Asia Pacific hot drinks sales set for further growth

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According to a recent report from just-drinks, Asia Pacific has become both the largest and fastest growing retail market for hot drinks. Olly Wehring takes a look at some of the report's findings.

Over the last five years, Asia Pacific has become not only the largest region for retail sales of hot drinks, but also the fastest growing by far, according to a report just published by, Global Market Review of Retail Hot Drinks - Forecasts to 2011. And the growth trend in the region is set to continue.

The report predicts that the Asia Pacific market for retail hot drinks will grow by another 41.5% in volume terms between now and 2011, to reach 4.4m tonnes. The region will increase its share of the global market by 6.4% by 2011 to 40.4% making it even more dominant than it was in 2004.

Between 2000 and 2004, Asia Pacific was the fastest growing retail market for hot drinks, with Eastern Europe and Africa & Middle East the other principal growth regions. This growth means that regions which were primarily characterised as production areas for hot drink ingredients are now just as significant in terms of consumption. "Many of the countries in Asia Pacific and Africa are primary producers of the crops that provide the principal ingredients of hot drinks," the report says. "These countries are becoming not only producers and exporters of these commodities, but increasingly they are also becoming consumers."

The largest individual retail market for hot drinks in the region is not surprisingly China which commanded an estimated 53.3% of total regional sales in 2004,  amounting to some 1.658m tonnes.

Traditionally China has always been a major consumer of green tea and jasmine tea. But with its booming economy and growing prosperity, its population, especially the people who live in the big cities, have developed a growing taste for other varieties of teas as well as coffee. Nestle is now very active in China and Starbucks has successfully penetrated urban markets, thereby helping to expose the Chinese public to a variety of coffee flavours. The report suggests that the Chinese market for retail hot drinks is far from reaching maturity and that the same is true in several other countries in this region, notably Indonesia.

It is not too surprising that Asia Pacific has four of the top 10 markets for hot drinks in the world. After China, the other significant hot drink markets in Asia Pacific are India which had an 11.5% of the regional market in 2004, Japan (8.9%), Indonesia (7.7%) and Malaysia (3.9%).

The growth in the Asia Pacific region could not be in sharper contrast to the situation in Western Europe where the hot drinks market is becalmed. According to the report, demand in the Western European market changed little between 2000 and 2004, with less than a 2% volume sales increase over that period.

The five countries with the largest populations in the region account for around two thirds of retail hot drinks sales and each is a very mature market for these products. The populations of most countries in the region, including the big five, are either static or growing very slowly. Under these conditions, manufacturers cannot expect a major growth in the volume sales of retail hot drinks. Rather, their strategy is to compete heavily for market share and to offer consumers a wider range of different flavours and styles at premium prices. Thus while the value of the retail hot drinks market may well increase over the next seven years, volume sales are likely be fairly flat.

Last year, in Western Europe, Germany was clearly the largest market for retail hot drinks. Its share of total regional sales was 24.2%, which amounted to nearly half a million tonnes. France (15.8%) and the UK (10.3%) were the only other national markets with double figure percentage shares of total regional sales. Thus, the top three markets in Western Europe accounted for just over half (50.3%) of total sales. Spain, meanwhile, contributed a further 8.7% of total sales and Italy contributed almost the same with 8.5% of total sales. Countries in the rest of Western Europe had a combined share of 32.5%.

The report, Global Market Review of Retail Hot Drinks - Forecasts to 2011, includes regional and global forecasts for the coming six years as well as a comprehensive review of current trends in all the world's major hot drinks markets. For further information go to: /store

Sectors: Soft drinks

Companies: Nestle

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