RTD Tea Slows

Ready-to-drink tea suppliers are successfully embracing single-serve options that reduce expense and offer consumers a convenient, freshly brewed alternative to glass bottles and aluminum cans.

Ready-to-drink teas benefit from the flight from sugary carbonated sodas and are now top sellers in convenience outlets but growth has recently slowed, according to a new report by Packaged Facts.

Sales of RTD

Source: Statistica

Sales of RTD tea annually exceeds loose leaf, packet and tea bags, accounting for 43% of dollar volume. RTD grew at a rate of 3.4% compared to 8% for regular tea during the five years ending 2013. Diet RTD teas was down 6% during the period, according to Tea and Ready-to-Drink Tea in the U.S.: Retail and Foodservice, 5th Edition.

“RTD canned and bottled tea sales are flat, and instant tea mix declines present challenges,” according to Packaged Facts

“The flipside is that plenty of opportunity exists to continue to grow the category, from making tea drinking a bit more “manly” to looking for avenues to personalize tea drinking. And marketers can continue to ratchet up category innovation by supporting the trend toward premiumization, incorporating unique ingredients, and pursuing innovations in form,” reports Packaged Facts.

WTN140908_RTDTeaIconThe market research firm warns “Bagged/loose tea participants—already on notice—must prepare for continued Keurig Green Mountain single-cup tea share taking.”

In 2013 Keurig-licensed teas generated 6.5% of sales in the bagged/loose tea category. Its licensing/branding partnerships with Snapple, Lipton, Bigelow, Twinings, Celestial Seasonings, Tazo and Tetleys are only now gaining traction in the marketplace, which will translate to even stronger sales in 2014: 10% of 2014 sales seems quite reasonable,” predicts Packaged Facts.

Coca-Cola’s decision last week to offer 100-million-bottle-a-year Honest Tea in single-serve capsules shows an appreciation for the eco-sensibilities of the brand and validation that premium brands can brew good tea in a K-Cup.

Honest tea, a favorite of President Barak Obama, has sold more than a billion bottles of certified organic teas since it was founded in 1998. Sales are likely to accelerate due to the popularity of the K-Cup format and the increased visibility Honest Tea will enjoy next to conventional teas on grocery and department store shelves.

Snapple, which ranks third among the RTD tea manufacturers, first appeared in Keurig-licensed K-Cups in May 2013 following a deal signed in October 2012. Sales have reportedly been very strong from the onset.

Lipton, the second largest RTD tea manufacturer by sales, signed a deal with Keurig in March 2013 and began shipping its tea in K-Cups later that summer. Lipton is available in both hot and iced tea blends.

Arizona tea is the top-selling brand in the category with sales of $660 million last year. It holds a 37.4% share of the RTD tea category in the U.S. The company produces tea sticks filled with instant, but it is not available in K-Cups.

“Adult use of RTD iced tea usage penetration has grown 5% during 2009-2013, reaching 47% — but among those with children age 6-11 and 12-17 in the home, usage penetration has risen more strongly and overall usage penetration is higher. While this clearly places convenience-minded parents in the crosshairs of RTD marketers, it may also speak to the influence their kids have on household tea purchasing decisions,” concludes Package Facts.

Source: Keurig Green Mountain, Packaged Facts

 

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Dan Bolton

About Dan Bolton

Dan Bolton edits STiR Tea & Coffee Industry International. He was formerly editor and publisher of World Tea News and former editor and publisher of Tea Magazine and former editor-in-chief of Specialty Coffee Retailer. He is a beverage retail consultant and frequent speaker at industry seminars and conferences. His work has appeared in many beverage publications. He was a newspaper reporter and editor for 20 years prior to his career in magazines. Dan is the founding editor of Natural Food magazine and has led six publishing ventures since 1995. He lives in Winnipeg, Canada.