How Can the Hospitality Sector Capitalise on the Growing Demand For Out-Of-Home Hot Beverages?

The consumption of hot beverages out of the home is increasing in popularity, so pubs, hotels and restaurants need to capitalise on the growing market.

The rise of the out-of-home hot beverage market is continuing as consumer tastes evolve. Here Simon Mydlowski, partner and leisure and hospitality lawyer at Yorkshire law firm Gordons, discusses how the hospitality industry can capitalise on this growing trend.

Much of the growth is being driven by millennials who are not visiting bars and pubs as much as previous generations. Figures from the Office for National Statistics released in May 2017 revealed more than a quarter of 16 to 24-year-olds do not drink alcohol, compared with just over a fifth of the broader adult population.

The report indicated that just under 21 per cent of people surveyed in England, Scotland and Wales said they did not drink alcohol, which is the equivalent of 10.6 million adults aged 16 or over, highlighting a significant number of consumers that may not be catered for by traditional bars, pubs and hotels.

As tastes have changed so too has the hospitality sector. Coffee shops have become a high-street staple, with major café chains, independent outlets and even drive-thrus popping up all over the UK’s major towns and cities to fill the gap the traditional hospitality sector has left open.

The reduction in alcohol consumption among the millennial generation and the rise in the number of people looking to stay fit and healthy has posed a significant challenge for pubs and hotels specifically. Many have struggled to come to terms with the challenges posed by the rise in out-of-home hot beverage sales.

Diversifying an offer

Instead of seeing the rise of the hot beverage market as a challenge to them, hotels and pubs should look at the changing trends as a new opportunity to capitalise on a growing market, which shows little signs of slowing.

There has been an increase in the number of pubs and bars serving coffee to customers, with many opting for tie-ups with coffee brands to supply hot drinks to consumers, but there is still a lot more that can be done to capitalise on the demand. Hotels, in particular are very well placed to take advantage of the rise in coffee shop culture.

Many hotels are overlooking one of the significant assets they have. Space. Turning a hotel bar into a makeshift coffee shop during the day will take very little investment. Of course, the beverages being served must be the same standard consumers can get from the high-street chains. Providing basic filter coffee alone will not meet the requirements of a discerning consumer base – quality is paramount.

Hotels have traditionally promoted their expansive alcohol collection and expected guests and walk-in customers to consume these traditional drinks. However, times are changing and there is a clear demand for exotic teas and coffees served in the way people get them on the high street or in boutique coffee shops.

Pubs and bars also face challenges when it comes to the diverse tastes of consumers. They now need to cater to the ever-changing alcohol market, as well as those seeking out venues where they have a greater choice of non-alcoholic beverages. It is key for owners to meet consumer demand head-on, as failing to do so will see younger generations turn their back on them.

It is important to constantly assess the market and understand the changing tastes of consumers. While it is difficult to know what the next five years will hold, the statistics indicate that the out-of-home hot beverage market is a growing one. With consumers’ growing desire to stay fit and healthy, the trend only looks set to gather pace.

Ultimately, operators in the hospitality sector that can gauge rising consumer interest and subsequently cater for it will have the best chance of success.

If you need legal advice within the leisure and hospitality sector, please contact Simon on 01274 202514 or simon.mydlowski@gordonsllp.com. For more information about us please visit www.gordonsllp.com/sectors/leisure-and-hospitality.