Key Findings

The hot drinks industry growing only slowly as price pressures continue

Slow and steady growth is expected for hot drinks between 2024 and 2029. The largest challenge facing the industry will be balancing the demands of a consumer base frustrated by years of price increases (both in hot drinks and in their overall grocery basket) with continued supply chain disruptions and high commodity prices.

Asia Pacific is the largest region, but Latin America is contributing the most to growth

The three largest regions (Asia Pacific, North America and Western Europe) will continue to grow, but they are not keeping pace with the more dynamic regions of Latin America and the Middle East and Africa. Brazil, India and Turkey will be among the most important sources of global growth in the coming years.

E-commerce gains share rapidly at the expense of store-based channels

Physical retail still accounts for the overwhelming majority of hot beverage sales, especially outside Asia Pacific and North America, but e-commerce is making inroads. Around a 10th of retail sales now take place online, while in 2024, South Korea became the first country to have a third of its retail sales be online.

Nestlé remains on top of a market with slowing M&A activity

Nestlé retains the top spot in fresh ground coffee pods, instant coffee and flavoured powder drinks globally, giving it an overall lead in hot drinks that is significantly ahead of second placed JDE Peet’s. While the 2010s were marked by significant M&A activity, especially in coffee, recent years have seen a much more stable global landscape.

The global landscape becomes more hostile to innovation

The rate of new product innovation is slowing down, burdened by the rising cost of capital and a consumer base more reluctant to part with their money because of cost-of-living pressures. This has not diminished the importance of innovation to the industry, though, as it remains the most promising path to premiumisation.