Winning in Convenience with

Hot Beverages remains a prominent category within grocery, with 96.5% of UK households purchasing a Hot Beverages proposition in 20221 Having such a high reach has meant that over 60 billion Hot Beverage cups were consumed in the last year1. In 2022 we have experienced an increase in out of home consumption as consumption levels return to normal in a post covid environment. This has meant that in home consumption, especially on segments such as Coffee Pods has marginally reduced, back down to pre covid levels. However, despite in home consumption dropping, the category is ahead of where it was pre covid in terms of value and buyers, as more shoppers converted into Coffee during lockdown.

But why is coffee an important segment for retailers? Coffee is the 12th most valuable category and 9th highest penetration in the Total Market1. In addition, it is expected in the next three years to overtake Tea to become the most consumed Hot Beverage in the UK. The Coffee category is worth £1.6bn in the UK and has grown 1.4% versus 20212. If retailers want to win in Hot

Segment Share of Market

Beverages, then it is vital that they are winning in coffee, given that coffee accounts for 63.7% of all Hot Bev value, being approximately 2.5 times bigger than the next biggest segment Tea2.

Coffee in the Wholesale and Convenience (W+C) Channel

Convenience coffee (exc. Major mults) is worth £82.9M, growing 2.8% over the last quarter3 Convenience experienced significant declines as a result of covid and we are now seeing a return to normal shopping behaviours. Needs for today still remains the number one shopper mission for the convenience shopper, so ensuring the right pack offerings and propositions are available will enable retailers to win in the channel. Symbols & independent retailers are worth £62.3M in coffee and grew value 3.3% in the last quarter of 2022 showing strong signs of recovery.3 Across W+C, there is a strong over index on Core Instant propositions and this is the most important segment to W+C coffee, with Core Instant worth 67.6% of total W+C coffee.4

Which products are crucial to list?

Which core segments are more valuable in Wholesale and Convenience?

Core Instant is broken into 5 subsegments: Regular, Premium, Decaf, Super Premium and Origins & Organic. In W+C, a substantial amount of value in Core Instant is driven by Premium and Regular subsegments. For retailers, having a strong presence on shelf in these segments should enable them to drive a lot of value into their coffee category.

Which products should retailers be listing?

The following products are the key products for convenience retailers to list as part of their range to really maximise their value.

What to do with a limited space

Ranging and merchandising is essential for any retailer, no matter the size of their coffee fixture. Around two thirds of the fixture should be dedicated to Core Instant propositions so that they are on a fair space to sales. Then a representation of Mixes and R&G to cover need states and ensure that the Needs for Today shopper mission is met. On bigger fixtures there is then scope to add Pods into the range to further the range.