Global ready-to-drink (RTD) tea and coffee sales are expected to experience a combined annual growth rate (CAGR) of 9 percent through 2021, according to a new report by global technology research and advisory company Technavio.
Fast-paced lifestyles of consumers are one of the major factors driving the market. Consumers are increasingly looking for RTD products that fulfill their daily nutrition requirements and can be consumed on-the-go. Owing to this, RTD products are seeing a dramatic rise in popularity among consumers, says the report.
Other key findings include:
- In 2016, the RTD tea segment dominated the market by occupying more than a 75 percent share.
- In 2016, APAC dominated the global RTD tea and coffee market with a share of close to 64 percent.
- JDB Group (JAB Holdings), Nestlé, PepsiCo, The Coca-Cola Co., and Tingyi (Cayman Islands) Holding and Uni-President are some of the players in the market.
Several recent reports have identified the Asia-Pacific (APAC) market as a fruitful one for RTD tea, citing fast-growing economies, massive urbanization, rising disposable income of consumers, and a growing café culture in the region. A 2017 report by beverage consultancy Zenith Global, “Ready-to-Drink Tea Innovation Report 2017,” found that the RTD tea market grew by 40 percent between 2011 and 2016 and that the Asia-Pacific region now tops the world in sales.
Also in 2017, a Technavio report “Global Ready-to-Drink (RTD) Green Tea Market, 2017–2021” predicted that the RTD green tea market would reach $3.5 million by 2021 and that the Asia-Pacific region will generate more than 62 percent of the overall market revenue for RTD green tea, with China and Japan, two of the leading producers in the region, benefiting greatly from exports.
Players should concentrate on new urban regions such as Asian, Latin America, and Eastern Europe, as many unharnessed opportunities exist in these regions, according to the latest Technavio report. New RTD products in China, for instance, have been improving the overall sales of RTD tea and coffee, while in Japan, consumers have started shifting from hot tea to iced tea, an emerging trend there that will have a significant impact on the sales of still RTD tea products.
According to Manjunath Reddy, a lead analyst at Technavio for research on non-alcoholic beverages, “Product premiumization is another emerging trend in China and Australia that will change the dynamics of the RTD tea and coffee market in APAC during the forecast period. This has encouraged many leading players to upgrade their existing range by including innovative and premium beverages in unique flavors.”
The report also highlights a growing demand for organic RTD tea and coffee—a trend that it says will gain traction in coming years: “Despite the high cost of organic food and beverages, consumers are increasingly preferring to consume organic food products due to the health benefits they offer. The demand for organic RTD tea and coffee is steadily increasing due to the growing health awareness of the harmful effects of the excessive consumption of sugar and artificial sweeteners. Also, these organic beverages are free from chemicals, pesticides, and preservatives.” It notes that several RTD manufacturers have already included organic RTD tea and coffee in their product portfolio.
Intense competition among international and regional players in the RTD tea and coffee market as well as rapid technological changes have fragmented the market, however. “To attain a competitive advantage over the other players in the ready to drink tea market, the players have the need to offer innovative and differentiated products that cater to the consumer demands,” the report states.
It expects to see the RTD tea segment, in particular, to flourish due to the numerous reported health benefits of tea and rising health consciousness and disposable income of consumers. Many vendors are producing still and carbonated RTD tea to cater to this consumer base.
All this adds to great opportunities for growth and innovation in the RTD tea segment over the coming year, not just in Asia but worldwide.