An evolution of tea has created opportunities for new formats, including natural and organic offerings, fueled by consumer thirst for interesting flavors and crossover variations, according to a recent article in Beverage Industry magazine.
Citing several recent research reports and quoting analysts from Mintel, Euromonitor and Kantar Worldpanel, the article explores various buzzwords and vogues such as GMO-free, fair trade, craft, ready-to-drink (RTD) and hybrid, as well as health and wellness trends such as all-natural, energy-boosting, relaxation and fortification.
Specialty tea offerings such as PepsiCo’s new Brisk Mate (an energizing iced tea that blends Brisk tea with South American yerba mate), AriZona’s Good Brew (an all-natural RTD line of tea brews that tap into consumer interest in craft beers) and Celestial Seasonings’ line of RTD tea lattes (coffee/tea hybrids) are given as examples of specialty offerings that demonstrate innovation and evolution.
“No matter which trends are having the greatest impact on the tea category and its respective segments, data suggests that considerably more consumers are opting for this medicine-turned-beverage,” according to the report.
Latest figures from the Tea Association of the U.S.A. Inc.’s 2015 Tea Fact Sheet show that Americans consumed more than 80 billion servings of tea in 2015, with 85% drinking black tea, 14% green tea, and oolong, white and dark making up the remaining amounts.
Hot tea sales are forecast to have a compound annual growth rate of 4.3% from 2015–2020, outpacing growth from the past 5 years.
Euromonitor research analyst Eric Penicka said premium trends within tea retailers could start to impact the consumer packaged goods market: “Fueled by premium tea retailers, growing interest in teas [that are] more complex than standard black or green teas has already begun to permeate its way through traditional retail channels like supermarkets with oolong and rooibos teas making their way onto shelves… We expect to see more of this development in specialty teas and herbal teas over the forecast period.”
Kantar’s Lauren Massoti pointed out that seasonal flavors such as pumpkin spice and peppermint mocha are becoming more available in the tea category, mimicking existing trends in coffee. She expects the current affinity for specialty teas to continue to proliferate, and predicts that black tea will experience contraction.
“The U.S. tea market is showing growth toward the specialty types — specialty flavored black tea, greens and herbals,” she said. “These types play very well in the hot tea segment and are being driven by millennial consumers. The traditional regular black tea segment sees declines, however, stemming from traditional fresh brewed iced tea offerings, which is being impacted by RTD solutions and tap water.”
According to the Tea Association’s Fact Sheet, while four in five Americans drink tea, millennials are the most likely, with 87% drinking it.
Also contributing to RTD tea growth is the hybridization of tea with other beverage categories such as tea lattes, sparkling tea (e.g., Sparkling Ice’s Sparkling Tea and Lipton’s Sparkling Tea) and some coffee and tea blends.
Hybrid offerings allow brand owners to appeal to numerous trends and consumers, according to Mintel beverage analyst Elizabeth Sisel.
“Tea comes with a health-halo, and nearly all U.S. consumers believe the health claims associated with tea. This can then translate to any tea-hybrid drink offerings,” said Sisel. In particular, she sees carbonated tea as a possible big growth area, as consumers look to different forms of better-for-you carbonated beverages outside of the soft drink category.
In its “2016: State of the Industry” series of reports, Beverage Industry magazine predicted that natural and organic trends will be the “next big push” in the tea market. The Pepsi Lipton Tea Partnership’s new Pure Leaf Tea House Collection of super-premium organic tea brews is a prime example of this direction.
Euromonitor’s Penicka thinks that consumers will begin to show interest in specific tea growing regions, as they already do with coffee. Sisel sees the growth in the tea market as providing myriad opportunities for innovation that will keep consumers interested and fuel consumption rates for many years to come.
Sources: Beverage Industry