Hot beverages is a £2.3bn (Circana) category in the UK. Within this, hot coffee is over twice as large as tea (Circana/IRI) in retail sales value, making up 62% of the hot beverages category and growing at +2.9% YoY (Circana/IRI).
Ed Sykes, Coffee Category Lead Nestlé UK & Ireland, comments: “Within Coffee, the Mixes segment is driving growth, and we are seeing consumers drink over 36.8 million more cups across our Nescafé Mixes range.
“We typically see coffee shop trends drive shopper demand in retail. The Mixes segment is growing at +6.1% and allows shoppers to imitate the Barista experience at home through the variety of cappuccinos, lattes and mochas now available in the category (Mintel). We are also seeing demand for Iced Coffee increase too, as nearly half of Gen-Z consumers prefer the taste of cold brew coffee over hot (Mintel). This year we’ve launched Nescafé Iced Coffee Multiserve 750ml in Iced Caramel and Iced Latte, and Nescafé Espresso Concentrated 500ml in Vanilla, Caramel and Classic.”
The RTD Iced Coffee Segment is worth over £367m (Circana and IRI) and is growing at +10.5% YoY (Circana and IRI). This summer Nestlé launched Nescafé Iced Coffee Multiserve 750ml RTD in Iced Caramel and Iced Latte, which together have driven over £950k RSV (Circana and IRI) in the market.
Cold coffee is evolving beyond RTD, with the introduction of concentrated products. Nestlé also launched Nescafé Espresso Concentrated with a range of flavours available in Classic, Vanilla and Caramel. 7.6 million cups of the Nescafé Espresso Concentrated range have been consumed (Circana and IRI), with the products adding £2m of sales value to the Coffee Category (Circana and IRI).
This summer saw the launch of Nescafé Espresso Concentrated. Revolutionising how iced coffee is prepared at home, Nescafé Espresso Concentrated is a premium liquid coffee that can be used to create barista-style iced coffees. Each bottle contains 16 servings and is available in three delicious flavours: Vanilla, Caramel and Classic.
The Coffee category is worth £1.8bn (Circana and IRI) and Nescafé is the UK’s No.1 brand (Circana and IRI), with over 6.6bn cups of Nescafé coffee consumed in the UK each year (Circana and IRI).
“To enhance the shopper experience and aid navigation at shelf, stores should merchandise products on shelves from left to right, arranging from the lowest to highest pence per cup items. Stock a diverse range of the best-selling brands, and prioritise PMP products where available for convenience mission-led stores. Ensure that the allocation of space to category sub-group is proportionate to the sales generated, and for products with a high rate of sale, ensure adequate facings to support sales performance,” adds Sykes.
Maria Kabalyk, Head of Category & Shopper, JDE Peet’s, comments: “With the coffee category now worth over £1.6 billion and more than 24 million households in the UK buying coffee (Kantar), retailers can continue to benefit from the growing opportunity from this category (Kantar). Coffee plays an essential role in shoppers’ routines, as one of the most difficult beverages to go without (NIQ). With consumers increasingly looking for more evolved coffee shop-style coffees that deliver on taste and quality, it remains vital for retailers to offer an exciting and diverse coffee range to make the most of the category.
“Retailers should consider stocking household favourites such as Kenco, L’OR, Douwe Egberts and Tassimo which allows retailers to purchase convenient but still delicious ways to display coffee shop favourites.”
The coffee shop at home trend continues to grow, with 49% of consumers claiming to visit coffee shops less to save money – and most drinking more at home (NIQ). Consumers are trading up on their weekly shop with products that allow them to easily recreate their favourite coffee shop experiences in the comfort of their own homes.
Consumer trends point towards a shift in typical consumption occasions, with more and more people now drinking coffee outside of just a morning brew (Kantar), particularly within the frothy coffee category, which over-indexes with afternoon and evening consumption.
That’s why JDE Peet’s launched four new barista-style drinks in the last year for Kenco Millicano, which are expertly blended to recreate the nation’s favourite coffee shop orders. Tapping into consumer demand for more indulgent coffee, the range is available in Smooth Latte, Creamy Cappuccino and Cadbury Mocha, and the new Cadbury Caramel Latte.
The rich and creamy drinks are modelled on the UK’s most popular coffee shop orders (latte is #1, followed by cappuccino and mocha, according to Allegra). What’s more, these products are also key to recruiting a younger shopper and expanding the popularity within the coffee category.
“We see a significant overlap between the growth in indulgent at-home coffees and the wellness trend. Wellness doesn’t just mean launching products with explicit health claims – it’s also about giving consumers control over portion size and what goes into their coffee,” adds Kabalyk.
“The ability to make coffee shop-style drinks at home is attractive to many health-conscious shoppers because they get to have more control than when buying out-of-home. It’s one of the reasons our new Kenco Millicano barista-style range comes in tins rather than single-serve sachets: we wanted to give consumers the flexibility to tailor their drinks to their mug size and taste preferences.
“Affordability and convenience are also key. Consumers want to recreate their favourite coffee shop orders at home, and they want a bit of indulgence, but it needs to be convenient and at the right price point. We see a growing opportunity for premium instant coffee products that deliver rich, indulgent taste with minimum fuss while also costing significantly less per drink than your typical coffee shop order.”
Richard Milner, Category & Insight Manager at Lincoln & York, comments: “In retail, demand for good quality coffee is high and continues to grow. We’re seeing double-digit growth in whole bean coffee purchases, with value +18% and volume up 13% in the latest year (NielsenIQ).”
Coffee also continues to outperform the wider food and drink sector across a range of out of home (OOH) channels. Now valued at over £8bn, the OOH coffee market is currently growing at 7% year on year (Worldpanel by Numerator), with purchase frequency growth a key driver. Simply put, more people are buying more coffee, and they’re doing it more often.
Much of this momentum is being driven by younger consumers. VYPR recent research shows that 40% of 18-34-year-olds are drinking more coffee out of home than they were five years ago.
Amongst this age group, we are also seeing a boost in demand for iced and RTD coffee. Iced coffee is worth £302m (Worldpanel by Numerator), and is now the third most popular drink for those aged 18-35 {VYPR}.
Today’s coffee consumers are actively seeking specialty blends and indulgent extras, and Lincoln & York’s independent research shows they’re also willing to pay more for this premium coffee fix. Nearly half of those surveyed said they ‘always’ or ‘occasionally’ spend more to try a special blend or a single origin coffee {VYPR}. Furthermore, research shows not only that ‘taste’ remains more important to consumers than ‘price’, but that ‘taste’ – together with ‘choice’ – have become even more important than three years ago {VYPR}.
This response is also backed by market statistics, with purchase frequency up 10.7% and over 640,000 more coffee buying consumers than 2 years ago, despite a 14% increase in average coffee prices over the same period {Worldpanel by Numerator}. This demonstrates consumers’ engagement with coffee and their willingness to prioritise their ‘caffeine fix’ despite rising prices, which is an opportunity retailers should be taking advantage of.
“The key for retailers looking to take advantage of a thriving coffee market is to prioritise quality and consistency whilst also ensuring their range is diverse and interesting. From stocking a number of single origins to offering specialty blends, variety is essential to meet the needs of increasingly adventurous and engaged coffee consumers” adds Milner.
“Being open to innovation and new formats such as RTD and coffee extracts opens up new opportunities, making the increasing demand for cold coffee from consumers easier to meet and manage.
“Finally, keeping abreast of the latest flavour trends and being able to offer the new ‘must try’ syrups and trending drinks will help retailers appeal to new, younger audiences and shows they’re up to date with what’s hot in coffee.”
Jo Taylor, Brand Manager at Arctic Coffee, comments: “The chilled ready-to-drink coffee category remains in strong growth, up +15.1% year-on-year (Circana) and now purchased by 21.5% of UK households (Circana) – equating to 6.1 million grocery buyers. Within this, Arctic Coffee generated £29m in value sales over the past 12 months (Circana). This performance highlights both the continued consumer appetite for chilled coffee and the brand’s success in attracting and retaining shoppers in an increasingly competitive market.”
Arctic Coffee’s best-sellers remain its core lattes, which consistently deliver strong rate of sale across both single-serve and take-home formats. The 330ml Café Latte and Caramel Latte are shopper favourites in the chiller, meeting the demand for convenient, great-tasting iced coffee on the go. The brand’s 1L cartons – Café Latte, Caramel Latte and, most recently, the UK’s first Vanilla Latte 1L – are also performing exceptionally well, offering consumers great value per serve and driving repeat purchase at home.
Arctic Coffee is in strong growth. Its 1L range has been a particular success, recruiting new shoppers into the chilled coffee category and helping to establish take-home as a key growth driver. Combined with our consistent core range and disruptive marketing activity – such as our festival roadshow with Isuzu this summer – Arctic Coffee is cementing its place as the UK’s leading independent chilled coffee brand.
Kate Abbotson, Senior Trade Communications Manager at Coca-Cola Europacific Partners (CCEP), comments: “The RTD coffee segment is forecast to be the highest growth category in soft drinks (Nielsen). According to long-term projections, the category is expected to double in size by 2030, reaching an estimated £670 million (Nielsen). Originally a niche category when it launched in 2010, RTD coffee is now well established in the mainstream, with its trajectory driven primarily by younger consumers who have adopted it as a year-round, all-occasion beverage (Kantar).”
The Costa Coffee RTD range has been carefully designed to meet a broad spectrum of growing consumer need-states, ensuring there’s a product for every coffee moment: the Double Shot variants deliver a high-intensity caffeine hit, ideal for busy or low-energy moments, the Latte and Caramel Latte offer smoother, more accessible options for daily coffee drinkers and the Frappé range provides a more treat-led, lower-caffeine experience, appealing to those looking for flavour and comfort over function.
“Leading brands like Costa continue to play an important role in giving the category credibility and recruiting new shoppers from hot coffee or from other chilled soft drinks segments,” adds Abbotson. “Our advice to retailers is to ‘brand block’ on the fixture for maximum standout and visibility, to help disrupt the shopper journey and inspire impulse purchasing decisions.”
CCEP has introduced a modernised pack design across the Costa Coffee RTD range this summer, featuring bold Costa branding, clearer flavour descriptors and a clean, premium aesthetic that appeals to younger consumers. The updated packaging has rolled out across 250ml sleek cans, 330ml bottles and multipacks. This doesn’t just help the brand and the category stand out in store; clearer communication of product intrinsics on pack makes an increasingly diverse category easier for consumers to shop depending on their need state.
One of the biggest updates to the refreshed lineup is the Creamy Tiramisu Frappe – a low-caffeine drink inspired by the classic Italian dessert. It has a smooth, velvety texture and a rich, dessert-style flavour, perfect for indulgent, treat-led occasions.
Another new addition is the Double Shot + Caramel, which pairs high-caffeine intensity with smooth caramel flavour and added vitamins. It’s designed as a flavour-driven energy boost in a convenient grab-and-go format.
These innovations sit alongside existing favourites, such as the 250ml cans of Latte and Caramel Latte, which continue to perform strongly in grocery.
“Value also remains a lead motivator for shoppers in the convenience channel (Lumina), closely followed by the demand for trusted brands and consistent quality (Lumina),” says Abbotson
“Retailers can meet these needs by stocking leading brands in a variety of price-marked pack (PMP) formats, from on-the-go to multipacks, offering a premium RTD dairy drink selection that stands out from the larger store experience. Our PMP range includes popular favourites like Costa Coffee Latte and Caramel Latte RTD.
Emmi CAFFÈ LATTE is expanding its iced coffee range with the launch of Emmi CAFFÈ LATTE Creamy – a smooth, indulgent new variant crafted to satisfy the nation’s growing appetite for permissible treats.
With the rise of ‘little treat’ culture where one in five (Next) Brits (18 per cent) splurge on ‘feel good’ items up to three times a week, and 49% (Virgin Media) of UK office workers purchase coffee as a daily pick-me-up, Emmi CAFFÈ LATTE Creamy is designed to elevate everyday ‘me time’ moments with a luxurious yet guilt-free iced coffee experience.
Research shows that 37% (IPSOS) of consumers are seeking a smooth, creamy iced coffee, Emmi CAFFÈ LATTE Creamy delivers exactly that. Made with just three 100% natural ingredients: hand-roasted Arabica beans from Guatemala and Honduras, fresh Swiss milk enriched with cream, and a touch of sugar – it offers a velvety mouthfeel and indulgent taste without added sweeteners.
“Consumers are increasingly looking for small moments to treat themselves that align with their health and lifestyle goals,” says Georgia Lightbody, Brand Manager at Emmi CAFFÈ LATTE.
“Our new Emmi CAFFÈ LATTE Creamy variant brings together everything they want: great taste, high-quality natural ingredients, and a momentary retreat to re-energise – all in a convenient, on-the-go format.”
Already the top-performing sku globally – and a bestseller in Switzerland, Germany, and Belgium – Emmi CAFFÈ LATTE Creamy is poised to inject fresh excitement and fuel further growth in the booming UK iced coffee market. With 46% of consumers prioritising great taste and 21% (IPSOS) choosing iced coffee to enhance their day, the new variant is perfectly positioned to meet these expectations.
Sustainability is at the heart of Emmi CAFFÈ LATTE Creamy’s design: the entire production and filling process is powered by 100% sustainable energy, and its packaging contains 30% recycled materials. The playful label designed to evoke indulgence and approachability, ensures standout presence on shelf.
Stuart Wilson, Founder of Lost Sheep Coffee, comments: “With the RTD coffee category maturing and new brands getting in on the act, what we’re seeing now is the rise of quality.
“Most RTD drinks in the chiller are made with instant coffee. Even the ones you wouldn’t expect. As a brand, we’re changing that.”
Lost Sheep does not use instant coffee. Its Milk Based Iced Coffee Cans (Iced Latte, Iced Caramel Latte and Iced Mocha) are made with its signature Get To The Hopper Coffee – a blend of the highest quality Colombian and Brazilian Speciality Grade Arabica beans, which are traceable from origin to can. The drink is freshly ground, brewed, and flash chilled into cans.
“We’re cost comparative to the mainstream brands too, bringing speciality coffee to consumers who may not have had access to it before,” adds Wilson. “It’s about making speciality coffee more accessible and less pretentious. RTD’s are a great way to do that as they can just chill, shake and enjoy. You’re essentially getting a full barista experience, just like you would in a coffee shop, all with the shake of a can.”
As more consumers look to recreate coffee shop quality at home, a trending product that is set to explode over the next year is coffee concentrate.
What concentrate offers is the opportunity to create café-style coffee in the comfort of your own home, with no barista skills or expensive equipment required.
“Right now, there are a handful of mainstream brands on the market, but none that offer speciality-grade coffee quality and traceability,” says Wilson.
“This is where our new Espresso and Caramel Coffee Concentrates (launching this Autumn) come in. Designed to turn everyday coffee lovers into home baristas, they’re made with the same iconic award-winning speciality-grade ‘Get To The Hopper’ coffee found in our Iced Coffee cans (with the same rich flavour and quality) but in a super convenient format to use at home. Just shake, pour and stir for a perfect iced coffee or a bold espresso.”
Phil Smith, Head of Category & Insight, UCC Coffee UK & Ireland, comments: “The strongest momentum is coming from the coffee beans segment, which has been expanding steadily for many years. This growth was further accelerated during the COVID-19 pandemic, as remote and hybrid working led consumers to replicate café-style experiences at home. The shift toward premiumisation, convenience, and the desire for higher-quality beverages continues to create demand in this sector.”
A major trend is consumers seeking to replicate the high-street coffee experience in their homes. This is reflected in the strong growth of the whole bean segment, as more people invest in home brewing equipment, as well as the continued success of Nespresso-compatible capsules, which offer both quality and convenience.
While healthier food and drinks options have become more popular, at present, health is not a major driver in the hot or cold coffee categories. UK consumers continue to enjoy the sweeter, indulgent Ready-to-Drink (RTD) formats. Healthier variations may become more relevant as the RTD market grows and diversifies but current demand remains focused on taste and enjoyment.
“The RTD sector is performing very well and still has considerable scope for growth, whether that be flavour variations or healthier alternatives,” adds Smith.
UCC’s Ueshima coffee range continues to perform exceptionally well, particularly across the ground and whole bean formats. The brand now enjoys wide distribution, with listings across most major grocery multiples. Last year was a busy year for NPD for UCC, with the launch of two canned coffees, Iced Latte and Iced Matcha Latte as well as Pour Over Coffee Bags. This year, the brand has focused on giving its existing coffee range a fresh new look.
“Focus on making the fixture easy to navigate. This category is naturally crowded and complex, so simplifying the shopping experience will help customers find what they need quickly, and ultimately drive more sales,” says Smith.
“To drive higher sales, retailers should focus on offering a well-rounded product mix that covers key formats like capsules, ground coffee, and beans.”
Philip Rayner, Founder and CEO of Glebe Farm Foods, comments: “While the dairy alternatives category is declining slightly by 1.6% (Kantar), oat milk isn’t going out of style. In fact, oat milk is the only dairy alternative in growth – up 2.8% (Kantar) year-on-year and now accounting for around 46% of the category by volume (Kantar). It’s the only segment showing consistent volume growth, with demand driven in part by its versatility in the booming hot beverages market.”
From barista-style lattes to indulgent hot chocolates, oat milk has cemented its role as a must-stock option for retailers looking to meet evolving shopper preferences. PureOaty by Glebe Farm Foods offers a unique proposition in this high-growth space: produced entirely on-site at Europe’s first dedicated gluten-free oat facility, using 100% British gluten-free oats grown and milled on a family farm in Cambridgeshire.
For buyers seeking a point of difference, PureOaty combines exceptional taste and performance with full supply chain transparency – supporting both quality credentials and British provenance, while tapping into the sustained popularity of oat milk in hot drinks.
Taste and texture have always been the leading factors in hot drink choices – and the free-from and plant-based categories are no exception. When asked what drives purchasing decisions, taste consistently ranks as the number one priority (AHDB), highlighting the need for brands to balance health-conscious ingredients with a flavour profile that keeps consumers coming back.
Oat milk has become the preferred non-dairy choice in coffee shops and ranks as the fourth most popular milk type overall (Allegra). With one in five coffee shop and café consumers opting for oat milk in their hot beverages (Allegra).
Glebe Farm’s award-winning PureOaty range is developed with taste, texture and quality in mind – ensuring a naturally creamy, full-bodied oat drink that delivers on both flavour and functionality, appealing to this consumer preference.
Rachel Wells, Commercial Director at St Pierre Groupe comments on behalf of the St Pierre brand: “An important part of our brand plans involves promoting St Pierre’s individually wrapped range as the perfect complement to hot beverages and ready to drink coffees. Retailers can give their hot drink sales a boost when shoppers are hybrid working or out and about by making the store’s bakery offering highly visible to customers buying hot drinks and food to go. Shoppers are being careful with their cash, but bakery is still an everyday affordable treat.”
The move towards premiumisation hasn’t slowed in this staple category, and premium brands like St Pierre give consumers an affordable opportunity to ‘trade up’ and elevate their everyday meals, including when they are on the move. The ongoing financial pressures have made the shopping audience more discerning but offering an appetising mix of indulgence and impulse buys will still drive sales in this sector.
Consumers have got used to convenience stores’ food to go and snacking offerings being a core part of these outlets’ propositions, and shop them at all times of day, along with hot beverages and ready to drink coffee and tea. This also generates secondary spending in other parts of the store.
The way shoppers work has normalised too, leading to stabilised, regular shopper visits. People have settled back down to going to their workplaces full time or flexi working from home, with both presenting growing opportunities for retailers to sell food and hot drinks to go. Morning goods and sweet snacks from quality brands like St Pierre complement hot drinks perfectly as sweet treats at any time of day, merchandised alongside hot drinks machines, and are a great opportunity for retailers to increase basket spend.
One clear growth area is morning goods and sweet treats from brands that consumers know and trust, like St Pierre. The St Pierre food-to-go range comprises of individually wrapped Caramel Waffles, Millionaires Waffle, Butter Croissants, Chocolate Filled Croissants and Brioche Waffles, whilst its multipack offerings include Brioche Swirls, Chocolate Chip Brioche Swirls, Brioche Rolls, Chocolate Chip Brioche Rolls, Chocolate Filled Crepes, Vegan Croissants and Vegan Pains au Chocolat.
“Indulgence is a major factor in bakery purchases, and the bakery category overall continues to benefit from consumers choosing premium options, as they look for ways to treat themselves well at home, and on the move – hence in sweet bakery, the popularity of our food to go range and multi-packs. In the wider bakery category, the move towards premiumisation shows no sign of slowing, and quality brands like St Pierre give consumers an opportunity to ‘trade up’ and elevate everyday meals, including breakfast on the move,” adds Wells.
“Overall, in the current economic climate, our desire for affordable treats is even more pronounced, and indulgence is another trend gaining traction as many embrace the little pick-me-ups that we all need from time to time. Retailers’ bakery sales will continue to benefit from offering a mix of indulgence and impulse buys.”
Comments are closed.