Category guide: Hot beverages

Lindsay Sharman explores how wholesalers can heat up their tea and coffee sales.

Traditionally a nation of tea-drinkers but more recently of coffee-lovers, the UK enjoys an ever-increasing variety of hot drinks, both in and out of home.
Five ways to grow sales
  1. Premium: Encourage your customers to experiment with premium coffee to compete with the high street.
  2. Flavours: Get the basics right but don’t be afraid to try out new trends such as flavoured teas.
  3. Accessorise: Offer products to caterers that support premium tea and coffee, such as quality paper cups.
  4. Promote: Get the balance right with promotions – some each period are crucial but too many and the products lose their potency.
  5. Educate: Educate your sales team – their knowledge of tea and coffee will filter down to your customers and increase sales.

For wholesalers, stocking the right products for both their catering and retail customers, in line with trends and the changing market, is essential.

Take tea, for example. The UK consumes an estimated 165 million cups every day and 90-95% of that is black tea. Market leaders include Tetley and PG Tips. However, the product hasn’t changed a great deal for many years and in fact, despite its popularity, sales of black tea are in slight decline.

“Year on year, tea sales have fallen 8.9% in volume and 4.8% in value – and this decline is reflected across all trading environments, including independents,” says Tetley business sector controller Brett Grimshaw.

The response from the tea manufacturers has been to diversify. Alternatives to traditional black tea, such as green tea, decaf, mint tea and other herbal-flavoured tea bags, are showing impressive growth. Green tea sales have increased 25.3% year on year – 38.6% in convenience.

The growth of green tea along with other herbal varieties, falls in line with a general trend across grocery for products that fit in with a healthier lifestyle.

“There are distinct consumer trends emerging that will drive value within the category,” says Rob Brazier, customer business director at Twinings. “Consumers are becoming increasingly demanding in what they are looking for from tea, requiring a greater breadth of flavours, blends and health benefits from their daily cuppa.

“Increasingly, teas such as green, fruit and herb, infusions and specialties, such as Assam and Darjeeling, are forming part of drinkers’ everyday tea habits.”

Another growth area is premium tea. In 2011, PG Tips launched a range of four premium teas – specific blends containing teas processed using ‘revolutionary’ technology. The leaves are pressed to release ‘natural juices’, which are then sprayed back on after the drying process for a more refreshing taste. Unilever says its premium tea range was created to encourage consumers to develop their individual preferences. It seems to be working, with £4m in sales in the year to April.

Retailer viewpoint

rajRaj Aggarwal, Londis, Wigston, Leicester

“We have a variety of teas and coffees, including budget brands and best-sellers. The shop is near some offices and factories so we find bigger sized jars of coffee sell really well. I’ve tried Azera but it doesn’t work with this demographic. I’ve bought a shop in Market Harborough though and I think more artisan products will work over there.”

The wholesale channel is a critical route to market for tea and Tetley’s Brett Grimshaw encourages wholesalers to thoroughly understand their customer bases to get the right product mixes.

“Smaller packs like 40s and 80s are big sellers for independent stores, but larger packs like 160s and 240s are useful for larger stores with a broader grocery offering,” he says.

Choosing the right products is more complex when it comes to coffee. Consumers increasingly know what makes a decent cup, thanks to the rise of high street coffee chains, and want to replicate that quality in their own homes and at independent outlets. 

The good news for wholesalers is that consumers are willing to pay a premium price for this. The challenge is persuading retailers and caterers to do the same.

Wholesalers need to up their games to help their independent customers stay competitive, says Barry Kither, sales and marketing director (away from home) for Lavazza coffee.

“The statistics for how often people visit coffee shops are staggering – 25% of adults visit coffee shops every week and 43% once a month,” he says. “Wholesalers have got to get on trend. It can be complicated, but it is worth the effort.”

Retailer viewpoint

tessTess Flower, The Village Shop & Café, Upper Dicker, East Sussex

“The café makes up the majority of our business and over the seven years I’ve been here, I’ve noticed a change in what customers
want. They used to go for plain filter coffee or tea for £1 but now they want cappuccinos, espressos or macchiatos. We have a lot to thank Costa for – they have taught the British public about
good coffee.”

Products in the coffee category range from instant and ground coffee beans to whole bean – and everything in between. New products are appearing at a high rate as suppliers seek to offer a high street-quality product to consumers.

“Coffee producers are on a mission to provide new, more premium products for the category,” says Odette Forbes, head of corporate communications at Nestlé. “The launch of super-premium coffee and brands like Nescafé Azera, which added £12.2m to the category in a year, have been market-changing innovation.”

Stocking premium products and educating retail customers on current trends is one way for wholesalers to maximise the coffee opportunity. Getting to grips with educating catering customers is another. Lavazza’s Barry Kither says if wholesalers commit to coffee wholeheartedly, the opportunity can be fantastic. He cites JJ Food Service as an example of a wholesaler that has conquered the category.

“We’ve been working with JJ’s constantly for five or six years and it has clicked with them,” he says. “If they can do it thoroughly then there’s no company that can’t do it.”

Selling the right supporting products is another important element of success in hot beverages. For catering customers especially, products such as good quality paper cups enable them to compete with the high street giants – and charge a premium price.

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Lindsay Sharman is a former editor of Retail Newsagent, news editor of Retail Express and account manager in public relations for leading food and drink brands. Lindsay loves anything to do with the arts, including mid-century antiques, and cycles everywhere, even in winter


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