Green tea is a fast-growth segment in all formats but ready-to-drink will account for the greatest value, volume, and profitability for the five years ahead, according to market researcher Technavio.
London-based Technavio estimates the U.S. market for green tea, in bottles and cans will reach $3.515 million by 2021. The estimated compound annual growth rate (CAGR) of 5% exceeds estimates for black tea during the same period. This is in part due to the fact that black tea growth is calculated from a much larger base with a huge iced tea component. The black tea category spans traditional teabags, bottled tea, and hot tea service.
Lipton, Unilever’s primary brand in the U.S., experienced a decrease in retail sales in 2015 and 2016 leading to an overall 5% decline in retail value in the past five years, according to Euromonitor. The market research firm projects only 1% off-trade volume growth in sales through 2021. Unilever’s brands retained their position as the products with the largest market share of retail dollars at 13% but “failed to match the growth of the category as a whole, as consumers migrated to what they perceived to be more exciting and premium offerings by other manufacturers,” according to Euromonitor.
Despite the decline of the market’s leading brands “tea is predicted to grow its overall share of throat in hot drinks by 2021,” according to Euromonitor. Organic green tea in bottles is one example of where that growth can be seen.
Technavio attributes green tea’s trajectory in the organic segment to innovative flavors and easy preparation. “Green tea offers medicinal benefits, such as a reduction of cardiovascular disease by 22–23%,” according to the report. Organic green tea benefits even more than conventionally produced green tea with health-conscious consumers.
“Green tea is perceived to be extremely healthy. It helps fight cholesterol and arthritis, promotes the growth of healthy bacteria, prevents prostate cancer, and boosts immunity. The polyphenols, antioxidants, and flavonoids present in green tea are thought to provide these benefits,” says Technavio lead beverage analyst Moutushi Saha.
Green tea is also viewed as a popular functional drink that helps regulate the metabolic rate of those who drink at least three cups a day. “Epigallocatechin present in green tea promotes the breakdown of fat cells, which not only reduces overall fat but also provides more energy to consumers,” according to the Technavio report. “Additionally, the presence of caffeine has a synergizing effect and enhances the benefits provided by the drink,” writes Saha. “These benefits are pushing increased consumption of RTD green tea, thereby driving market growth,” according to the report.
The health benefits of green tea are not the only important driver of sales, according to Saha. “Increasing urbanization and globalization has given rise to the café culture, driven by the presence of better opportunities and lifestyles,” she said.
“A lot of people spend longer hours gathered in cafés to spend their leisure time,” she said, adding that the rise of café culture “has been one of the major drivers of the global RTD green tea market.”
The report Global Ready-to-Drink (RTD) Green Tea Market for 2017–2021 provides detailed industry analysis based on container type (plastic bottles and cans), product type (flavored green tea and unflavored green tea), and geography (Asia-Pacific; the Americas; and Europe, Middle East, and Africa (EMEA)).
The Asia-Pacific region will generate more than 62% of the overall market revenue. China and Japan, two of the leading producers in the region, make the most popular and best green tea products, creating a large percent of revenue through exports, Saha explains.
Corrected: Technavio estimated $3.515 million in green RTD tea sales. The number was incorrectly reported in billions.