Brand View Insights reviews price and promotional trends taking place in different categories. This report takes a closer look at the price and promotional trends for the Hot Beverages category and the sub-categories that fall within it – i.e. Coffee, Tea and Hot Milky Drinks.
Market Trends by Sub-category
The Brand View Index measures the shelf price of products in Tesco, Asda, Sainsbury’s and Waitrose. The analysis includes all items that have been stocked since July 2008 and which remain in stock today, to ensure an accurate measure of inflation.
Since 2008, the Brand View Index shows an increase of nearly 24% in the total Hot Beverages category, with the Coffee sub-category experiencing the most drastic increase, by almost 28%. This significant increase is due to rises in the price of raw material, as previously reported in April of this year. The Tea sub-category experienced a sharp rise in price during the summer of 2010, but has since remained relatively flat, whereas Hot Milky Drinks has been on a rising trend from April 2011.
Sub-category Pricing Trends
Brand View has reviewed the difference in pricing trends occurring on raw material costs and in-store prices.
Coffee pricing trends indicate a 9-12 month lag in raw material price changes appearing in-store. Looking at the decrease in raw material cost from the start of 2009 through to Autumn of the same year, in-store pricing follows this trend from the start of 2010. This trend continues as raw materials rise from 2010 to the middle of the following year.
Unlike Coffee, the Tea sub-category appears far more volatile with more pronounced peaks and troughs; however, the in-store price does not follow this pattern, showing a more gradual increase.
Promotional Intensity by Brand
Twinings and Nescafe have run the largest number of SKUs on promotion in the 12 months to July 2012. Twinings tend to run promotions for a longer-than-average period, balanced with a more shallow depth of cut than the market average. Tetley drives deeper discounts in Tea, with PG Tips and Typhoo not far behind, but again, these promotions are balanced by shorter periods on deal.
For Coffee, Nescafe and Kenco offer an above average depth of discount when on promotion, and all four brands (including Douwe Egberts and Percol) offer shorter promotions than the total average of the Hot Beverages category.
Hot Milky Drinks offer longer deal periods – the exception being Ovaltine – with Options offering the greatest promotional period and Horlicks and Cadbury’s offering greater discounts.