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Hot Chocolate and Malted Drinks - UK - March 2010

  • The investment potential of the hot chocolate market is clearly highlighted by growth of 20% between 2007 and 2009. Despite the economic downturn, the market is now worth just under £100m.
  • By contrast, once-iconic malted drinks, such as Horlicks and Ovaltine are now seen as old-fashioned and less relevant to today’s consumer. As a result, sales declined by 12% between 2005 and 2009.
  • The hot chocolate and malted drinks markets are struggling to increase purchase and consumption rates. Seen as heavier and more calorific than regularly-drunk alternatives such as tea and coffee, both drinks suffer from a perception of being an “occasional” drink.
  • It does not help that these products are seen as highly seasonal. Mintel’s research shows that 17 million people drink them primarily in the winter or when the weather is cold, in contrast, to the 7 million consumers who drink them all year-round.
  • Cadbury’s Hot Choc Chunks is a new innovation to watch as it allows consumers to melt real pieces of chocolate into milk. By re-inventing hot chocolate as a dessert rather than just a drink, greater usage may be stimulated as well as adding a fun factor to a very traditional sector.
  • Some consumers use these heavier beverages to avoid unnecessary snacking, according to Mintel’s focus group. Marketing campaigns could promote the products as helping, rather than hindering, calorie control.

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Table of contents

  1. Issues in the Market

      • Definition
        • Consumer research
          • Advertising data
            • Focus groups
              • mysupermarket-insights.co.uk
                • Abbreviations
                • Future Opportunities

                  • Fair-trade is becoming huge, meaning positioning is key
                    • However, be careful what you wish for
                      • Promoting more positive health messages
                      • Market in Brief

                        • A tale of two markets
                          • The importance of increasing frequency of usage
                            • Relaxation, comfort and indulgence
                              • Maximising functionality
                              • Internal Market Environment

                                • Key points
                                  • The importance of embracing the fairtrade revolution
                                    • Figure 1: Agreement with ethical lifestyle statements, 2005-09
                                  • Premiumisation is a key driver despite recession
                                      • Figure 2: Trends in agreement with statements on luxury/status, 2007-09
                                    • The market can do more to leverage its health benefits
                                      • Figure 3: Trends in personal concerns, December 2009
                                    • Capitalising on the desire for indulgence/escapism
                                      • Controlling the calories remains a concern
                                        • Figure 4: Trends for agreement with statements about dieting/calories, 2005-09
                                      • Nostalgia can mean extra comfort in uncertain times
                                        • British is best
                                          • Figure 5: Agreement with statements on provenance of food, 2005-09
                                      • Broader Market Environment

                                        • Key points
                                          • Tough economic outlook for 2010
                                            • Figure 6: Trends for GDP, PDI and consumer expenditure, at real (2004) prices, 2004-14
                                          • Strong seasonal affiliations
                                            • Figure 7: The effects of seasonality and consumer confidence on quarterly consumption of milk drinks (including chocolate/cocoa and non-dairy milk type drinks), 2007-09
                                          • Soaring cocoa prices
                                            • Legislation impacting on the development of the market
                                              • Implications of an ageing population
                                                • Figure 8: Total adult population and forecast, by age group, 2004-14
                                              • Rise of the middle classes
                                                • Figure 9: Forecast adult population trends, by socio-economic group, 2004-14
                                            • Competitive Context

                                              • Key points
                                                • Are the British falling out of love with hot beverages?
                                                  • Figure 10: Trends for penetration of hot beverages, by product, 2005-09
                                                • Hot beverages badly affected by the recession
                                                  • Figure 11: Percentage yearly growth in 2008 UK household spend, by selected category, in real value (based on 2005)
                                                • Soft drinks have thrived in recent years...
                                                  • Figure 12: Trends for soft drinks consumption patterns in Britain, 2000, 2004 and 2008
                                                • Hot chocolate and malted drinks lag behind in the Fairtrade stakes
                                                  • Figure 13: Trends for estimated retail value of Fair trade certified hot beverages products in the UK, 1998-2008
                                              • Strengths and Weaknesses in the Market

                                                • Strengths
                                                  • Weaknesses
                                                  • Who’s Innovating?

                                                    • Key points
                                                      • Hot chocolate NPD on the increase
                                                        • Figure 14: Trends for new hot chocolate/malted drink products released into the market, 2006-09
                                                      • Growth of hot chocolate pods
                                                        • Cadbury Hot Choc Chunks expand the possibilities of hot chocolate
                                                          • Chocolate gets dark…
                                                            • Own-label on the wane
                                                              • Figure 15: Trends for branded versus own-label hot chocolate/malted drink products released into the market, 2006-09
                                                          • Market Size, Segmentation and Forecast

                                                            • Key points
                                                              • Growth of hot chocolate keeps market on an upward curve
                                                                • Figure 16: Forecast of volume and value sales of total hot chocolate and other malted drinks market, in current and real prices, 2004-14
                                                              • Hot chocolate starts to realise its potential
                                                                • Figure 17: Forecast of volume and value retail sales of hot chocolate, in current and real prices, 2004-14
                                                              • Spiralling cost of cocoa will push up retail prices
                                                                • Figure 18: Forecast of sales cost per kg of hot chocolate, 2004-14
                                                              • Other malted drinks steady their decline but this sector needs surgery
                                                                • Figure 19: Forecast of volume and value sales of other hot malted drinks, in current and real prices, 2004-14
                                                              • Factors used in the forecast
                                                              • Market Share

                                                                • Key points
                                                                  • A bittersweet performance from Cadbury
                                                                      • Figure 20: Trends for brand value sales shares in the hot chocolate retail market, 2008-09
                                                                    • Hard times for Horlicks
                                                                        • Figure 21: Trends for brand value sales shares in the other malted drinks retail market, 2008-09
                                                                    • Companies and Products

                                                                      • Key points
                                                                        • Associated British Foods
                                                                          • Cadbury
                                                                            • GlaxoSmithKline (GSK)
                                                                              • Mars
                                                                                • Nestlé
                                                                                • Brand Elements

                                                                                    • Key points
                                                                                      • Brand map
                                                                                          • Figure 22: Attitudes towards and usage of hot chocolate and malted drink brands, February 2010
                                                                                        • Brand qualities of hot chocolate and malted drink brands
                                                                                          • Cadbury rules the roost, but malt warming up
                                                                                            • Figure 23: Personalities of various hot chocolate and malted drink brands, February 2010
                                                                                          • Experience of hot chocolate and malted drink brands
                                                                                            • Cadbury most popular, Cafédirect lacks awareness
                                                                                              • Figure 24: Consumer usage of various hot chocolate and malted drink brands, February 2010
                                                                                            • Brand consideration for hot chocolate and malted drink brands
                                                                                              • Low-calorie most considered
                                                                                                • Figure 25: Consideration of various hot chocolate and malted drink brands, February 2010
                                                                                              • Brand satisfaction for hot chocolate and malted drink brands
                                                                                                • Cafédirect lacks the treat factor
                                                                                                  • Figure 26: Satisfaction with various hot chocolate and malted drink brands, February 2010
                                                                                                • Brand commitment to hot chocolate and malted drink brands
                                                                                                  • Cadbury has greatest loyalty
                                                                                                    • Figure 27: Commitment to various hot chocolate and malted drink brands, February 2010
                                                                                                  • Brand intentions for hot chocolate and malted drink brands
                                                                                                    • Cadbury keeps them coming
                                                                                                      • Figure 28: Future usage intentions for various hot chocolate and malted drink brands, February 2010
                                                                                                    • Brand recommendation for hot chocolate and malted drink brands
                                                                                                      • Low-cal and Fairtrade brands eclipsed by indulgence
                                                                                                        • Figure 29: Recommendation of various hot chocolate and malted drink brands, February 2010
                                                                                                      • Horlicks
                                                                                                        • What the consumer thinks
                                                                                                          • Figure 30: Attitudes towards the Horlicks brand, February 2010
                                                                                                        • Cafédirect
                                                                                                          • What the consumer thinks
                                                                                                            • Figure 31: Attitudes towards the Cafédirect brand, February 2010
                                                                                                          • Ovaltine
                                                                                                            • What the consumer thinks
                                                                                                              • Figure 32: Attitudes towards the Ovaltine brand, February 2010
                                                                                                            • Cadbury Drinking Chocolate
                                                                                                              • What the consumer thinks
                                                                                                                • Figure 33: Attitudes towards the Cadbury Drinking Chocolate brand, February 2010
                                                                                                            • Brand Communication and Promotion

                                                                                                              • Key points
                                                                                                                • Advertising activity slows down
                                                                                                                  • Figure 34: Trend for spend per year on above the line advertising for the total malted drinks category, 2005-09
                                                                                                                • GSK dominates ad spend
                                                                                                                  • Figure 35: Market share for total hot chocolate/malted drinks market, by company, between 2007 and 2009
                                                                                                                • Skinny Cow is the only major new launch
                                                                                                                  • Figure 36: Top 7 spending brands on above-the-line advertising, 2007-09
                                                                                                                • Spend shifts from TV to press
                                                                                                                  • Figure 37: Trends for proportion of advertising spend for total hot chocolate/malted drinks market, by media type, 2007-09
                                                                                                                • Hot beverages target colder months
                                                                                                                  • Figure 38: Proportion of yearly adspend for soft drinks and hot beverages, by month 2006-09*
                                                                                                              • Channels to Market

                                                                                                                • Key points
                                                                                                                  • Supermarkets gain further stranglehold
                                                                                                                    • Figure 39: Estimated value sales by retail channel for hot chocolate and other malted drinks, 2008-09
                                                                                                                  • Promotional activity intensifies while multiples move away from own-label
                                                                                                                    • Figure 40: Trends in online supermarket own-label and discounting activity for hot chocolate/other malted drinks, December 2007-November 2009
                                                                                                                • Overall Consumer Usage and Frequency

                                                                                                                  • Key points
                                                                                                                    • A downward trend in 2009
                                                                                                                        • Figure 41: Use of milk drinks (including chocolate/cocoa and non-dairy milk drink types), 2005-09
                                                                                                                      • A case of either very old or very young
                                                                                                                        • Figure 42: Volume Importance Index (VII)* of milk drinks (including chocolate/cocoa and non-dairy milk drink types) by demographics, 2009
                                                                                                                    • Consumer Usage and Frequency by Drink Type

                                                                                                                      • Key points
                                                                                                                        • Malted drinks suffering from lack of awareness, not antipathy
                                                                                                                          • Figure 43: Frequency of drinking hot chocolate/other malted drinks in the past 12 months, by drink type, December 2009
                                                                                                                        • Viewed as an occasional purchase
                                                                                                                          • Hot chocolate attracting younger generation
                                                                                                                              • Figure 44: Regular drinkers (ie at least once a week) of hot chocolate/other malted drinks in the past 12 months, by drink type and demographics, December 2009
                                                                                                                          • Consumer – Occasions and Motivations Behind Drinking

                                                                                                                            • Key points
                                                                                                                              • A perfect time for premium brands to utilise home advantage
                                                                                                                                • Figure 45: Locations where hot chocolate/other malted drinks have been consumed in the past 12 months, December 2009
                                                                                                                              • However, more ambition in infiltrating the workplace can reap rewards
                                                                                                                                • Moving beyond being just a winter warmer
                                                                                                                                  • Figure 46: Statements on attitudes towards drinking hot chocolate or other malted hot drinks, December 2009
                                                                                                                                • How hot chocolate occasions compare to those for coffee and tea
                                                                                                                                  • Using its difference from tea/coffee to its advantage
                                                                                                                                    • Women can especially be wooed by the indulgence factor
                                                                                                                                      • Figure 47: Net difference* of attitudes towards drinking hot chocolate/other malted drinks in the past 12 months, by gender, December 2009
                                                                                                                                  • General Consumer Attitudes towards Hot Malted Drinks

                                                                                                                                    • Key points
                                                                                                                                      • Mining the comfort factor
                                                                                                                                        • Figure 48: Attitudes towards hot chocolate/other malted drinks, December 2009
                                                                                                                                      • Comfort has a strong feminine appeal
                                                                                                                                        • Figure 49: Net difference* of attitudes towards hot chocolate/other malted drinks, by gender, December 2009
                                                                                                                                      • An antidote to recession insomnia
                                                                                                                                          • Figure 50: Attitudes towards hot chocolate/other malted drinks as a sleep aid, by age group, December 2009
                                                                                                                                        • An unwelcome association with being old and frail
                                                                                                                                          • Fairtrade is great but don’t make me pay for it
                                                                                                                                          • Appendix – Internal Market Environment

                                                                                                                                              • Figure 51: Agreement with ethical lifestyle statements, by demographics, 2009
                                                                                                                                              • Figure 52: Agreement with selected lifestyle statements, by demographics, 2009
                                                                                                                                          • Appendix – Overall Consumer Usage and Frequency

                                                                                                                                              • Figure 53: Usage and frequency of milk drinks (including chocolate/cocoa and non-dairy milk drink types), by demographics, 2009
                                                                                                                                          • Appendix – Occasions and Motivations Behind Drinking

                                                                                                                                              • Figure 54: Main locations† where hot chocolate and other malted drinks are consumed, by demographics, December 2009
                                                                                                                                              • Figure 55: Main statements† on hot chocolate/other malted hot drinks, by demographics, December 2009
                                                                                                                                          • Appendix – General Consumer Attitudes towards Hot Malted Drinks

                                                                                                                                              • Figure 56: Main attitudes† towards hot chocolate and other malted hot drinks, by demographics, December 2009

                                                                                                                                          Companies Covered

                                                                                                                                          • Aimia Foods
                                                                                                                                          • Aldi Stores Ltd (UK & Ireland)
                                                                                                                                          • Asda Group Ltd
                                                                                                                                          • Associated British Foods Plc
                                                                                                                                          • British Bakeries Ltd
                                                                                                                                          • British Market Research Bureau (BMRB)
                                                                                                                                          • British Sky Broadcasting Group plc (BSkyB)
                                                                                                                                          • British Soft Drinks Association
                                                                                                                                          • Cadbury Schweppes Plc
                                                                                                                                          • Cafédirect Ltd
                                                                                                                                          • Co-operative Group
                                                                                                                                          • Coca-Cola GB
                                                                                                                                          • Diageo UK
                                                                                                                                          • Equal Exchange Trading Ltd
                                                                                                                                          • Facebook, Inc.
                                                                                                                                          • Fairtrade Foundation (The)
                                                                                                                                          • Food Standards Agency
                                                                                                                                          • Freeview
                                                                                                                                          • Gfk NOP
                                                                                                                                          • GiFi (Côte d'Ivoire)
                                                                                                                                          • GlaxoSmithKline Plc
                                                                                                                                          • Government Actuary's Department (GAD)
                                                                                                                                          • Green & Black's Ltd
                                                                                                                                          • Hotel Chocolat Ltd
                                                                                                                                          • J. Sainsbury
                                                                                                                                          • Kraft Foods UK
                                                                                                                                          • Lidl (UK)
                                                                                                                                          • Luigi Lavazza SpA
                                                                                                                                          • Marks & Spencer
                                                                                                                                          • Mars Incorporated
                                                                                                                                          • Nestlé UK Ltd
                                                                                                                                          • Netto Foodstores Ltd
                                                                                                                                          • Novartis Consumer Health UK Ltd
                                                                                                                                          • Ocado
                                                                                                                                          • Office for National Statistics
                                                                                                                                          • Outdoor Advertising Association of Great Britain
                                                                                                                                          • OXFAM
                                                                                                                                          • R Twining and Company Limited
                                                                                                                                          • Rainforest Alliance
                                                                                                                                          • Research in Motion Uk Ltd.
                                                                                                                                          • Starbucks Coffee Company UK Ltd
                                                                                                                                          • Tesco Plc
                                                                                                                                          • The Fairtrade Foundation
                                                                                                                                          • Traidcraft PLC
                                                                                                                                          • Virgin Media Ltd
                                                                                                                                          • Voluntary Service Overseas
                                                                                                                                          • Whittard of Chelsea
                                                                                                                                          • Wm Morrison Supermarkets

                                                                                                                                          Hot Chocolate and Malted Drinks - UK - March 2010

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