Nigeria’s retail demand for beverages declines sharply as coffee demand outpaces tea in Q2 2024

Kasi Retail Demand Index provides valuable insights into consumer demand for various retail categories in Nigeria. Ranging from +100 to -100, the index measures how consumer habits influence demand across different categories. A higher index value indicates strong consumer interest and purchasing intent, while a lower value suggests decreased demand. Looking at 2023 to 2024 data, the retail demand index for beverages in Nigeria reveals an overall decline. The overall demand has fallen from 46.5 in March 2023 to just 16.3 by July 2024. Across categories, tea has shown the most dramatic drop, going from 27.3 in March 2023 to a steep -21.8 by July 2024.

However, amidst this decline, beverages such as coffee, fruit juice, and bottled water have fared relatively better. Coffee, although seeing a decrease in demand from 52.3 in March 2023 to 29.1 in July 2024, remains a favourite. Similarly, fruit juice and bottled water have shown resilience. Bottled water, though it experienced a sharp drop to 10.5 in March 2024, recovered slightly to 19.6 by July 2024.

In Q2 2024, Gen X and Millennials ditch tea for coffee

When analyzing demand trends for coffee and tea in the first half of 2024, coffee has continued to lead the market with a retail demand index of 32.2, far surpassing tea, which shows an index of -15.3, the lowest of all beverages tracked. This divergence between the two categories reveals a significant change in consumer behavior, especially when viewed by demographic segments.

The data reveals that Gen X and Millennials are the key drivers behind the shift, as they increasingly ditch tea in favor of coffee. Gen X has the highest index for coffee at 39.5, followed by Millennials at 37.3. In contrast, both groups have low indexes for tea, with Gen X at -19.8 and Millennials at -20.4. It’s clear that older consumers are gravitating towards coffee, perhaps due to lifestyle factors such as work demands or perceived health benefits.

Interestingly, Gen Z has displayed a different pattern, cutting back on coffee with an index of just 13.6 and showing less of a decline for tea at -5.1. This may suggest that younger consumers are more price-sensitive or health-conscious, preferring alternatives or cutting back on traditional caffeinated beverages like coffee.

The gender analysis doesn’t show a significant difference between male and female consumers, with both groups showing similar trends for both coffee and tea, suggesting that preferences are more age-driven than gender-driven.

Need to focus on value addition for beverage brands

The decline in beverage demand across the board presents both a challenge and an opportunity for beverage brands in Nigeria. With all categories experiencing a downward trend, brands have a level playing field to fight for consumer loyalty. However, as we’ve seen with coffee, fruit juice, and bottled water, some categories have shown resilience, pointing to potential areas for growth.

To stand out, brands will need to focus on value addition—whether that means offering better-quality products, convenience-driven packaging, or health-focused beverages. Consumers are becoming more selective, and brands need to innovate in terms of flavour profiles, convenience, or health benefits to win back market share.

Moreover, targeted marketing will be essential. Gen X and Millennials are increasingly shifting to coffee, while Gen Z is cutting back on coffee but still consumes tea at higher rates compared to older demographics. Beverage brands should tailor their marketing and product offerings to these specific groups. For instance, marketing campaigns for coffee might focus on busy, career-driven consumers in the older age brackets, while tea brands may find better traction with younger, more health-conscious individuals

Contact our team today to explore how our retail intelligence can empower your decision-making process. Win with confidence with Kasi insight. https://www.kasiinsight.com

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