Retailers looking to add excitement to the hot beverages aisle should look to premium and speciality teas, as well as high-quality coffees.

Over the next five years, coffee shop sales are expected to increase 29%, reaching £4.3bn by 2021 (Mintel w/e 12 April 2017). Yet while sales of flat whites are anything but flat in our high street cafés, when it comes to buying hot drinks for home in c-stores, it’s not always that easy to get shoppers to buy.

Sid Ali, owner of five Nisa stores in Aberdeenshire, says customers have become “very savvy” about what is charged for everyday hot drinks brands, and he says that in his store few brands are selling consistently well unless they are on offer.

“It’s difficult to compete in the category against the strong offerings from the multiples on one side and the discounters on the other,” he asserts.

David Wyatt, owner of Costcutter service station in Copthorne, West Sussex, agrees. “People are much more impulse driven. Traditional tea and coffee is a category that is a lot smaller than five years ago.”

Dee Sedani agrees that tea and coffee is becoming more promotion driven at his One Stop in Etwall, Derby, but adds that this is a trend he has seen across all categories. He thinks customers are becoming “obsessed” by price.

“Nescafé remains the best-seller for coffee, with fluctuating sales in tea depending on what’s on offer. PG Tips and Yorkshire Tea are the top brands for me,” Dee says.

In North Wales, Conrad Davies, owner of two Spar and two Eurospar stores, offers a mix of premium and value beverages in an effort to keep category sales as high as possible.

“The market has certainly changed over the past couple of years, with premium teas and promotion-driven sales. There are a lot of ground coffee and speciality teas on the market now,” he says.

Conrad’s hot beverage range is a constant presence on promotions, and he says that premium items, in particular, see big sales increases when they are on deal. Anything else in between struggles, he reveals.

“Customers are definitely fussy about what they buy and how much they pay. It’s because of the discounters. Near our store we have a B&M, a Lidl and a Home Bargains which has also started doing food and drink; they are just cutting into the market,” Conrad adds.

Sid says it’s the more interesting alternatives that get shoppers excited. “Customers watch programmes such as Eat Well for Less and are encouraged to try more products.

“They are more likely to go for the alternative as long as the package is nice and the price is right. People are not so brand conscious and are happy to try a brand or product that they have never heard of before, even in the tea market.”

David Rich, channel business manager for UK & Ireland at Twinings, believes that offering exciting flavour combinations to satisfy consumers will lead to success for retailers.

“Although reports circulated early in 2017 that tea and coffee pricing may be impacted by Brexit, leading to a decline in sales, it is important to remember that tea is second only to water as the nation’s preferred drink.

“For the 84% of the UK population who are loyal tea drinkers, there’s never been more choice to meet the changing taste of their favourite tipple, with an explosion in flavoured, speciality and healthy teas.

“Within the convenience channel, shoppers are increasingly looking for a wider range of products to complete top-up shops,” Rich says.

Sales of Tetley’s decaffeinated sku are up 29.7% compared with last year. However, maximum category growth is expected to come from the green tea and herbal tea markets (Mordor Intelligence w/e 12 December 2016).

Peter Dries, director of customer and shopper marketing for Tetley, says that convenience stores are “overly reliant on black tea sales” and should recognise the growing range of alternative teas. “Stores risk missing out on sales if they don’t stock products from the growth areas in tea. With careful selection of the right range there are big returns to be had from the higher-margin products in the healthier sectors of tea.

“Products in the growth areas of tea that fit shopper demand will sell the best and deliver higher value,” Dries adds.

Adam Hogwood, manager of Budgens in Broadstairs, Kent, says demand for green teas has continued to grow, and they are now appealing to a whole range of different customers.

“Those on a health mission buy green tea; we are seeing a lot more health-conscious people with different lifestyles, such as vegetarian or vegan customers. There has been an increase in that category and that has affected the sales of green tea.”

“That said, don’t be surprised if you see a white van man coming in to buy his groceries carrying a box of green tea,” Adam adds.

Scott Graham of McLeish, Inverurie in Aberdeenshire, believes people are looking at tea as an alternative to coffee and as a healthy option that suits their dietary demands.

He says: “Green tea always sells well. Sales are also incremental so have taken nothing away from sales in other tea categories.

“I think the flavoured tea and green tea categories are still relatively new and we need suppliers to tell us what is best to stock. The tea and coffee category is not like soft drinks where you know what to sell and what’s going on. We need suppliers to give more information on the items that should be stocked in store.”

Taylors of Harrogate has noticed customers are more frequently demanding a varied selection of decaf and premium tea and coffee. It believes shoppers are looking for a “healthier hot beverage” that is more of a balanced alternative to the category norm.

Helen Boulter, channel controller at Taylors of Harrogate, says: “Increasingly, customers are looking for a premium offering beyond the standard tea bag or instant coffee.

“Stocking premium black teas, such as our Yorkshire Gold, and a good quality coffee offering such as our best-selling Rich Italian blend, are good options to capitalise on this need.

“Roast and ground coffee is becoming popular and there is an opportunity to migrate customers away from instant coffee.”

She adds: “Stores with a more affluent shopper base should consider at least one-fifth of their hot drinks offering being ‘real’ coffee. Often hot drinks are purchased as part of a top-up shop, so having a strong range on offer will encourage impulse sales for hot beverages.”

Tetley Super Teas

Tetley introduced Super Teas almost a year ago and has been expanding the range since, splitting flavours into groups such as Boost, Immune, Glow and Detox.

The range was initially supported by a £5m campaign, the largest marketing drive for the company outside of its black tea range, further illustrating the continued consumer trend away from traditional teas.

The products blend vitamin B6, vitamin C or vitamin D with a smooth green tea base and the addition of citrus flavours such as orange and lemon.

The Super Teas are also available in varieties such as apple & cinnamon and blueberry & raspberry.

These fruity flavour-infusions provide the tea with a unique flavour and each cup contains 23% of your recommended daily amount of vitamin D.

Peter Dries, director of customer and shopper marketing for Tetley, says: “The strong appeal of the Tetley brand and reassurance of a quality offering clearly resonates with shoppers and we are seeing this reflected in sales.

“We’ve worked to add value to the tea experience through innovation and taste and our new Super Teas with added vitamins are a big area of growth for us and are striking a chord with shoppers looking for something a little different.”

Dries believes shoppers see Tetley Super Teas as a ‘good for me’ purchase, a treat that shoppers are happy to pay a little extra for.

Despite the volume sales being less than those of cheaper varieties, Dries believes it is sensible for retailers to maintain the value of the product. This can be done by presenting the range next to similar products in the hot beverage aisle, he explains.

He adds that the product is also better marketed as something special and as part of the high-end market.

Products are not pricemarked, as he believes that in this market the mechanism would be unlikely to add any extra value.


Quality counts

Falling prices of coffee machines to use at home means more shoppers are opting to recreate the coffee shop experience at home and nearly a third (30%) of Brits now own a coffee machine (Harris Interactive, w/e 28 September 2016).

Many shoppers are happy to splash out on more expensive coffee pods and sales are expected to soon overtake standard roast and ground coffee. In 2016, coffee pod sales grew 29.5% (£137.5m), despite pods being more expensive than other ambient coffee (Kantar Worldpanel w/e 5 September 2016).

Tess Flower, of The Village Shop in Upper Dicker, East Sussex, believes consumers are much more interested in high-quality coffee beans and well-made coffee than in the past, whether that’s to consume in her store’s café, or to buy and make at home.

“We’ve had the coffee shop element to the store for 10 years now and in that time we’ve definitely seen the interest move from tea to coffee,” Tess says.

“We have beans from a local roaster and, while some people like to come in to drink a coffee in the shop, there are a growing number of shoppers coming and buying bags of the beans to take home and grind in their machines at home.”

Tess has seen fresh coffee bean sales grow, but this has affected sales of regular coffee in her store.

“I think it’s much more common now for people to have coffee machines at home as people have got a taste for the good coffee that they can get in coffee shops and it’s hard to go back to standard, instant,” she adds.

Nicole Hartnell, brand manager at Lyons Coffee, believes convenient, high-quality and fresh coffee is a new growth area in the coffee market. Coffee bag sales are up 32% compared with last year, showing the biggest growth in the fresh coffee sector (Nielsen w/e 12 August 2017).

“There is also an increase in demand for stronger, more intense coffee blends. While Lyons No3 blend Rich and Full Bodied is still the best-seller in the coffee bag range, worth £1.6m, sales of the darker No4 blend are the fastest growing within the range, showing the shift in consumers’ taste buds towards bolder flavours,” she says.

“Quality is a big trend in the food and drink sector, particularly in terms of coffee, as consumers are recreating their favourite hot drinks at home and turning away from poor quality instant coffee, for example. Consumers are becoming more coffee savvy, using coffee machines and cafetières to enjoy fresh coffee at any time.”

Choose cross-merchandising

Wrigley believes retailers can take advantage of growth areas in the hot beverage market by stocking up on gum. It says some 29% of chewing occasions occur directly after consumers drink a hot beverage (Ipsos Reasons to Chew 2014).

This consumer trend means that retailers can increase sales of gum by positioning displays either at till points or near the hot drinks machine.

Retailers have a real opportunity to encourage additional impulse purchases and increase basket spend through cross-promotion, 
it believes.

Wrigley says retailers need to ensure stock stays high throughout the day to allow retailers to take advantage of peak hot beverage sales periods.

Some 97% of Wrigley’s gum sales are from sugar-free products (Nielsen Scantrack w/e 25 March 2017) with shoppers choosing to purchase chewing gum whenever they eat or drink to help remove lingering food and help keep teeth clean.


Jacobs Douwe Egberts believes the trend for quality, barista-style coffee is set to continue, with consumers becoming even more discerning in their coffee choices.

It believes consumers’ taste for high-quality, barista style beverages is boosting sales for new product formats. It points out that microground coffee, such as JDE’s Kenco Millicano, continues to grow in popularity, with value and volume increases of 3.2% and 9.1% respectively (Nielsen data MAT to 15 July 2017).

The company says that retailers should expect their customers to continue to trade up through the coffee category, and be prepared for continued growth in super-premium formats such as Kenco Millicano and single-serve, led by Tassimo.

With this in mind, the company introduced a super-premium L’Or brand earlier this year. The instant coffee is available in three variants – classique, intense and decafeine– in 100g (rrp £4.99), 150g (rrp £5.85) and 200g (rrp £7.49) sizes.

UK marketing director Martin Andreasen says: “We recognised the importance and need for a luxury brand in the coffee category. With L’Or our ambition is to introduce a gold coffee standard UK consumers can enjoy in their home.”

While Conrad keeps his price-conscious clientele happy with a value range, he believes many of his shoppers will happily pay more for quality tea and coffee, especially if they have a machine at home.

“We sell a lot of Williamson teas with some lines selling for more than £10. We also sell coffee pods and have done for a couple of years. I think more people are using pods because the machines are getting better. I have a machine at home and it’s so easy to make a quality cup of coffee.”

Jag Brar, who owns a Londis store in Cricklade, Wiltshire, has started stocking Nescafé speciality lines in his store, with three to four variants that he is selling at a “premium price”. The number one brand among his customers is Nescafé Original, but when the speciality range is on promotion customers often choose to trade up to the premium option instead.

“The Nescafé Gold cappuccinos and lattes are going really well for us because people are consuming more caffeine. We also do Nescafé Azera, which is very popular. Even though we have coffee machines in store, sales are still pretty strong. Coffee is definitely doing better than tea.

“I have thought about selling coffee machines, but space is a real issue in our store.

“People expect high quality from their coffee. Taste is a big thing now and people think more about what they’re drinking.”

One new area that Tess is seeing increasing interest in is cold brew coffee, which she believes could be a success for other retailers, too.

“You only need a small space in the chiller to add these to your offering. That could be a good option for small store retailers,” she points out.

The cold brew sub-segment grew by 580% between 2011 and 2016 (Mintel w/e 29 July 2016).

The category is particularly popular with young people as just 8% of people in their early 20s drink instant coffee more than once a day (Mintel w/e 8 September 2015). Starbucks, one of the world’s largest coffee chains, now offers its own cold brew coffee range in flavours including caramel and vanilla sweet cream.

Speciality, green and infusions

David Rich, Twinings channel business manager UK & Ireland, points out that with 48% of households now buying into speciality and green tea and infusions, they have become an essential part of a convenience store’s mix and should feature on every hot drinks fixture.

Rich says that within convenience, speciality teas are driving value back into the sector with 1.6% annual growth (Nielsen, 52 weeks, convenience channel, 10 September 2016).

“While standard, traditional tea sales may be in value decline, retailers should maintain their offer across the standard tea fixture but adjust their premium tea range to accommodate new variants and flavours which will meet the evolving needs of customers and drive average margin in the sector.

He advises merchandising all speciality, green and infusions packs in individual blocks, making it quick and easy for shoppers to find what they want.

“Making the fixture as easy to understand as possible while incorporating the key sectors will be the secret to unlocking sales as trends within the category shift,” 
he adds.


Hot chocolate

The chocolate beverage market is worth £89m in the UK, with Mondelez International taking the spot as number one manufacturer in the category with 51.9% market share (Nielsen, Total Value MAT, w/e 1 October 2016).

Susan Nash, trade communications manager at Mondelez International, says: “We believe the drinking chocolate category has significant headroom for growth. Currently, only one in two households buy hot chocolate (Kantar w/e 24 April 2016) yet it is a highly popular drink in the out-of-home market thanks to the rise of café culture.”

Mondelez International introduced its Cadbury Freddo Drinking Chocolate last year in a bid “to reconnect families with the hot chocolate category”.

Instant hot chocolate now accounts for nearly 50% of the hot chocolate market and continues to generate annual sales of £23m, according to Mars Chocolate Drinks & Treats (IRI Infoscan, total market, 52 w/e data to 10 June 2017).

It also points out that the instant low-calorie hot chocolate category is becoming increasingly popular, currently accounting for 16% of the total hot beverages category and almost half of the instant hot chocolate market.

Galaxy Lightstyle features the same flavour and creamy texture as Galaxy hot chocolate, yet contains just 40 calories per serving (rrp £2.99).

Michelle Frost, general manager for Mars Chocolate Drinks & Treats, says: “Combining strong brands, exciting and innovative products and offering flexibility for both retailers and consumers has seen our range continue to grow. The complete range now includes options for those seeking a low-calorie, malted, or indulgent hot chocolate.”

Adam says the small sachets of instant hot chocolate sell best in his store, but the category performs well all year round.

He says: “The biggest seller is the Cadbury instant sachets and the diet variety also sells well. With the sachet format, it tends to be that office workers come in and take it back to their work so that they can have a drink throughout the day.”

Adam also sees customers come into the store and use the convenient sachets to sprinkle over desserts as an alternative to buying regular chocolate bars.

Beyond the Bean, maker of the Zuma hot chocolate brand, has noticed that customers are not only looking for healthier hot chocolate, but for more ethical hot chocolate, too. The company has found that “many consumers are looking at their hot chocolate with the same critical eye they use when purchasing coffee beans”.

This interest in cocoa content and quality flavour has led to the launch of Zuma 100% Organic Cocoa, sold in 2kg tins (rrp £16.49). The high-end cocoa range gives customers “the freedom to create the right blend of hot chocolate”.

Scott says his hot chocolate sales are pretty consistent throughout the year, with popular varieties such as Cadbury Drinking Chocolate selling better than diet varieties for him.

He says: “The hot chocolate, in general, tends to be bought by the older generation. Those more mature shoppers tend to be the ones who buy it to make from home. Cupboard fillers are not as important to younger people as they will buy things as and when they need it.

“If young people buy hot chocolate then it will be through the coffee machine instead.”

Coffee to take away

Denby Drinks Company is now offering convenience stores the Ciao Coffee to Go Serving Station.

The firm says customers are enjoying an average 400% sales increase when replacing their simple in-cup coffee solution.

Ciao Coffee to Go Stations are self-service and offer customers a choice of 14 drink options at the touch of a button. With a high-quality drink using fresh coffee beans, chocolate powder and freeze-dried milk, no fresh milk is required, making it an easy-to-maintain and reliable solution.

The company says retailers who sell just 19 drinks each day can generate additional annual profits in the region of £10,000, while retaining all of their profits. Each drink sold generates 88% POR.

Machines are already in operation in Premier Stores, Family Shopper and Nisa Local stores.

Denby Drinks Company is offering retailers who lease their Ciao Coffee to Go Station three months’ free leasing and up to 4,000 free drinks, worth about £7,000 at retail.

Denby Drinks Company managing director Steve Roy says: “Ciao Coffee to Go Serving Stations pay for themselves by selling just four cups of coffee each day.”

He adds: “With a serving station compact footprint at just 79-80cm wide, each is designed and engineered to last 10 years and comes with lifetime support.”



Samantha Winsor, assistant brand manager at Lantmännen Unibake UK, believes that retailers can increase hot beverage sales by pairing their tea and coffee with cakes and pastries.

She says: “A third of out-of-home hot drink purchases are associated with catching up with friends. A pastry is the perfect opportunity to piggyback on this trend as 80% of all pastry consumption occasions are social and 50% of all sweet 
bakery items consumed out of home are purchased with a hot drink.

“Cross-promoting sweet bakery items with on-trend hot drinks will tempt consumers to buy into these trendy bakery and beverage pairings. Effective point-of-sale materials and messaging can help to communicate this to customers.”

Helen Boulter at Taylors of Harrogate agrees that hot drinks are ideally placed near complementary items such as bakery products, biscuits and fresh milk.

“For coffee shoppers, newspapers, especially on Sundays, are also key,” she adds.

Unilever Partners of Growth also agrees that there are opportunities for incremental sales from stocking complementary categories together.

It advises retailers that they should also allow for regional differences when putting their tea and coffee range together.

Research conducted by the group shows that London and Southern England over-trades in the smaller tea sectors such as fruit, herbal, green and speciality tea, while Northern regions have the “strongest share” of normal tea sales.

It points out that fruit, herbal, green and even decaffeinated teas are growth opportunities, as they are usually bought in addition to normal tea.

Angela Bartholomew, of Bartholomews, Bedmond, near Hemel Hempstead, used the Partners for Growth advice to increase sales at her store.

She explains: “We moved our teas to a more prominent position, but also placed them next to the coffee machine and biscuits. We then used the planogram to stock the well-known brands and introduce speciality teas. This resulted in a greater demand and a sales increase of 35%.”

By stocking a range of value lines to keep their cost-conscious shoppers happy, and speciality lines to satisfy the more adventurous among them, retailers can ensure their hot beverage profits continue to flow.