Key Findings

Consumer frustration with high prices will collide with continued supply chain issues

Pressures continue on many core industry inputs, especially commodities. This has been an issue for years, and consumers are becoming more reluctant to accept additional price increases. Balancing rising input prices with this consumer unhappiness will be the dominant challenge for the hot drinks industry globally in 2025.

Premiumisation is becoming more difficult under cost-of-living pressures

One of the implications of the rising cost of living has been the increasing difficulty of pursuing premiumisation. Consumers who are already being forced to spend more are becoming harder to convince to willingly spend even more on top of that. This is not to say that premiumisation is not still possible, only that the options are becoming more limited.

Wellness is a dominant consumer priority in an uncertain world

As the world becomes more chaotic and consumer stress levels rise, individualised wellness is becoming more important. It has become a clear financial priority, especially among younger people, making this an important avenue for value-added products. At the same time, evidence of the health benefits of regular hot drinks consumption is becoming stronger.

Technology is disrupting the historical role played by hot drinks in foodservice

Traditionally, drinking a hot beverage outside the home was often as much about socialising or purchasing a place to spend time as much as about the beverage. Changing lifestyle patterns and technology usage, though, mean that, increasingly, the foodservice outlet is a place to obtain a beverage not practical to make at home, rather than a “third place”.

Sustainability challenges need to be aligned with consumer spending priorities

Sustainability is a growing challenge for hot drinks, and not just because extreme weather events are increasingly battering growing areas and pushing up commodity prices. Consumers are also cutting back on their spending, becoming more reluctant to spend on sustainability, and more sceptical of greenwashing claims when they do.