U.S. Tea Production Segment Nears $1 Billion


Tea production services in the U.S. including tea blending, bagging and packaging expanded 4.7 percent in the past five years to $955 million, according to market researcher IBISWorld.

“The overwhelming evidence and promotion of tea's health benefits have fostered positive perceptions among the public, increasingly making tea the healthy beverage of choice,” according to analyst Agata Kaczanowska. Tea is also becoming more popular thanks to the increasing variety of flavors, strengths and sweeteners, she says.

These trends are expected to persist in the five years to 2016.

Gourmet and specialty tea segments of the industry are the largest beneficiaries of the health trend that will drive $1.1 billion in revenue. IBISWorld estimates industry revenue grew at an average annualized rate of 4.7% in the five years to 2011 to total $955.5 million. Revenue is expected to grow at a slower rate of 1.1% in 2011.

Emerging from the long shadow of the Coffee Production industry, the  report Tea Production in the U.S. shows the tea is beginning to come into its own, she says.

“The high differentiation of teas has enabled the industry's major players to earn high profit margins and perform well despite recessive economic conditions,” says Kaczanowska. “High brand and customer loyalty that the major players command has also contributed to high profit margins and sales growth.”

In particular, Unilever, a multinational conglomerate, has the distinction of longevity with its Lipton brand. On the other hand, as members of a growth industry, niche players have had some significant opportunities to service increasingly fragmented consumer needs, such as the specialty and gourmet segment.

“The Tea Production industry's future is bright. America's aging population, which embraces tea's antiaging and health attributes, will be a strong source of future demand and will drive sales of specialty products, especially for green and other herbal teas,” says Kaczanowska.