The hot drinks sector in Japan is forecast to grow from JP¥2 trillion (US$18.4bn) in 2018 to JP¥2.5 trillion (US$23.7bn) in 2023, recording a compound annual growth rate (CAGR) of 3.7 percent, says GlobalData, a leading data and analytics company.

Global Data’s report, ‘Japan Hot Drinks – Market Assessment and Forecasts to 2023’reveals that the sector is led by the hot coffee category, which held the majority share of 68.2 percent in value terms, in 2018. It is followed by hot tea and other hot drinks categories. Furthermore, driven by the growing demand for coffee beans and instant coffee, the hot coffee category is forecast to record the fastest CAGR of 4.1 percent during 2018–2023.

The per capita consumption (PCC) of hot drinks is significantly high in Japan compared to the regional and global averages. It stood at 4kg in 2018 and is expected to grow further in the next five years to reach 4.4kg by 2023.

Mohammed Masiuddin Shajie, a Consumer Analyst at GlobalData, says: “Rising disposable income of Japanese consumers is driving the per capita expenditure on hot drinks, which is one of the largest in the APAC market.”

Nestle SA, Ajinomoto Group and UCC Ueshima Coffee Co Ltd are the leading companies in the Japanese hot drinks sector. Nescafe remains the most popular brand in the country.

The report also states that the hot coffee category, registered the highest per capita consumption of 2.6kg in 2018, which is sizably high compared to hot tea and other hot drinks (includes chocolate and malt-based drinks).

In terms of distribution channels, on-trade transactions accounted for 34.2 percent share of the overall hot drinks sales in 2018. Hot coffee and hot tea categories held a higher share of on-trade sales compared to other hot drinks.

Shajie concludes: “On trade sales of hot drinks, especially coffee will continue to grow in Japan, benefitting from stimulating influence of Western culture and an increasing number of chained cafes and specialist coffee shops in the country.”