Sales of sparkling teas marketed as “good for you” are bubbling.
The category launched decades ago but remained a small, slow-growing niche through the early 2000s while carbonated sodas (CSD) dominated the market for refreshment beverages.
That landscape changed with the realization that sugar-saturated sodas were unhealthy. Consumers, in large numbers, abandoned CSDs in an accelerating trend until volumes had declined to 30-year lows.
Trouble is, everyone missed their fizz.
Sparkling water brands including La Croix, Spindrift, Sparkling ICE and Topo Chico helped fill the void along with tea entries launched nationally by PepsiCo and Pellegrino.
Meanwhile, reformulations and price increases kept revenue from falling as the top five bottlers developed healthy alternatives to CSDs, primarily flavored waters. Sparkling water surged 16.1% in 2017 according to IRI and was up 14.5% last year to more than $3 billion.
During the past year PepsiCo and Coca-Cola managed to halt the slide by introducing products like Bubly, a sparkling fruit flavored beverage on track to reach a $1 billion in sales. FoodNavigator reports that “while unit sales of regular soda are still in negative territory (down -2.7% in the past year), they edged into positive territory (+0.1%) in the last year) for diet soda.” The trend is led by Coke Zero Sugar and PepsiCo’s Bubly.
Iced teas in bottles and cans annually account for $3.1 billion in sales in multi-outlet stores, according to Nielsen market research. Growth has been modest, averaging 2% in recent years. The category is down -0.7% for the year except in the natural retail channel where market research group SPINS reports sales growth of 12.4% for the category.
The key to maintaining growth is to move beyond “no-sugar” with ingredients that either promote health or offer condition-specific claims.
Spadework by tea innovators set the stage for the emergence of sparkling tea brands.
Teatulia organic tea began selling a sparkling tea at its Denver tea bar in 2012. “Our handcrafted Tea Soda has been our No. 1 best seller from the day they were introduced,” according to the company. The tea recently received a “Great Taste Award” from Tea & Coffee Trade Journal and praise for its colorful tins by Thirst Craft.
This year founder Linda Appel Lipsius decided to capture the magic in cans. The new organic line includes black tea with pineapple, peach, lime and cucumber. Lemongrass tea with wild berry, lime and lavender, a green tea with black berry, lime, cilantro and peach and a mint tea blend.
“Our tea comes from our own organic tea garden in Northern Bangladesh. This is totally unique to the tea industry in the United States. Why is it important? It means we’re able to control every aspect of how we treat the tea, the land it’s grown on, and the people who cultivate it,” according to the company.
“Where and how your tea is cultivated makes all the difference in its taste and quality, as well as its overall impact on the planet and its people,” says Appel Lipsius.
In 2015 PepsiCo and Unilever teamed up to distribute Lipton Sparkling Iced Tea in peach, raspberry and lemonade. That year saw volume fall 1% to 6% for Coke, Diet Coke, Pepsi and Diet Pepsi. Pepsi suffered the steepest decline as drinking diet sodas to lose weight became suspect due to concerns about artificial sweeteners. Sales of ready-to-drink tea spiked as soda declined but much of the tea sold at that time contained sugar, artificial color and flavor. Bottled water emerged as the healthiest option and is now the No. 1 beverage product in the U.S. by volume, according to the International Bottled Water Association.
Last year Teavana introduced two sparkling teas, a blackberry lime green and a peach nectarine green tea and has since expanded the line to include a sparkling blood orange mango white tea. Starbucks and Anheuser-Busch jointly manufacture and distribute these premium “craft teas” which sell for $2.39 per bottle.
Below are several brands that are successfully expanding the category.
- Sound tea, launched in 2015, describes its products as tea-infused sparkling water. The teas are unsweetened, certified organic with natural flavors and no preservatives. The line includes chamomile, white tea, green tea rose tea and yerba mate blends popular in health food stores.
- Minna Sparkling Tea is a lightly brewed blend with low caffeine. Flavors include Tropical Green Tea with pineapple and passionfruit, a decaffeinated Citrus Black Tea with orange peel, mango and Lime Hibiscus Tea combining rosehips and hibiscus.
- Sun-Rype is based in Kelowna, British Columbia, Canada. Among its diverse product offerings is a line of sparkling teas. The canned teas are brewed with a little sweetness and only 90 calories. Sun-Rype’s line includes Black Tea with a Twist of Lemon, Black Tea Mango Peach, Green Tea Honey Lemon and Rooibos Tea Raspberry.
- Sparkling ICE is based in Preston, Wash. Flavors include Lemon, Peach, Raspberry and Half & Half. The teas are sold in plastic bottles, so they are great for people with active lifestyles who want to drink their sparkling tea on-the-go.
Competing with these brands are a fast-growth segment of functional teas. Zest Tea High Caffeine Energy Tea contains more caffeine than coffee, paired with L-Theanine. Founded in 2014, the company was a World Tea Expo new product winner in 2015. Zest is a pacesetter in the natural food channel, the most common pathway to mainstream distribution.
Cham Cold Brew Tea takes tea a step further by pioneering a better way to preserve the goodness of tea before adding functional ingredients.
Cham is never heated. It is a functional tea with claims to revitalize, calm or defend (antioxidant). Like all the new entries it contains little or no sugar (from honeybees), no preservatives and is cold pasteurized. Flavors include honeybush, apple, hibiscus with rosehip and raspberry and chamomile lemon (with real honey) and Ironwort, known as mountain tea, imported from Greece.
The company explains that “Steeping tea in cold water over a long period of time produces a superior tasting tea that is smoother, less bitter and truer to its original flavor profile. Additionally, cold brewing helps preserve as many naturally occurring benefits that heat in traditional brewing can deteriorate.”
The brand addresses the market-eager challenge of freshness by offering seasonal bottlings, the latest is a black tea lemonade with ginger root called the “Ginger Palmer.”
Seasonal teas will prove even more popular marketed as freshly picked, cold-brewed and bubbly.