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2016 State of the Industry: Natural, organic vital to tea market

Tea lattes, sparkling teas offer more options

The U.S. tea market has seen an evolution over the years as consumers’ on-the-go lifestyles put an emphasis on convenience and ready-to-drink (RTD) teas. However, natural and organic trends seem to be the next big push within the tea market.

“Natural and organic are very important to tea consumers; however, all-natural is significantly more preferred than organic is,” said Elizabeth Sisel, beverage analyst at Mintel, Chicago, inBeverage Industry’s June issue. “GMO-free and Fair Trade claims are also gaining traction, but do not have the same impact on consumer purchasing decision as does all-natural.”

Eric Penicka, research analyst for Chicago-based Euromonitor International, also noted that natural is having a greater impact than organic when it comes to hot tea because of its inherent natural properties. RTD tea also is seeing a greater influence when it comes to natural attribute claims.

“Within RTD teas, there has been a very clear movement toward the creation of naturally brewed teas and this continues to bring consumers into the category,” he explained inBeverage Industry’s June issue.

For example, Pure Leaf, a product of The Pepsi Lipton Tea Partnership, Purchase, N.Y., released its Pure Leaf Tea House Collection, a super-premium line of the organic tea leaves brewed with fruits and herbs. In addition to its Pure Leaf Tea House Collection, the brand added to its Unsweetened Iced Tea with the launch of two new flavors — Unsweetened Black Tea with Lemon and Unsweetened Green Tea.

Varietal trends also are impacting the U.S. tea market. According to the Tea Association of the U.S.A. Inc.’s 2015 Tea Fact Sheet, about 85 percent of American consumers drank black teafollowed by 14 percent who chose green tea. Oolong, white and dark made up the remaining amounts, states the association’s fact sheet.

However, opportunities could abound for these minority variants. Noting that hot tea sales are forecasted to have a compound annual growth rate of 4.3 percent from 2015 to 2020, Euromonitor’s 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 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,” he said. “We expect to see more of this development in specialty teas and herbal teas over the forecast period.”

The U.S. tea market also has seen impacts from hybrid beverage trends. “Tea lattes have continued to be a trend (tea and milk), while sparkling tea is on the forefront of the hybrid market — e.g., Sparkling Ice’s Sparkling Tea and Lipton’s Sparkling Tea,” said Lauren Masotti, client manager of U.S. beverages at New York-based Kantar Worldpanel, in Beverage Industry’s June issue. “There are some players offering coffee and tea blends — giving consumers the health benefits of tea and the energy boost most often sought [from] the coffee segment.”

Contributing to the tea and dairy beverage segment, Boulder, Colo.-based Celestial Seasonings, a division within The Hain Celestial Group, developed its own coffeehouse-style teas. The barista-style Celestial Lattes are available in in four flavors: Dirty Chai, The Godfather, Mountain Chai and Matcha Green.

Sparkling teas also continue to pop up in the U.S. tea market. Earlier this year, Bhakti, Boulder, Colo., announced its line of natural sparkling teas, which are available in Lemon Ginger Black, Mango Lime Matcha, Tart Cherry Rooibos and Mint Maté. Bhakti Sparkling Teas are a combination of carbonated teas, organic fresh-pressed juices and the company’s signature fresh-pressed ginger, it says.

Yet, one format of tea has remained challenged to find a core consumer base. “While tea has certainly grown within the single-cup brewer segment, the impact Keurig and similar machines have had hasn’t been nearly as profound as what we’ve seen in the U.S. coffee market,” Euromonitor’s Penicka said.

Kantar’s Massoti also noted the challenges for the single-cup tea segment, but adds tea lattes and iced variants could offer potential. “Tea lattes and iced tea occasions may continue to do well in this format as it offers consumers a ‘fool-proof’ occasion they can enjoy in a single cup,” she said. BI

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2014 State of the Industry: Tea and RTD tea | 2014-07-11 | Beverage Industry

 2014 State of the Industry: Tea and RTD tea | 2014-07-11 | Beverage Industry

Consumer interest in healthy beverages has led to an evolving marketplace within the industry, experts note. For instance, the tea category has experienced sales increases due to consumer emphasis placed on healthy living habits, according to a January report from Santa Monica, Calif.-based IBISWorld titled “Tea Production in the US.”

The report also notes that beverage manufacturers are capitalizing on these trends through marketing efforts. “Backed by the scientific community, tea manufacturers are marketing the various health benefits of tea consumption, such as its effect on lowering cholesterol,” the report states. “Additionally, as Americans become more health conscious, they will seek alternatives to sugar-rich, carbonated beverages.”

Dana LaMendola, beverage analyst with Euromonitor International, Chicago, stated in Beverage Industry’s June issue that tea’s positioning as a functional beverage as well as consumer education have helped the U.S. hot tea market and ready-to-drink (RTD) tea market grow in both volume and dollar sales between 2008 and 2013.

According to Chicago-based Information Resources Inc. (IRI), sales for bagged and loose-leaf teas increased more than 6 percent to
$1.2 billion in sales for the 52 weeks ending April 20 in U.S. multi-outlets. Showing more modest growth, canned and bottled tea sales were up just more than 2 percent to $3 billion in sales.

Within bagged and loose-leaf teas, IBISWorld’s Hester Joen reported that although bagged tea sales make up a majority of the hot tea market, the loose-leaf tea format has cut into its market share.

“The consumption of loose-leaf tea has grown on the back of the growing popularity of specialty tea and coffee shops,” Joen said in Beverage Industry’s June issue.

Adding to this trend, Seattle-based Starbucks Coffee Co. and Oprah Winfrey collaborated to co-create Teavana Oprah Chai Tea. The tea blends cinnamon, ginger, cardamom and cloves with loose-leaf black tea and rooibos.

The category also has seen varietals outside of the black and green tea segments gain in popularity. “Herbal and white teas have also grown in popularity in recent years,” Joen said. “Herbal teas appeal to drinkers who are looking for a refreshing beverage, while white teas appeal to drinkers who want a lightly caffeinated beverage.”

 At Natural Products Expo West, Boulder, Colo.-based Celestial Seasonings, an operating unit of The Hain Celestial Group, introduced two new varieties to its Holiday Tea line: Caramel Apple Dream Holiday herbal tea and Cranberry Vanilla Wonderland Holiday herbal tea.

The category also has seen health and wellness trends benefit the RTD category as consumers seek an alternative to carbonated soft drinks, Euromonitor’s LaMendola explained. Brand owners continue to churn out new products that fit this billing, such as Atlanta-based The Coca-Cola Co.’s Honest Tea Unsweet Lemon Tea. The Pepsi Lipton Tea Partnership, a joint venture between PepsiCo Inc. and Unilever, also recently announced the release of Pure Leaf Tea & Lemonade.

However, the segment could be impacted by the proliferation of single-cup tea and liquid concentrates, experts note. “Consequently, liquid concentrates provide convenience to consumers who regularly consume iced tea,” IBISWorld’s Joen said. “While liquid tea concentrates have grown slightly in popularity, their impact on other tea segments has been minimal.”

Large players have entered the segment with AriZona Beverage Co., Cincinnati, and Nestlé Waters North America, Stamford, Conn., releasing lines last year.