but don't forget your core brands, says Kate Miller.
Despite headlines which would have you believe that Brits drink alcohol from dawn to dusk, our real passion is for a nice hot drink rather than a G&T. The total hot beverage category is worth £170m in the convenience channel, growing by 6.7% (Nestlé/IRI Total Convenience Value Sales 52 weeks ending September 8, 2007). Several trends run throughout the category, whether you're talking about tea, coffee or hot milky drinks. Health, convenience, speciality and premium continue to drive growth.
In tea, major brands have moved into areas once found in speciality shops and health stores, such as speciality, green, decaffeinated and herbal teas. These teas, which are seen by some consumers as healthier, form a small part of the market, but are performing well.
According to Typhoo customer marketing manager Sue Jones-Smithson: "The mainstay within black tea remains fairly static, but the share of throat has declined slightly as we're seeing younger people coming in and buying fruit and herbal teas. People's repetoire has changed and consumers will now purchase across a number of segments, buying black tea as well as herbal. Shoppers also switch between caffeinated and herbal."
This year Typhoo underwent a makeover, updating its image and giving its brands a distinctive look. It backed the change with £4m-worth of TV advertising and
15-second ads running on bus screens in London and Birmingham. The company also launched a range of teas under the Typhoo Fruit Creations umbrella.
Tetley customer marketing controller Simon Attfield agrees that the market is changing: "People used to drink the same tea all day, but now they're drinking a mixture."
He says that the move of big brands into specialist tea markets has encouraged consumers to experiment: "In research we got feedback that consumers didn't see specialist teas as an area they'd go to - it was seen as posh tea. The Tetley brand is down to earth and can bring those teas across to people."
Tetley launched Tetley Redbush (also known as rooibos tea) at the beginning of the year and introduced larger 50-bag packs of green lemon and green decaf,
40-bag packs of herbal tea peppermint punch, and reblended its fruit range.
A TV ad campaign in April sought to promote Tetley's wide range of teas by dropping the 'Auntea' character and replacing her with a mix of people drinking a variety of Tetley teas, under the banner 'Everyone's Cup of Tea'.
Twinings UK sales director Jon Jenkins says that the company calls the trend 'mainstream plus one'. "If you look at tea, historically people have
often just had PG tips or Tetley in their cupboard, but now more often they have green tea and infusions. It's a bit like the cheese market was a few years ago - then it was all about Cheddar. But now people like to have different types of cheese, but will still have Cheddar as well."
This month Twinings adds an Everyday Loose Tea and Everyday Organic Tea to its Everyday range. Also in December comes a range of Fairtrade teas under the Jacksons of Piccadilly name, including blended premium mainstream teas, single origin speciality teas and Chinese sencha green teas. In October the brand put £1.2m behind its Earl Grey and Lady Grey blends.
In coffee, Twinings launched its Coffee Blends in April and is currently advertising them on TV. Jenkins says: "We wanted to build distribution before launching an ad campaign, and the run up to Christmas is a peak time for coffee."
While the change in drinking habits is exciting for the market, it can be confusing for a small retailer with limited space. "There are two scenarios that c-stores fall into," says Tetley's Attfield. "One where retailers haven't changed at all, and the second where they've jumped in with both feet and given it too much space. It's a case of getting the balance right."
Unilever senior category manager for tea Adrian Adams points out that although speciality tea is growing, 80% of tea sales are still traditional tea bags. "It's important for rate of sales that retailers recognise this and stock the top- selling lines accordingly," he says.
Unilever spent £18m on PG tips in 2007, reprising the 'monkey and Al' ads, and announced its commitment to purchasing all its tea from sustainable, ethical sources. It aims to have all Lipton Yellow Label and PG tips tea bags sold in Western Europe certified by the Rainforest Alliance by 2010.
Mainstream teas also offer the chance for promotion, which can be a real driver. Typhoo's Jones-Smithson says: "Consumers are loyal to brands. With the bogof culture coming in, people will purchase on promotion. Tea is one of the categories where loyalty has an awful lot to say. It's almost like family heritage and people will probably cupboard-fill on promotion."
Jenkins says retailers should be looking to multiple convenience stores for a guide: "If you take a straw poll of 10 c-stores, you'll probably find between four and six standard teas, but are unlikely to see any infusions or green teas. Compare this with what's happening in multiple convenience, which will probably only have one mainstream, but a good range of other teas. They're using the same space, but in a different way."
Tea isn't the only market witnessing change, but it'll probably be a while before the latest development in coffee takes off in c-stores.
The next big thing is the pod, a single-serve, fuss-free way to make coffee, but which needs a special machine. Manufacturers are on a major push to convince consumers that they need these sleek, modern machines in their homes, however it may be a while before most c-stores see a major demand for pods. Nestlé UK trade communications manager Graham Walker believes that while pods represent a big opportunity for the market, it's still too early for most c-stores to put their orders in. He says: "They represent £15m in the coffee market and are growing at 63%, but there is the huge dilemma of when we need to start pushing them into the convenience sector because there has to be sufficient enough machines in people's homes to warrant the shelf space - we're not quite there yet."
Walker identifies four main trends in coffee: health & wellbeing; environment & sustainability; convenience; and indulgence. He says that the change to smaller shopping trips, accounting for 35% of all spend on instant coffee, is a huge opportunity for c-stores. "It's an absolute bullseye for c-stores,"
he points out.
Within indulgence, he says that consumers are looking to replicate the experience they have in the plethora of coffee bars that continue to spring up on every high street. "About 64% of instant coffee is regular and premium, and that should be your core, but then you start moving into growth areas."
This area of the market, along with convenience and speciality coffee, is showing stronger growth in c-stores than grocery as a whole.
This year Nestlé has backed its Nescafé brand with a £17m media spend with TV advertising for Nescafé Original, and new website Nescafe.co.uk launched in the first week of June. Half Caff also made it to TV screens in May and a £2.7m campaign was launched for the Nescafé Collection range of connoisseur coffees.
In coffee, value is growing faster than volume, highlighting an upswing to premium sales, according to Mintel. The total market is worth more than £680m, split between the dominating sector of instant representing 85% of the market, and ground coffee (source Mintel). In convenience, instant coffee is growing at 5.4% (Nestlé IRI Total Convenience Value). In both sectors the main trend has been premium, super-premium and speciality blends.
Kraft Foods convenience sales customer director David McNulty says: "Increasing numbers of consumers are trading up to better quality coffee and are seeking more variety."
Kraft is investing £9m in its Kenco brand with a redesign and two recent product developments: Kenco Fusion, the single-serve coffee combined with whitener, with or without sugar; and the super-premium Kenco Pure. The company has also invested £8m into the Tassimo brand this year.
Of course, there's a lot more to hot beverages than tea and coffee and this is the time of year that many of your customers will be looking to snuggle up with a warm milky drink at bedtime. Hot chocolate is performing particularly well in
c-stores - up 8% (Nescafé/IRI Total Convenience Value Sales 52 weeks ending September 8, 2007). One of the main trends is the single-serve stick and earlier this year Aimia Foods launched two single-serve sachets of Maltesers and Galaxy for the autumn/winter market. The 25g and 28g sticks respectively are designed to be used at home or to carry around for drinking at work. They retail at 29p per sachet.
New for next year will be Galaxy Bliss, designed to be made with milk rather than water, and available in an 18g single-serve stick.
Aimia brand marketing manager Richard Cooper says that increased consumption of hot beverages will come from more consumer snacking and increased breakfast consumption of hot beverages.
Horlicks has also introduced the stick-pack format across the Horlicks range, with new Horlicks Extra Light launched in 11g sachets. The drink is targeted at women aged 25-45 and is a response to research by the company which indicated that consumers are looking for a hot milky drink that is lower in calories.
The brand has also recently launched pillow-shaped packaging, supported by £4.2m media spend including TV ads.
Ethical and Fairtrade
According to Mintel, growth in Fairtrade remains significant at about 12% year on year. Cafédirect chief executive officer Penny Newman says: "The tea industry is closely following the coffee industry, with brands and retailers entering the growing ethical tea market. And it will be interesting to see what impact this development will have on market performance."
• The total hot beverages category is worth £170m in the convenience channel, up 6.7%
• Instant coffee has the largest share of the market at 45.2% (value)
• Instant coffee in convenience is up by 5.4%, driven by premium, super-premium and speciality coffee
• 46% of hot beverage shoppers are on a top-up mission within convenience stores
• Hot beverage convenience store shoppers spend £10.59 per visit, while average shoppers spend £5.44. C-store shoppers also purchase 5.6 items per trip compared with 2.6 items for the average shopper
• About 165 million cups of tea are consumer daily in the UK.
Sources: Nescafé/IRI Total Convenience Value Sales 52 weeks ending September 8, 2007). Typhoo/United Kingdom Tea Council and HIM
• Make your hot beverages are visible. If you stock it, make sure your customers know you do, especially if you stock some of the specialist varieties which your customers may not expect you to have
• Use promotions wisely as they are an important driver of tea sales
• Cross-merchandise - what goes better with a cup of tea than biscuits?
• Make sure you keep everyday tea as your core, but stock a range of Earl Grey, green tea, herbal and decaffeinated
• Avoid out of stocks like the plague - your customers will never forgive you.