How the hot drinks sector is adapting to the Covid era

While every sector in the food and drink industry has been impacted by Covid, not all have experienced as great an effect as that seen by hot drinks and cafés.

When the first UK lockdown hit on 23rd March, the industry saw a switch from out-of-home indulgences to at-home – shoppers have been investing in better quality drinks and equipment since they’ve been unable, or too uncomfortable, to source a great beverage from a café or coffee shop.

Indeed, according to a poll of 1,000 consumers by Volcano Coffee Works, the average consumer has spent £50 on recreating their favourite to-go hot drink order at home.

The demand for hot drinks is far from over, but the past few months have seen a number of expected challenges across the sector. Jeffrey Young, founder of UK Coffee Week and CEO of World Coffee Portal said of the effect of Covid on the hot drink industry, “Covid is providing a number of challenges for our industry. In actual fact, the impact is going to be absolutely catastrophic for some players.”

He states a fact that many businesses have had to begrudgingly accept: “People that don’t adapt and don’t find their way into this new normal really won’t survive this moment. There is a lot of structural change within our cities, within our workplaces and also lots of anxiety among consumers.”

In fact, lacking their usual footfall of office workers and commuters, many city and town centre businesses have found the past few months a struggle. That’s not to say that hot drinks businesses have reached a dead end. “There’s a lot of opportunity with those who want to embrace this new era,” he says.

“We have a lot of growth in the home coffee market, we have a lot of growth in local independents, and we have this fundamental need for British consumers to embrace the local, and to embrace their local community.”

Independent producers and community-minded SME brands are perfectly placed to maximise this opportunity. “There’s a lot of opportunities for brands to build those bridges to communities… so we all move forward into a positive future together.”

Helen Boulter, multi-sector sales controller at Taylors of Harrogate, has found that the current situation offers a ripe opportunity for independent retailers. “Roast and ground coffee sales continue to thrive (up 14.4% versus last year) with shoppers trading up from instant and existing shoppers buying more and more frequently as they switch their out-of-home consumption to in-home.

“With this in mind,” she continues, “farm shops and delis should ensure that they are stocking high-quality coffee, so consumers can enjoy a decent coffee at home. Our commitment to sourcing, tasting and roasting the highest quality coffee for over 130 years means that when customers buy our coffee, they can really taste the difference.”

Perhaps due to missing the excitement of enjoying inventive orders at their favourite coffee shops, consumers are receptive to innovation. Taylors of Harrogate’s Coffee Bags have been a particularly well-received new format. “Coffee bags as a format are now growing by 79.7% (source: IRI Value Sales, 52 w/e 12th September 2020) due to Taylors increasing awareness of this format – Taylors continue to outperform the market at 109% which demonstrates the appetite for a format that bridges the gap between roast and ground coffee and instant.”

As is often the case in the fine drinks arena, the combination of quality and convenience is a winning one. “Making proper coffee can sometimes seem like such a fuss, but game-changing coffee bags have altered the way coffee can be consumed; you simply put them in a mug and pour over freshly boiled water – it couldn’t be easier!” explains Helen.

Taylors of Harrogate’s innovation doesn’t stop at product formats; the business is also inventive when it comes to flavours across its portfolio.

Hot on the heels of its popular Bedtime Brew and Biscuit Brew blends, it has “recently transformed one of the world’s greatest breakfast combos into a brand-new Yorkshire Tea blend: Toast and Jam Brew. Perfect for mornings, it is a strong breakfast blend with all the loveliness of jam on toast without the crumbs! We would like to see this new launch available across the fine food sector in the near future.”

Sustainability sells

Another swift about-face seen in the hot drinks sector as a result of Coronavirus was a pause in reusable cups being used in place of single-use ones. Indeed, some foodservice operations refused to serve hot drinks in reusable cups, believing that single use ones were more hygienic.

But shoppers haven’t abandoned their wish to support environmentally friendly hot drink ventures; in fact, a report produced in order to celebrate International Coffee Day revealed that two thirds of consumers are willing to pay more for their coffee if it provides direct benefits to farmers.

Summerdown Mint offers consumers a way to do just that. “Summerdown now works with the Farming Community Network (FCN) to help support farmers across Britain,” explains Jo Colman, head of sales and marketing. “FCN provides invaluable practical and pastoral support to the country’s farmers and their families during difficult times.”

What’s more, the business’s Pyramid Tea is now 100% plastic-free, making this health-giving product a surefire thumbs up from health and environmentally conscious shoppers.

Summerdown Mint has found that its tea’s blend of a bright and uniquely refreshing flavour and strong health credentials has stood it in good stead in the speciality sector in recent times.

It has long celebrated the healing properties of its Black Mitcham tea, which range from easing digestive upsets and boosting mood to providing antibacterial and antiviral properties – and further information about these benefits can be found both on-pack and on the business’s website.

British tea brand Dorset Tea have also invested in the consumer demand for increased environmental consideration by relaunching its range of products in environmentally friendly packaging.

“At Dorset Tea we love the planet as much as we love a good cup of tea,” says Phoebe Double, brand manager at Dorset Tea, “so we have been working hard to make sure our products respect the environment. Our special recyclable boxes are not wrapped in plastic and keep the tea bags fresh without a foil bag, and our biodegradable tea bags can be popped into your council food waste bin after usage.”

The business has even partnered with the Marine Conservation Society to highlight the importance of reducing litter in marine environments.

In this challenging period, it pays to listen to shoppers more than ever. The demand is there – particularly for products to be enjoyed at home while cafés are experiencing turbulent times – and by showcasing their quality, provenance and sustainable credentials, brands and retailers will find themselves in a strong position to move forward.

Six caffeinated drink trends for 2021

Treatt has named the top trends looking to heat up the drinks sector.

1. Plant-based innovation
A number of brands are introducing vegan-friendly products to their portfolio, using non-dairy milks such as almond, coconut, oat, hazelnut and rice milks to recreate popular beverages. The move has proved a hit with all consumers, not just those following a plant-based lifestyle.

2. Single origin
Shoppers are increasingly keen on hot drinks which state their provenance, and are enjoying the particular flavour profiles of coffee beans from single origins – especially when lightly roasted in order to fully appreciate its distinct characteristics.

3. Caffeinated fruit juice
In North America, fruit juices infused with cold brew coffee are trending with health-conscious shoppers who consider it a healthy alternative to conventional functional energy drinks. Consumers are relishing the health benefits – antioxidants and vitamins – provided by the juice, combined with an all-important caffeine kick.

4. Nitro Coffee
Nitro coffee has been in the British market for a couple of years now, but the trend is still going strong thanks for its luxurious characteristics including a creamy mouthfeel, sweet flavour – it’s sometimes available in flavours such as vanilla and caramel – and high caffeine content.

5. Hard coffee
Touted as a lower calorie alternative to the majority of alcoholic beverages available, hard coffee is a caffeinated twist on the hard seltzer trend. Sugar fermented alcohol, also used in hard seltzers, is blended with coffee and often milk and sweet flavours for a creamy and indulgent experience.

6. Functional energy drinks
Coffee is being flagged by brands as a healthier alternative to conventional, and often sugar-laden, energy drinks. Coffee-powered energy drinks are proving to be particularly popular with health conscious and environmentally minded shoppers – Grandview Market Research has found that functional energy drinks using natural and organic ingredients are on the rise.