As Consumer Confidence Increases with the Economic Recovery, Consumer Trends will be Directly Affected

Tuesday 15 January 2013, Amsterdam

Marketers in the Hot Drinks market face a major challenge. Understanding market size and segmentation is valuable, but the key to effective targeting is to know just how valuable specific consumer groups are, and being able to quantify the impact of consumer trends.

As consumer confidence increases with the economic recovery, consumer trends will be directly affected. Since the global financial crisis of 2008–2009 the retail market has been characterized by an increased amount of discount and own-brand products. Hot drinks are not considered essential items and therefore consumption patterns have been negatively affected. As economic and market recovery continues over 2012, consumption patterns will record a positive trend in both the medium and heavy frequency bands and the amount of non-users should decrease.

Consumers’ uptake of products and the influence of consumer trends are fundamental causes of change in markets – making knowing what these trends are and the extent of their influence crucial.

In the US Hot Drinks market, tea is the smallest market both in terms of value as well as volume. This is due to an under-developed tea drinking culture in the US, where consumers prefer coffee when consuming hot drinks.

Private label has a low penetration in the US Hot Drinks market. This is true for all three categories – Tea, Coffee, and “Other Hot Drinks”. Private label penetration is highest in the “Other Hot Drinks” category and at lower, but similar, levels in tea and coffee. Branded hot drinks have such strong recognition that there is little space for private label brands to penetrate. Private label companies can work towards improving their products and visibility to achieve better penetration.