RTD Tea, the Ultimate Victor

NosodaWhen Gallup conducted its first measure of daily soda consumption during the summer of 2012 nearly half (48%) of Americans reported drinking at least one carbonated beverage a day. Those who identified themselves as soda drinkers average 2.6 glasses daily with 20% in this group drinking two or more glasses and 7% drinking four or more glasses a day. A year later Gallup’s annual Consumption Habits poll revealed that overweight Americans were much more likely to be drinking diet soda – 32% compared to the 19% of “about right” weight soda drinkers. Drinking diet soda instead of regular is a positive development but more encouraging yet is the fact that 52% of those surveyed say they no longer drink soda at all. While carbonated drinks are the most widely consumed beverage in America the U.S. Beverage industry reported another year-to-year drop in volume, this time down 1.42% in convenience outlets compared to 2012. In contrast RTD is the fastest growing segment of the beverage category. Bottled water showed big gains as soda consumption continues to decline but ready-to-drink tea ITO ENmay be the ultimate victor now that the world’s major bottlers give it a boost. Coca-Cola reported last week that its tea volume grew by 11% last quarter. Sales of Honest Tea are up 25% compared to 2012 and it is now a $100 million brand. FUZE tea and juice blends and Gold Peak shows solid growth as well. Market research firm Canadean released its Global Iced/RTD Tea Drinks Report last week noting North America had net volume growth of 74 million gallons (280 million liters). The $5.1 billion U.S. market for RTD tea is expected to increase to $5.3 billion in 2014 with projected growth rate of 6% through 2018. “The refreshing taste and perceived natural, healthy image of iced/RTD tea drinks will continue to generate growth and place the category in a good position to take advantage of the slowing carbonates market,” according to Canadean. RTD tea is not just gaining customers in the United States. Of the impressive 18.7 billion liters forecast to join the market between 2013 and 2018, over 15 billion liters is projected to come from Asia, with a massive contribution from China (as it overcomes its temporary setback) and Indonesia, according to Canadean. “Soft drink categories have continued with healthy double-digit growth, primarily owing to the key categories such as iced/RTD tea drinks and packaged water. The company reports that in Europe most carbonated consumption continued to occur in West Europe (primarily Benelux) in 2012. The region consumes 55% of global volumes but has lost considerable ground to Asia.