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Latvian hot drinks sector shows upward trend

By Anatol Steven. 04.04.2014

Cup of coffee
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Latvian hot drinks sector shows upward trend

The recovery of the Latvian hot drinks sector from the recent economic crisis began in 2012 and continued in 2013, a study by Euromonitor reveals.

Coffee remains the main driver of performance as it accounts for the majority of total volume sales. Other hot drinks have also performed well in total volume terms over the last five years due to the health and wellness trend in the country. Lifestyle, simplicity and the wellness trend are defining the performance of hot drinks in 2014.

People in Latvia prefer coffee (instant over fresh) to other hot drinks mainly due to the climate, variety, promotion, lifestyle and its invigorating effect. Instant coffee is preferred due to its simplicity and ease of preparation. Coffee pods are gaining popularity for the same reasons. 

However, some consumers substituted coffee with tea or other hot drinks in 2013 due to the trend of health and wellness. The recovering economy has had a positive impact on consumer purchasing power and contributed to increased demand for higher quality products.

The leading positions in the sector are taken by international brands, and few local players were present in Latvia in 2013. The leading companies are present in all three categories of hot drinks, and due to economies of scale it is difficult for local producers to compete with international brands. Local producers focus mainly on developing niches or particular target groups, Euromonitor says.

On-trade sales are increasing as the economy improves and the country’s cafe network develops – players include Coffee Inn, Double Coffee and Costa. Supermarkets remain the leading off-trade channel in 2013 due to the wide variety of products available and discounts offered. Internet retailing also increased, especially for coffee pods, but this channel remains insignificant in terms of total retail volume sales.

Instant coffee sales will increase as people become less willing to spend time preparing fresh coffee and seek faster alternatives, Euromonitor predicts. The growing popularity of coffee pods and the number of cafes will positively affect on-trade sales. Lower prices of coffee beans and cocoa will lead to higher discounts, encouragement to innovate and minimal unit price growth over the next five years.


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