Feeling hot, hot, hot

NIKKI ALLEN speaks to four hot beverage experts about the opportunities for retailers and caterers

The Suppliers

hot beverages
In home trade marketing specialist, Lavazza
Hot beverages
Tetley marketing director, out of home, EMEA
hot beverage
Brand manager, DaVinci Gourmet
hot beverage
Channel controller, Taylors of Harrogate

BW: Why are hot beverages important to the wholesale channel?

DS: Britain is a nation with tea at its heart. Every day, we drink 165 million cups of tea, in comparison to just
70 million cups of coffee. Overall, the tea market will grow by 8% by 2016, according to Mintel, so the value of this already important category will increase for wholesalers.In addition, 96% of the tea we drink daily is from teabags.

SG: Hot beverages in the foodservice channel have grown 25.6% since 2008, according

to Keynote. The number of coffee outlets is predicted to reach 20,500 by 2018, showing the huge importance of this category to wholesalers.

BR: The value and volume growth in hot beverages is primarily driven by the premiumisation of coffee

drinking. In all sectors, consumers are increasingly looking for better tasting, better quality products that are easily prepared.

The growth in the out-of-home coffee culture has also driven consumers to seek coffee shop-quality hot drinks in the comfort of their own homes.

JS: There is a benefit in focusing on hot beverages in wholesale, as both
tea and coffee remain staple items on consumers’ shopping lists and retailers will benefit

from distress purchases as well. The market is a mature one and it is therefore important that wholesalers focus on stocking a strong core range of brands.

BW: What key trends are affecting the retail and foodservice sectors?

DS: Caffeine-free blends like Tetley Decaf and Redbush are growing in popularity as alternatives to everyday Black Tea. Fruit and herbal blends now make up more
of the market than ever. Another big trend for many retailers and foodservice operators is takeaway tea – consumer lifestyles are becoming busier than ever.

SG: Consumers are more discerning about their hot drinks, and they expect to see an array of flavoured and fruity options on the menu from operators, with fruity and seasonal choices identified as the favourites. Lattes are the most popular coffees for consumers and are now outselling cappuccinos.

BR: In retail, as consumers become more knowledgeable, we expect the trend
for premium brands offering authentic quality to grow. The trends for dining-in and convenience-store growth will also continue to play an important role for retailers. Consumers are looking for affordable luxuries when dining at home, making premium brands key. Smaller store formats are also important for retailers.

JS: The standard black tea category still accounts for about 70% of the total tea market and therefore it is critical that there is a focus on providing a quality product that delivers on taste for the consumer. The continuing growth we are seeing in speciality teas, including fruit, herbal and green, is an indication that consumers are looking to broaden their repertoires.

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BW: What advice can you offer wholesalers looking to improve their hot beverage sales?

DS: Effective category management is at the heart of strong sales in hot beverages. Consumers’ tastes are changing and whether it’s in retail or foodservice, they are no longer satisfied with black tea being the only option.
We recommend wholesalers stock between seven and eight blends. Shelves should be stacked according to volume sales and products should have a clear description of base selling prices, point-of-sale material (PoS), promotions, and before and after prices, as well as detailing the margins that customers can expect, using shelf-edge labelling to create stand out.

SG: Wholesalers should advise customers that speciality options don’t need to
be costly or complicated, but can be achieved with flavoured syrups and
sauces marketed as complete drinks. Wholesalers must educate their customers to publicise hot beverages on menu boards with tasting notes or with vibrant posters. We have a range of PoS available to foodservice outlets, including seasonal table talkers and chalkboards.

BR: Wholesalers can get a boost in the booming roast and ground coffee sector by stocking up on these products in both the retail and foodservice aisles. Customers will tend to visit the aisle where they operate, so featuring the key brands in both aisles is essential. Stocking a wide range in the retail aisle is especially important in helping retailers to merchandise effectively, giving maximum impact on-shelf and improving shopper navigation of the category.

JS: Working with suppliers in a meaningful, collaborative partnership, we are able to offer resource to assist in managing the category fairly and look to drive some growth going forward. I would also insist on keeping things simple – a ‘less is more’ approach would be recommended and to do this, you should focus on your core range, agree a full year promotional package and stock the brands that are looking at supporting the channel both above and below the line.

BW: What new products/promotions should wholesalers look out for and how do these tie in with market trends?

DS: Across the foodservice market, there’s a growing trend for health by stealth. Tetley Decaf allows wholesalers to offer a tea that has only 0.2% of the caffeine but the same taste and colour of Tetley Black Tea. It’s proven so popular, Tetley is now the number one brand for decaffeinated tea (Nielsen), so we have now launched a larger, 440-teabag pack size for foodservice.

SG: Lattes take up the largest share of the out-of-home coffee market and are the most prominent coffees for adding flavours to. This makes our Butterscotch, Chocolate, Chocolate Mint and Gingerbread flavours must -stocks for wholesalers. Plus, traditional hot chocolate is emerging as a common alternative to tea and coffee.

BR: The growth of bean to cup coffee machines and coffee grinders has led to consumers seeking authentic Italian beans for premium coffee in the comfort of their own homes. To support this, Lavazza has launched a 250g variant of Qualità Rossa beans, which are proving very popular.

JS: The main market trend in tea is around the growth in fruit and herbal beverages, I would look to build and establish a core range within this side of the category that work for the wholesalers’ customers base but aim to restrict duplication in the range as well.

However, don’t forget that the standard black tea market is vital and wholesalers should support the brands adding category value in this sector
as well.


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