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INNOBEV GLOBAL SOFT DRINKS CONGRESS 2014

RTD coffee the next big thing? ‘We’ve heard that quite a few times before!’

By Ben Bouckley+

28-Apr-2014

Starbucks Iced Coffee (Photo: ImpulsiveBuyer.com)
Starbucks Iced Coffee (Photo: ImpulsiveBuyer.com)

Zenith International chairman Richard Hall has expressed skepticism over RTD coffee’s credentials as the ‘next big thing’, despite impressive growth since 2003.

Speaking at the recent Innobev Global Soft Drinks Congress, in Lisbon, Hall spoke of growth in the RTD coffee category, which Zenith predicts will hit 4.3bn liters by 2018, with 34% growth between 2003 and 2018.

Despite impressive growth RTD coffee is still a tiny category. CSDs excluding energy drinks are forecast to hit 216bn liters by 2018, and bottled water 382bn liters, according to Globaldrinks.com statistics.

There are some people who are suggesting that RTD coffee is about to take off,” Hall said.

“We’ve heard that quite a few times before. It’s quite possible that it may, but there are so many other attractive coffee options in the hot category,” he added.

Awash with water, and fruit juice fluctuation

Despite growth in RTD coffee, hot coffee was where the bulk of industry interest still lay, Hall said.

Summarizing other global beverage trends, Hall said we are seeing a soda slowdown – mainly due to an 8% decline for North America over the forecast period, which Zenith’s chair said was partly due to the fact that consumers nowadays have more choice in soft drinks, but also due to growing health concerns.

“We are awash with water, and there’s quite a lot of fruit fluctuation, with a trend to lighter more affordable drinks,” Hall said.

“Functionality has become more fulfilling – especially to meet the time/energy conumdrum. But there are questions beyond as to what will succeed in functionality,” he said, adding that he was waiting for the ‘next big thing’ after energy, recovery, probiotics and cholesterol.

Hall described teas as a ‘tempting’ category, as green teas and other variants gain recognition, and said hot drinks had taken on a new lease of life through the growth of café culture.

“There’s a growth of popularity in premium coffee, tea variants are becoming increasingly appreciated and single-serve coffee machines are becoming very big numbers,” Hall said.

Premium alcohol is trending up

In alcohol, Hall identified a trend towards premiumization through craft beers and microbreweries, as well as more drink mixes, flavors and exploration in low alcohol content drinks.

“One of the themes in milk, interestingly, is not milk – it’s alternatives to milk. Soy, almond, many other rice drinks, oat drinks, more protein drinks and an emphasis on more adult products – with people choosing milk rather than being provided with it by their parent,” he said.

As an ‘emerging idea’, Hall said liquid breakfast seemed to have promise, while crossover drinks are also blurring categories – hot sparkling drinks, soy coffee drinks, rice drinks with coconut water, yogurt soft drinks.

“The key issues for brand owners and producers remain much the same. Taste is paramount, convenience is what consumers want, while portion size is a new focus – not just for those in a smaller household or with more aged consumption habits – but also for health reasons,” Hall said.

“Availability can never be overlooked. Big companies bang on about it forever. Getting the product into the hands of the consumer – never being out of stock, ensuring great condition, is clearly essential,” he added.