As the colder weather sets in, retailers can warm up their shoppers and sales with hot beverages, writes Nikki Allen.

What trends are driving hot drinks?

Tea sales are in decline due to a price squeeze on standard lines, but there is money to be made from premium brands. If you can reflect the demand for higher-quality drinks in store, you will have a successful category.

“Increasingly, customers are looking for a premium offering beyond standard tea or instant coffee,” says Helen Boulter, Taylors of Harrogate channel controller. “Stocking premium black teas, like Yorkshire Gold, and a quality coffee, such as Taylors Rich Italian blend, can capitalise on this.”

The decline of standard tea is evident in convenience stores, but so is the growth in green and speciality tea, says David Rich, Twinings channel business manager, says.

“In the convenience channel, tea is declining by 10% annually,” he adds. Whereas premium tea, incorporating speciality, green and infusions, which is bought by 48% of consumers, is driving sales.

“The tastes of tea drinkers are changing. In convenience, premium teas now account for 10% of tea sales, with speciality tea growing by 1.6% and flavoured green teas by more than 20% annually,” Rich explains.

This trend is being driven by the increasing availability of barista coffee on the high street. Nicole Hartnell, Lyons Coffee brand manager, says:

“Consumers want to recreate their favourite hot drinks at home and are turning away from poor-quality instant coffee.”

How to merchandise your hot drinks display

With the increasingly wide range of hot drinks on offer, this category can be confusing. You can make it simple by demonstrating the difference in quality between brands on
you shelves.

“Merchandise all speciality, green and infusions packs in individual blocks, making it quick and easy for shoppers to find what they want,” says Rich.

“Also, stock chocolate and malted drinks on the main fixture, incorporating formats like jars and sachets, so customers have a clear choice.”

You should use your EPoS data to work out your bestsellers and ensure these are stocked at eye level and double faced if possible.

“Ninety-six per cent of hot drinks purchases are made from the main shelf, so the right range and layout is crucial,” says Boulter.

“Our Brew View website offers advice for retailers on how to grow their sales.

“We suggest ensuring your fixture is within eyeshot on entering the store, displaying PoS, running cross-category promotions and alternating your promotions weekly to keep the
category fresh.”

Why invest in a hot drinks machine?

The coffee shop market has grown by 37% over the past five years and was worth
£3.4bn in 2016.

However, in a market traditionally dominated by coffee shops, as many as 44% of consumers now buy their hot drinks from non-specialists, meaning convenience stores are ideally placed to grab a slice of the market by investing in a hot drinks machine.

“Fewer people have breakfast at home and 52% of coffee sales are now on the go,” says Simon Baggaley, category manager for Nescafé Coffee Machines.

“While the coffee shop market is dominated by high-street coffee chains, convenience stores are well placed to tap into this lucrative market with coffee vending machines.” 

Your store is likely to open earlier than any local coffee shops, which means you can cash in on the early-morning rush.

You should choose a strong, trusted brand to partner with to drive sales and preferably offer something that is not available nearby to bring people in.

Retailer View

“As part of our store refit in April this year we installed a Costa Express hot drinks machine next to our hot food-to-
go counter.

“We had a hot drinks machine before that sold coffee at £1.50 a cup, but now we charge £2.30 for a regular cup and £2.60 for a large one. With the new machine we have doubled the number of cups we sell each day and also tripled the amount of cash going that’s through the till.

“There is no doubt that having a big brand name has been a real driver for our hot drinks sales.”