Hot drinks down under: coffee culture boom

A report from GlobalData has found that the Australian hot drinks sector, which includes coffee, tea and other hot drinks, is forecast to grow from $3.4 billion in 2018 to $3.99 billion in 2023, recording a compound annual growth rate (CAGR) of 3.5%.

The report reveals that the hot coffee category led the sector with the majority share of 79.8% in 2018. The category is forecast to grow at a value CAGR of 3.9% from 2018 to 2023, increasing its share to 81.3% by 2023. The growth will be particularly high in the coffee beans, and roast and ground coffee segments.

“Vibrant coffee culture and increasing number of specialty cafes are playing a pivotal role in the growing demand of hot coffee in Australia,” said Mohammed Masiuddin Shajie, Consumer Analyst at GlobalData.

Even during the pandemic isolation, the coffee trend continues in Australia as a take-away option. And one of the latest reported ‘iso’ trends is called Dalgona coffee, which is like reverse cappuccino with a sweet coffee foam covering milk.

The per capita consumption of hot coffee is high in Australia, compared to the regional and global averages. It is also higher when compared to other categories such as hot tea and other hot drinks (hot chocolate and malt-based hot drinks). Nestlé SA, Jacobs Douwe Egberts and Unilever are some of the leading companies in the Australian hot drinks sector, with Nescafé the most popular coffee brand in the country. Private labels, which account for a small share, are growing at a higher CAGR than brands in this sector.

“Hot coffee will remain the leading category in terms of sales in the Australian hot drinks sector during the next five years. In 2018, three of the top five companies depended on hot coffee sales for over 80% of their revenue. The established coffee culture in Australia will make sure that hot coffee will continue its domination over other hot beverages,” Shajie said.

Image credit: ©stock.adobe.com/au/Ivan Kruk