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Hot Drinks in Denmark

Denmark hot drinks market: -1% CAGR decline witnessed during 2012

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2014-01-28 15:27:02 - Hot Drinks in Denmark - a new market research report on

Coffee is very popular in Denmark and retail volume sales only decreased slightly (by 1%) in 2012, despite worsening economic prospects and significant retail price hikes in coffee over 2011 and 2012. The decline in coffee retail volume sales was at a similar pace in 2012 as during the whole review period. Furthermore, the decline was mainly due to changing consumption patterns from the traditionally-favoured American-style filter coffee to high-quality, Italian-style short and stronger coffee, such as espresso.

Italian-style quality coffee, certified labelling, and convenience were the key growth drivers for premium brands in 2012. This resulted in strong growth in 2012 in instant coffee, fresh ground coffee pods for espresso machines, organic tea and coffee, and particularly organic instant



coffee. Premium product launches, such as Gevalia Millicano, targeted these trends and enhanced the growing premium positioning of instant coffee. Certified labelled coffee and tea, such as organic, fair trade, source origin, and eco-friendly, are often perceived as healthier and tastier.

Some of the most dynamic brands in hot drinks include the highly-advertised Nespresso and Ethical Coffee Company´s lower-priced premium brand Espresso, both underpinned by dynamic growth in the demand for fresh ground coffee pods. The trend towards espresso also boosted value sales in 2012 of premium imports within standard fresh ground coffee, such as the Italian brand Lavazza. The small domestic premium brand, Peter Larsen, was strongly positioned in 2012 in certified labelling through which, combined with several espresso and strong-coffee product lines, it increased its share in instant coffee and standard fresh ground coffee.

The economic downturn and rising consumer price sensitivity has, however, led to a strong trend towards discount, economy, and private label products over the review period. Consumer price preferences have polarised as the Danes want either the best or the cheapest. This trend intensified in 2012 which saw private label products increase their value share whilst mid-priced brands generally lost out, this included the three leading brands, Merrild, Gevalia and BKI. Also, these three brands lost sales as they are mainly present in the previously dominant but declining standard fresh ground coffee. Another consequence of the trend towards lower-priced products was the increase in the value share of discounters in 2012.

Consumer interest in Italian-style coffee and stronger coffee in general, combined with convenience and certified labelling, is expected to drive growth in premium brands of coffee over the forecast period. This trend will most likely also shift preferences within hot drinks further in favour of coffee, which is expected to have the highest value growth in hot drinks in the forecast period. It is therefore expected to take a further share from tea and other hot drinks in 2012-2017. Hot drinks manufacturers are expected to target the vast majority of product innovations and marketing at coffee, while tea might see minor investment in categories positioned in health and wellness such as green tea and fruit/herbal tea.

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