Tea trends

Tea holds a large consumer consumption rate and future sales point to interest in healthy and premium options for expanded sales and prices.

The goal of artisan beverage manufacturers is to create a niche product that serves a specific market to increase wholesale product sales. Mintel, the world’s leading market intelligence agency, weighs in on the market for tea.

Mintel’s September 2018 report entitled Tea and Ready to Drink (RTD) Tea reported that tea has a 90 percent consumer participation rate with a third of users being daily tea drinkers. The tea found on the market today has a wide variety of flavors and is drank on many different types of drinking occasions. Consumers drink tea for a lot of various reasons, too. Of those that reported drinking tea, 48 percent do so to quench thirst, 47 percent to relax, 38 percent for its antioxidants, 25 percent for an energy boot, and 17 percent as a digestive aid.

Although tea and RTD had steady growth from 2013-16, growth rates have slowed. Overall sales are expected to reach $7.9 billion in 2018, with canned/bottled RTD tea dominating the category at 55.6 percent of overall consumption at a value of $4.4 billion in 2018. By 2023, the best case scenario for this category is sales of $10.2 billion, while the worst case scenario is sales of $8.2 billion.” The Tea Association, in their State of the Industry review, projects an “increased demand in coming years as consumer interest in the beverage's healthfulness, variety, availability and sustainability lure drinkers”.

While AriZona and Snapple with their economical brand have experienced declining sales, “Lipton Pure Leaf and CocaCola Gold Peak are gaining, due in part to premium positioning”, says Mintel. Mintel recommends that, “as consumers shift their focus to better for you (BFY) and premium offerings, brands must also shift their brand focus or look to expand product lines to fulfill consumer interests and need states.” Honest Tea, a small company started in 1998 and now owned by Coca-Cola, began with a focus on organic, low sugar, fair trade and sustainability that eventually caught a major following for those interested in the BFY drinks, reports FoodDive.

Although tea has a positive view, three out of 10 tea drinkers agree that RTD tea is too high in sugar and nearly a quarter think RTD contains too many artificial ingredients. Consumers aged 25-34 are the most likely to believe this about RTD.

The avid base of daily users are those 18-24 years old, Hispanic consumers, and parents. One opportunity for growth lies in connecting older consumers to tea innovations that add functional health and wellness benefits. “Hispanic consumers and 18-34s are more likely to drink tea for antioxidants, fewer calories, an energy boost, nutrition, or as a digestive aide.” Mintel found the following percentages of consumers would be willing to pay a higher price for their tea for the following reasons: 19 percent for fair trade, 17 percent for adaptogens (herbal stress relief), 15 percent for single origin, and 10 percent for nitro bottled/canned tea.

The MSU Product Center, in partnership with Michigan State University Extension, provides business counseling for product development and marketing strategies that help Michigan entrepreneurs commercialize high-value, consumer–responsive food products. For more information, visit the MSU Product Center website or call 517-432-8750.

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