Global market for hot beverages forecast to reach 10.6 million tons in volume terms, US$69.77B in value terms by 2015, spurred by increasing emphasis on premiumization, health and quality, according to new report

Nevin Barich

January 21, 2014 (Sri Lanka Daily Mirror) – Global Industry Analysts Inc. (GIA) announces the release of a comprehensive global report on hot beverages (coffee and tea) market. The global market for hot beverages is forecast to reach US $ 69.77 billion in value and 10.57 million tons in volume terms by the year 2015.

The market is primarily spurred by increasing emphasis on premiumization, health and quality. Widespread awareness of health benefits associated with tea continues to drive the beverage to new heights of popularity.

On the other hand, coffee, viewed more as a style statement and a luxurious relaxant continues to sustain extraordinary sales levels. Rising levels of affluence, consumer awareness and greater per capita consumption particularly in developing economies is slated to accelerate future growth momentum.

Future growth in worldwide coffee and tea industries is expected to rely on key factors - health, quality and premiumisation. Coffee would enjoy modest growth because superior quality specialty espresso-based drinks are exceptionally popular with young generation.

The widespread popularity of tea primarily rests on account of greater awareness of its health benefits. Medical studies indicate that tea lowers the risk of coronary artery disease, heart attack and some cancers. Health-conscious consumers continue to drive sales in the tea market, while the expensive specialty coffees has managed to retain its position as one of the most popular hot beverage drinks over the years.

Per capita consumption of coffee depicts large variations across the regions. North America with the highest per capita consumption in the world and Western Europe are the two countries well way ahead of others in volume consumption. Asia and Africa, while showing great market potential, are behind the other regions as regards per capita consumption.

There is a prominent increase observed in coffee consumption worldwide, predominantly in nations such as China and Russia. Coffee consumption is a global phenomenon, where majority of coffee consumers are coffee addicts and others are fascinated by its exceptional aroma and taste among several other exhaustive reasons.

Coffee is cultivated in about 45 countries worldwide, with Brazil, Vietnam, Indonesia and Columbia leading the way as the world's largest coffee producers. Coffee is many times larger than the tea segment in terms of value. In the US, coffee is the second largest beverage segment, following soft drinks.

In terms of tea production, India and China produce more than half of the world's tea, out of which about a quarter is meant for exports. The two countries are also the leading tea exporters worldwide. In the United States and Japan, iced tea gained strong foothold, while other regions witnessed a sluggish growth rate. The UK is one of the world's most significant tea markets, where bagged black leaf tea and instant coffee dominate the hot beverages market in the region.

The global economic slowdown marginally affected the consumption pattern of tea and coffee, with both segments experiencing a small dent in sales both in volume and value terms. In the year 2009, prices of tea increased as demand for tea increased in Russia, East Europe and Middle Eastern nations.

Falling tea production globally due to natural calamities such as droughts and decreasing exports from Sri Lanka and Kenya resulted in mismatch between global demand and supply for tea. This compelled consumers to either purchase expensive tea or shift to other hot beverage alternatives, which in turn reduced the average global consumption of tea in 2009.

The economic crisis boosted the sales of low priced varieties of green tea, which gained popularity with introduction of different flavours such as Green Lemon, Green Decaf and Pure Green. The economic crisis also failed to affect the sales growth of RTD (ready-to-drink) tea due to health benefits associated with the product.

RTD tea grew faster than soft drinks segment in 2008, as consumers grew more health conscious, resulting from a slowdown in the purchase of carbonated drinks among affluent consumers.

Europe clearly dominates the global hot beverages market, as stated by the new research report on coffee and tea. The region notches up a sizeable chunk of the world market in value terms, driven by demand from the UK, Germany, Russia, Spain and other Eastern European countries.

In addition to Europe, the global market for coffee and tea, spruced up by sales from the other strong contenders, Asia-Pacific (including Japan) and the US. With respect to growth potential, the Asia-Pacific, driven by India, China, and Sri Lanka is likely to steer ahead at a compounded annual growth rate of 3.6 percent through 2015. By product segment, coffee accounts for the lion's share of the hot beverages market, favoured by sustained demand from developed countries and specialty and premium varieties.

Conversely, despite its relative smaller market size and low consumption levels, Tea, is slated to score over coffee in the long run in volume terms, on account of factors such as economical pricing, new flavours and 'healthy' brand value, as new tea drinkers join the brigade.

Key market participants profiled in the report include Kraft Foods, Nestle SA, Parry Agro Industries Ltd, Starbucks Coffee Co., Strauss Group Ltd, Tata Global Beverages Ltd, Tata Tetley Ltd, Maxingvest AG, Unilever, Hindustan Unilever Limited and Van Houtte. Published by HT Syndication with permission from Daily Mirror Sri Lanka. For any query with respect to this article or any other content requirement, please contact Editor at htsyndication@hindustantimes.com

(c) 2014 Daily Mirror

* All content is copyrighted by Industry Intelligence, or the original respective author or source. You may not recirculate, redistrubte or publish the analysis and presentation included in the service without Industry Intelligence's prior written consent. Please review our terms of use.