Iced tea has steadily gained acceptance globally since it found popularity in the U.S. a century ago. The pace is now accelerating with consumption of iced/RTD tea estimated at 37 billion liters in 2015, according to market research firm Canadean.
A new report by Canadean attributes category growth to mainstay North America with new traction in Europe and Asia. North Americans will drink 3 billion more liters than Europe but China retains its position as the top RTD market. In western markets health and wellness drive sales, according to Canadean.
“The natural image of iced/RTD tea drinks lends itself as a good non-carbonated lower sugar product as many consumers shift from traditional carbonates,” according to Canadean. “For this reason, many of the larger iced tea players in Europe and North America have launched reduced sugar variants, such as Gold Peak (Coca-Cola) diet and unsweetened tea, as increased consumption warrants increased attention and investment in this category.”
Market leaders include Lipton (Unilever), Arizona (Ferolito, Vultaggio), and Nestea (Nestlé). All three have launched new products to utilize this dynamic market, observes Canadean.
“The most popular flavors remain lemon, plain tea, and peach although there have been many launches of new flavor variations such as lime, orange/mango and yumberry. Increasing numbers of unsweetened, organic, and diet variants have been observed, in response to the influx of consumers searching for healthier alternatives,” according to Canadean.
Herbals are another innovation with traditional Asian spices and herbs ginseng, matcha, and hibiscus and Indian Tulsi appear in many new formulations.
“Brands such as Ovvio (Ovvio Beverages) have begun promoting cold brew tea, in combination with herbal enhancements, as cold brew tea is believed to better release antioxidants and have a more complex flavor without the bitter and tannic flavor of hot brewed tea,” according to Canadean.
“Though this innovation is keeping interest fresh and products interesting, traditional peach and lemon flavors remain firm iced tea favorites, and the traditional international companies making them remain the driving force for the category’s global growth,” reports Canadean.
Euromonitor notes that manufacturers have increased the appeal of RTD tea by going beyond traditional black tea to include lemonade and juice blends.
“The light coloring and texture of RTD tea makes it appear “less substantial” than thicker drinks such as juice or RTD coffee,” according to London-based Euromonitor. ‘There has also been a strong influx of premium RTD tea products that boast organic tea leaves and only a limited use of preservatives, further solidifying the consumer perception of healthiness,” reports Euromonitor.
Euromonitor predicts value growth will be substantially higher than volume, with an anticipated 5% CAGR at constant 2014 prices. U.S. sales will approach $6.6 billion by 2019, according to Euromonitor.