The behavior of out-of-home tea drinkers in the United Kingdom offers valuable insights for tea retailers in developed markets where competition with coffee is fierce.
Tetley, in its second annual 30-page Tea Report, teamed with CGA, a market research consultancy specializing in foodservice drinks markets in the U.S. and U.K. Consumers were questioned on everything from dining experience and the role of technology in the market, to the quality of tea out of home and the channels in which they consume those teas.
Here are key takeaways from responses by 2,500 U.K. residents surveyed last year.
- Consumers are more concerned about ingredients and products that provide nutritional, physical, or emotional benefits to meet their requirements for self-care. Consumers increasingly look for beverages to provide functions such as energy and relaxation. Health is the fastest-growing consumer need, up 9 percent since 2014.
- Consumer demand for natural and earthy flavors such as matcha, ginger, turmeric, and cumin are increasing across markets. Demand for these products is twofold as consumers seek out bold and adventurous flavors, while pursuing alternative health benefits associated with these ingredients.
- New sensations including kombucha, matcha, cold brew, and nitro tea are creating new sensorial experiences in the home. The global kombucha market is expected to experience significant growth from 2018 to 2021.
- Consumers are looking for an experience that reflects their desire to premiumize their beverage choice. Experience is a bankable commodity for brands and cafés alike. Two-thirds of British consumers tell us that they strongly or moderately feel the need to satisfy their desire for new experiences.
- Hotel and foodservice operators are offering afternoon tea reimagined. This quintessential tradition continues to evolve with operators offering eccentric twists. In the future tea sommeliers will play a huge part in the ceremony, with consumers hungry for the theater that comes with this British ritual. Hotel guests are willing to spend an average £2.33 ($3.27) per cup more than any other channel. The average cost per cup is £1.77 ($2.47).
A common perception is that tea consumption is declining in the U.K. overall, and while that is true by volume, the U.K. remains one of the top five tea-consuming nations in the world. Great Britons drink 31.4 million out-of-home cups of tea on the average weekday. Tea drinkers report consuming an average two cups per day during the week and one cup per day on weekends (per capita consumption was 1.4 kilos in 2016). The Irish average 2.5 daily cups per capita. One in five respondents said they are drinking more tea than they did a year ago.
Value has risen significantly in the past three years with many young people experimenting with tea outside the home. Since 2015, tea value has grown 13.6 percent. In Great Britain, only about one third (34 percent) of older consumers (age 55+) dine out at least once a week. This contrasts with the 61 percent aged 18–24 who dine out at least once weekly and the 66 percent of those 25–34 of age who eat out weekly. Tetley found that 14 percent of those who drink tea out of home say it is significantly better than what they make at home.
Coffee and tea
While the expansion of coffee culture is noteworthy, rising to 3.8 billion out-of-home occasions, 52 percent of those who identify themselves as tea drinkers also drink coffee and 43 percent of self-identified coffee drinkers also drink tea. Euromonitor predicts coffee consumption will reach 91.1 thousand metric tons by 2021, overtaking tea which is projected at 90.6 thousand tons. The market has grown 37% and is expected to reach $4.8 billion (£3.4 billion) in sales by 2030, a time when coffee shops are expected to outnumber pubs.
Respondents cited four reasons they drink tea in cafés: 35 percent drink “to socialize,” 34 percent “to relax,” 34 percent to quench thirst, and 34 percent drink tea “when taking a break.” Chai was the tea of choice for many, accounting for growth of 93.8 percent, with tea from Assam showing an increase of 28.4 percent year-over-year, tea from Darjeeling showing a 20.3 percent growth, fruit tea showing 20.3 percent growth, and peppermint tea showing a 14.6 percent increase.
Those who frequent cafés spend an average £1.87 ($2.60) per cup.
In foodservice, coffee dominates for energy and alertness early in the day, but tea is preferred with meals (62 percent of tea occasions also include food items). In 2017, out-of-home coffee occasions were down 10 percent from 2016 with lower numbers drinking coffee at the workplace while tea consumption remained steady (+1 percent).
These signal “the importance of tapping into the booming breakfast occasion,” according to a Tetley press release. Tea consumption in the workplace increased 16 percent by volume among those surveyed. Respondents reported a 15.4 percent increase in tea consumption in cafés, an 11.7 percent increase in hospitals and health facilities, as well as 10.6 percent increase in hotels compared to 2016.
Within the workplace, tea outperforms coffee. Tea drinkers (44 percent) choose the beverage to “break up the day” and “to quench thirst” (30 percent) with 28 percent drinking tea “out of habit.”
“With 47 percent of us drinking tea every time we are in the workplace, care residents drinking on average 2–3 cups per day, café-goers no longer satisfied with a simple ‘builder’s brew’ and 52 percent of hotel guests stating ‘how tea is served’ as extremely important, one thing’s for sure: wherever it’s being drunk, enjoying a cup of tea is a staple part of most people’s day,” according to Tetley.
Black reigns but green gains
While 75 percent choose black tea, 18.1 percent of tea served out of home is non-black. Respondents revealed that 29 percent expect to drink more green tea than last year.
Herbal teas grew by 9.6 percent year-over-year. Respondents cited “uplifting and refreshing fruit blends” and indicated they are seeking to lower their caffeine intake.
Younger tea drinkers are more likely to pay more for more premium brands. Fifty-nine percent of those aged 18–34 prefer premium, and 52 percent of those aged 35–54 are seeking premium tea. The preference falls to 39 percent for those aged 55+. Overall, 64 percent of consumers are willing to pay more for a premium drink while 34 percent of tea drinkers say they “are likely to pay extra” for premium brands.
Respondents are 29 percent more likely to order loose leaf tea out of home in 2017 compared to 2016. The survey found 45 percent of tea drinkers are drinking more matcha than this time last year.
Almost half (49 percent) of consumers who have seen new types of tea have tried a new brand out of home in the past 12 months.
Their favorites: green tea (18 percent), specialty black tea (17 percent), herbal tea (15 percent), fruit tea (14 percent), and matcha (3 percent).
“Matcha and green tea are two blends that consumers are willing to pay a little more for and are drinking with more frequency than they were 12 months ago,” according to Tetley.
Source: Tetley Tea Report 2018
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