RTD Tea: Ready for Prime Time

Iced tea is too pure and natural a creation not to have been invented as soon as tea,
ice and hot weather crossed paths.
—John Egerton, journalist, Atlanta, Ga.

Iced tea has been a part of the United States landscape for over a century. The most widely known story of iced tea’s origin occurred in 1904 at the Louisiana State Fair when an English merchant, Richard Blechynden was attempting to sell hot tea in the steaming heat. Partially as an act of desperation, Blechynden put the tea in glasses of ice and created an instant sensation. However, references to iced teas and iced tea cocktails have been traced back to as early as the Civil War. Iced tea has become a part of the average North American day whether it’s brewed at home or purchased in a ready-to-drink (RTD) format. “We are an iced tea drinking nation; 85 percent of the teathat is consumed in the United States is consumed in a cold form,” said Joe Simrany, president, Tea Association of the USA, New York, N.Y.

Looking back, 1993 can probably be identified as the critical year for RTD tea. This is the year where RTD went national and the product line expanded from a few black tea offerings to incorporate other products such as unsweetened, diet and juice blends. The U.S. was slowly becoming an RTD nation and other countries were beginning to pay attention.

“It started with the rise of Snapple and Arizona in the 90s,” said Seth Goldman, co-founder and president, Honest Tea, Bethesda, Md. “The industry started with bottled tea, then less sweet tea. The next step in RTD is organic and we believe that the market demand will then continue to follow the path of steeped tea with fair trade being the next natural step.”

Today’s consumer demands a lot from their beverages; they’re seeking alternatives that are convenient, healthy and of course, taste good. This market seems to be primed for the ready-to-drink industry—an industry that now offers consumers healthy, hydrating alternatives to highly sweetened/high caloric soda beverages.

“It is the fastest growing tea segment,” said Peter Goggi, executive vice president, Tea Association of USA. “In the course of 15 years it’s grown from less than half a billion dollars USD to over three billion dollars USD. If anyone is not watching that and doing something about it, then shame on them.”

Indeed, Goggi predicts a bright future for RTD with possibilities in a variety of channels including RTD products identifying the country of origin (on the packaging), mirroring the current trend in hot tea. The RTD category has also expanded to include other camellia sinensis varieties including oolong, white and green tea.

Youth & Health-Conscious Markets

Internationally, tea and its purported health properties have a strong foothold. People are drinking tea
for a variety of reasons from comfort to increasing their daily antioxidant intakes. “More and more research is coming out demonstrating that there are wonderful attributes to tea from as simple as quenching thirst to as much as anti-cancer. Clearly the driver in some of the consumption growth is the heightened awareness of tea and health,” said Simrany.

Simrany emphasized that younger people are driving this peak in consumption trend in the ready to drink industry. One advantage of youth becoming interested in tea is that it will most likely create a life long tea-drinking trend. “Tea is becoming ubiquitous in the sense that the younger generation is finding it cool to drink tea and that’s a habit that will stay life long,” said Simrany. “Young people love RTD tea because they don’t have to prepare it—it’s already made. It’s available wherever they want it to be. It’s driving these younger people who may not have otherwise considered tea as an option.”

ITO EN1This increased demand for a convenient healthy beverage is a shift that Rona Tison, senior vice president, corporate relations, ITO EN, Brooklyn, N.Y., has noticed. “Brewing loose tea is ideal to create a lovely iced tea, but people are busy. There is the convenience of the RTD,” said Tison. Originally in Japan, ITO Tea is one of the first companies to introduce a ready to drink green tea. Oi Ocha, an unsweetened RTD green tea, was introduced by the company’s founder, Masanori Honjo as a healthy alternative to soda and coffee.

“Our founder, Masanori Honjo, realized that the young people were much more mobile and so he needed to create a beverage that was easier to take with them,” said Tison. Honjo spearheaded the campaign for unsweetened green tea beverages in Japan, introducing the Asian market to a healthier alternative to typical RTD tea. ITO EN offers several RTD varieties in the global market including their newly released line of RTD lattes.

“People [want] less sugar and things that are flavorful and refreshing,” said Tison. “We will continue to introduce products under our five fundamental principles: natural, healthy, safe, delicious and well designed.”

Euromonitor International, London, reported that ITO EN maintained the leading position in
RTD tea in 2012 with a 25 percent share in total volume terms in Japan. The company’s flagship
brand, Oi Ocha, remained the leading brand, accounting for a 16 percent share of sales.
College campuses are one area where Goldman has noticed an increased demand for the Honest
Tea beverages. This increase is most likely due to the expanded awareness of tea’s health attributes.

Consumers Want More from RTD

Simple, pure beverages have commanded an avid following throughout North America. Honest Tea, ITO EN and Tejava are all strong advocates of introducing pure forms of a ready to drink tea to the consumer.

Goldman, for example, developed the Honest Tea product from his personal quest to find a healthy beverage that not only tasted good but also was “good for you.” All of Honest Teas products are organic and fair trade-sourced with a strong commitment to remaining connected to the product’s (the tea leaves) origins.

Tejava

Tejava Tea, a division of Crystal Geyser Water Company, Napa Valley, Calif., is a black tea that is 100 percent developed from pure tea leaves from the island of Java. “Unlike most RTD teas that are brewed from a tea concentrate, we microbrew our leaves on site using a proprietary technique that guarantees full-bodied flavor in each bottle,” said Doug MacLean, CEO.

Using tea leaves instead of tea extract is one of the new trends that are occurring in the production side of RTD. Haelssen & Lyon’s Brew T line of RTD tea was created by using tea infusions from the leaves of the tea plant. This product line caters to the needs of today’s market offering options for organic and certified natural teas. “In ready-to-drink, the product range is getting larger and larger. In the past, it was basically sugar water with a minor percentage of tea and/or tea extract,” said Holger Lohs, CEO, Haelssen & Lyon USA, New York, N.Y. “Today we have more real teas, more natural products, organically grown. The market is receptive to higher pricing. I would almost say that natural, organic will soon become main stream. The consumer is looking for a healthier product.”

Asia: A Strong Growing Market for RTD Tea

On a global level, Jonas Feliciano, global beverage analyst, Euromonitor, Chicago, Ill., said that RTD dominates in Asia, particularly in China, Vietnam, Indonesia and Taiwan. The three largest markets in RTD tea right now are China, Japan and the U.S. However, as far as growth is concerned, the top three markets are China, Vietnam and the U.S.

In Asia, urbanization paired with localized marketing techniques is increasing the demand for
RTD, according to Dana LaMendola, industry associate, Euromonitor. “Asia is an interesting market,” she said. “You have consumers who are already familiar with tea culture paired with the warm climates that are the perfect areas for introducing a cold drink culture.”

The success of Zero Degrees Green Tea, Vietnam, illuminates the unique marketing techniques
of the Asian market. Feliciano emphasized that the distribution strategy was attracting younger
clientele where the owners distributed the product in familiar markets, lunch shops and canteens. As a result, Zero Degrees Green Tea now comprises 37 percent of the Vietnamese market.

Expanding Variations in RTD

In the U.S., RTD companies are choosing innovative techniques to ensure that their products command market attention. In a nation that is demanding healthy yet tasty products, creating the perfect blend of tea and sweetener is essential.

Alternative sweeteners have expanded to include a variety of alternatives with stevia and agave
becoming increasingly popular. “Even [just using] less sugar is a simple, pure solution,” Susan Brady, sales manager, Templar Foods Inc., New Providence, N.J. “Honey is an ingredient that fascinates as there is many potential flavors. Maple syrup is delicious with vanilla tea; it [tastes] like cream soda.”

Packaging and innovation is another way for RTD products to make their mark. “Tejava recently unveiled a new, first of its kind, proprietary 18 oz. PET bottle. It features a unique package design incorporating a hand-sculpted, tea leaf motif with three-dimensional qualities, giving the appearance that the bottle is wrapped in tea leaves,” said Maclean. The bottle shape commands the attention of the curious consumer urging that initial purchase.

Tea of a Kind, Los Angeles, Calif., with their patented Gizmo Closure technology, combines both an innovative package that maintains both the integrity and the health properties of tea. In fact, it is the Gizmo Closure—a nitrogen pressurized chamber—that ensures that the health properties of the tea are maintained. Brad Foster, senior vice president, Gismo Technologies, Calif., said that the technology is what maintains the health integrity of the tea. The Gizmo closure preserves the tea concentrate in the lid of the bottle until it is being consumed. With a simple twist of the lid, the tea concentrate pulsates into the reverse osmosis water creating a fresh, antioxidant preserved brew.

Whether it’s through packaging, product or both, the ready to drink industry has an extremely bright future worldwide. Goggi believes that the industry is experiencing just the tip of the iceberg for RTD beverages as there are thousands of teas waiting to be discovered by consumers. And the rest of the industry seems to passionately agree.

“I’m sure the statistics are right, but in my mind what makes me smile as that we have a great product that people have a willingness to [try],” said Brady. “RTD tea is a friendly product. The health benefits, affordability, tradition and authenticity of tea further enhance that.”

This article was first published in the August 2013 edition of Tea and Coffee Trade Journal and was written by Anne-Marie Hardie.

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Anne-Marie Hardie is a freelance writer, professor and speaker based in Barrie, Ontario. She may be reached at: annemariehardie1@gmail.com.

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