South Korean hot drinks sector expected to reach US$2.3bn by 2023, says GlobalData
The South Korean hot drinks sector – which includes coffee, tea and other hot drinks – is forecast to grow from US$1.8 billion to $2.3 billion by 2023, registering a CAGR of 5.4%, according to data and analytics company, GlobalData.
GlobalData’s report, titled South Korea Hot Drink – Market Assessment and Forecasts to 2023, revealed that the hot coffee category dominates the South Korean hot drinks market, accounting for 84.1% value share of the overall sector sales in 2018. The category is forecast to grow the fastest at a CAGR of 5.6% during 2018-2023. On the other hand, the hot tea category, which held a 14.7% value share in the same year, is forecast to grow at a CAGR of 4.7% during the next five years.
Mohammed Masiuddin Shajie, consumer analyst at GlobalData, commented: “Driven by convenience, instant coffee is the most popular hot coffee in South Korea, accounting for 83% of the overall hot coffee value sales in 2018. It was followed by roast and ground coffee, and coffee beans categories with 9.5% and 7.5% sales, respectively. Coffee beans will register the fastest growth among all the segments across all categories, closely following by roast and ground coffee, and instant coffee during the next five years.”
The per capita expenditure on hot drinks in South Korea is higher than the regional and global averages. It stood at $33.8 in 2018, and is forecast to reach $43 by 2023.
Convenience store was the most popular channel for distribution of hot drinks in South Korea, followed by hypermarkets and supermarkets. These two channels accounted for a combined value share of 84.5% in 2018, while on-trade transactions held just 8.2% share in the same year.
GlobalData identified Ajinomoto Group, Namyang Dairy Products and Nestle as the leading players in South Korean hot drinks market; and Maxim and Osulloc are the most popular coffee and tea brands respectively.
Shajie concluded: “The purchasing power of consumers is increasing in the South Korean hot drinks market. The year 2017-2018 saw 1.9% increase in average prices of hot drinks, as consumers are trading up for premium products. Therefore, manufacturers need to focus on offering better quality products to gain competitive advantage.”