Globaldata: Increasing Disposable Income And Strong Tea Culture To Drive APAC Hot Drinks Sector Through 2025
Friday, July 16th, 2021 | 381 Views
Strong tea culture and increasing disposable income are set to drive the Asia-Pacific (APAC) hot drinks sector at a compound annual growth rate (CAGR) of 7.5 percent from US$83.3bn in 2020 to US$119.4bn in 2025, forecasts GlobalData, a leading data and analytics company.
GlobalData’s report, ‘Opportunities in Asia Pacific Hot Drinks Sector’, reveals that the ‘hot tea’ category led the sector in value terms and it is projected to register the highest value CAGR at 8 percent between 2020-2025.
The report identifies Japan, Australia, Vietnam and China as the high-potential countries based on GlobalData’s unique scoring system, which involves the risk-reward analysis derived from multiple metrics, which include market size and growth analysis, besides the political, economic, social and technological assessment of 26 major economies in the APAC region.
Among the high-potential countries, China was the largest market in both value and volume terms in 2020. During the review period, China is forecast to grow from US$30.8bn in 2020 to US$48.8bn in 2025, registering a CAGR of 9.6 percent while Vietnam is projected to record the highest volume CAGR of 6.3 percent from 178.1m kg in 2020 to reach 241.4m kg in 2025.
Nilanjan Dutta, Consumer Analyst at GlobalData, says: “APAC is expected to register high value growth over 2020-2025, on account of increased income levels in various Asian economies such as India and China, where improved purchasing power across all levels allows the consumers to spend on premium and high-quality hot drink offerings. Additionally, the growth in the region will be driven by novel hot drinks products targeted at young consumers with experimental taste palettes.”
‘Hot coffee’ is forecast to register growth in consumption share among all the high-potential countries except China, during the forecast period while the consumption share of ‘hot tea’ is expected to decline in all the high-potential countries except China. In the other hot drinks category, Japan, Australia and China are expected to register a decrease in the consumption share while consumption in Vietnam is forecast to increase.
Nestlé S.A., Unilever and China Tea Co. Ltd. are the leading ‘hot drinks sector’ market players in the APAC region. ‘Novel & experimental’ and ‘wellbeing’ are the top trends that get along very well with the region’s hot drinks sector. Consumers’ desire for maximal sensory benefits for improved consumption experience is driving the demand for new and unique flavors of hot drinks.
Mr. Dutta explains: “This consumer thirst for novel and varied palatable sensations is spurring innovation in the sector. Therefore, manufacturers are focusing on blended flavors, which offer an enhanced consumption experience, to appeal to the consumers looking for ultimate taste pleasures.”
Additionally, health remains a major concerning factor for consumers in the APAC region while making purchase decisions. To cater to these health-conscious consumers, manufacturers are introducing products with health claims such as ‘low-calorie’ and ‘free-from’.
Mr. Dutta concludes: “Although a tea-drinking region traditionally, Asia’s consumption of hot coffee saw strong growth in recent years, and the category is poised for further growth in the future. The adoption of western tastes has led to a surge in the number of cafés in the region, fueling the hot drinks sector. However, the dominance of the unorganised retail channel is allowing counterfeiters to thrive, negatively impacting the hot tea category.”
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