the UK, which has exposed consumers to high-quality coffee, alongside the rapid growth in the range of fruit and herbal teas, and the rising awareness of  the purported health benefits of these, and green, teas. Coffee pods, which are used in increasingly popular at-home single-serve hot beverage machines, have also been a major contributor to growth, as they allow consumers to recreate barista-quality coffee in the home.

Looking forward, the hot beverages market is forecast to record annual growth, albeit at a fairly limited pace. Premiumisation, ground coffee, coffee pods and green, fruit and herbal teas will remain the key drivers of growth; however, contractions in the significant black tea and instant coffee sectors are likely to hold back significant growth.