Hot & Soft Drinks Trends in 2024

Stock.adobe.com/volff

Hot Drinks: Many Individuals are Consuming Hot Coffee Specialities Regularly

Consumption patterns in the hot coffee and hot black tea segments have deep roots and are often guided by regularity. Consequently, it's unsurprising that there has been little change in the percentage of consumers who report using these products on a weekly basis over the past few years. While there has been minimal fluctuation in the frequency of hot green tea and hot chocolate consumption, there has been a noticeable increase in the proportion of individuals who state they indulge in coffee specialties weekly. For instance, FMCG Gurus’ consumer insights reveal that in 2021, 36% of global consumers said they turned to hot coffee specialities at least weekly, with this percentage increasing to 46% in 2024.

The current cost-of-living crisis is prompting many people to adjust their spending behaviors to stretch their finances. However, one implication of this change is that consumers are searching for items they consider to be small and affordable luxuries for the purpose of reward and escapism, often as a way to compensate for reducing expenses on higher-priced items. This product category presents a significant opportunity for innovation, promoting superior quality ingredients and fresh, unique flavors that capture consumers' attention and influence their perceptions of value and willingness to trade up.

Hot Drinks: Rising Prices are Impacting Consumption Habits in Categories Synonymous with Indulgence

The rise in prices significantly influences consumer behaviors and will continue to do so in the coming year, particularly as many individuals acknowledge living pay check to pay check without adequate savings. Consequently, consumption trends in luxury-related product categories like hot chocolate and specialty coffees are becoming more divided. While there has been a rise in the percentage of individuals who claim to indulge in these products weekly over the past three years, those who do consume such beverages report an inclination towards increased consumption rather than reduction in the last six months.

Conversely, there has been an increase in the number of people stating they have reduced their intake of these kind of beverages compared to 2021, with a simultaneous decrease in those reporting increased consumption compared to three years ago. This indicates that while certain consumers seek affordable luxuries, others are cutting back on non-essential products. Therefore, it is crucial for products in these categories to align with fundamental consumers’ needs to shape perceptions of value and necessity effectively.

Soft Drinks: Many Consumers are Turning to Cordial/Squash/Syrups at Least Weekly

Considering that beverage consumption is essential for daily hydration, it's unsurprising that there has been a significant shift in consumption patterns across various categories, especially as many occasions are influenced by regular routines. However, what stands out over the past three years is the noticeable increase in the proportion of consumers who indicate they use cordial/squash/syrup on a weekly basis, a category traditionally seen as a lower-cost alternative to juice. For example, FMCG Gurus’ market research highlights that 54% of global consumers say they turn to cordial, squash, or syrups at least weekly. While there hasn't been a fundamental change in the overall proportion of people turning to juice, the marked increase in the percentage of individuals seeking a more economical option aligns with a period of price inflation and financial struggles, leading individuals to moderate their spending on food and beverages. This suggests that consumers are turning to cordials more frequently for cost considerations, presenting an opportunity for industry players to prioritize affordable innovation to challenge consumer perceptions and associations with cordials.

Soft Drinks: There Has Been a Decrease in Consumers Drinking Health-Based Beverages

In comparison to three years ago, there has also been a decrease in the percentage of consumers who report using health-oriented beverages on a weekly basis, particularly noticeable in the functional juice/water category. For instance, FMCG Gurus’ consumer insights reveal that there has been a 21% decrease in the proportion of consumers who say they turn to functional juice or water between 2021 and 2024. This trend can be attributed to two primary factors. First, the fear of COVID-19 has significantly diminished in its influence on purchasing behavior across all food and beverage categories compared to three years ago. Second, healthy beverages are often associated with a premium price during a time when people are grappling with everyday living expenses.

Consequently, consumers are shifting away from the mindset of "pursuing health at any cost" and moving towards a more thoughtful approach to health. This means that while they continue to purchase health and wellness products, spending on these items is now less of a priority, and greater scrutiny is placed on the effectiveness, essential nature, and value for money of these products. As price inflation continues to impact purchasing habits, and consumers reduce the frequency of occasions they turn to such beverages, it is imperative for brands in the health and wellness market to ensure that their products align with the fundamental needs and expectations of consumers in terms of claims, formats, and product attributes.

This article is based on FMCG Gurus: Hot Drinks & Soft Drinks – Country Reports 2024. For more information, please contact FMCG Gurus at info@fmcggurus.com.