Although the economic recession has clearly affected the U.S. tea market, slowing previously double-digit sales growth in the pricier RTD segment while slightly lifting sales in the more affordable bags/loose tea segment, tea’s appeal as an “affordable luxury” and its compelling image as a healthy product have kept sales in the black when many other CPG categories have seen declines. Moreover, considering the 2005-2009 period overall, sales have done well, and as the economic picture brightens the recession may turn out to have a silver lining in that it has compelled tea marketers to innovate along value-added lines likely to continue to resonate well with consumers in the years ahead.
Market thrusts examined in the report include exotic superfruit flavors; hybrid products designed to compete with other beverage categories including bottled waters, energy drinks and sodas; new RTD spins on green tea that promise to mainstream this tea type once and for all; emerging segments including yerba mate and Kombucha; the upswing in fair trade and other “ethical” appeals; social marketing via nontraditional media like Facebook and Twitter; and a strong tea push in the convenience store channel by marketers and operators alike. At the same time, foodservice players from fine restaurants on down are expanding their tea offerings even as tea rooms and coffee/tea shops surge, suggesting tea may be headed toward much broader levels of distribution and popularity à la Starbucks.
This fully updated report examines the U.S. market for tea across the retail and foodservice spectrum, including ready-to-drink (RTD) tea, leaf (bagged and loose) tea, and instant tea. Following an introductory chapter documenting tea types, packaging trends, “the ethics of tea,” and global market trends, the report segments and quantifies the market by channel and product type, providing historical sales figures and projections through 2014. The report examines market drivers and trends and thoroughly maps out the competitive situation to the marketer and brand share level, profiling brands including Arizona RTD Tea (Ferolito, Vultaggio & Sons), Bigelow Tea (R.C. Bigelow, Inc.), Celestial Seasonings (The Hain Celestial Group, Inc.), Honest Tea (Honest Tea, Inc.), Lipton (Unilever) and Starbucks and Tazo Tea (Starbucks Coffee Co.). Trends in new product introductions are analyzed at length, based on data from Datamonitor’s Product Launch Analytics, as are trends in the c-store and foodservice channels.
An exclusive feature of this report is custom survey data from Packaged Facts’ February 2009 online poll of 2,600 U.S. adults, which was conducted to measure purchasing patterns, attitudes and demographics specific to tea and other functional foods and beverages. Drilling down to the brand level, the analysis also relies on consumer survey data from Experian Simmons’ Spring 2009 National Consumer Study to chart consumer demographic and psychographic trends, Information Resources, Inc. InfoScan Review data tracking product sales in mass-market channels, and wholesale data from leading natural/specialty channel distributor United Natural Foods, Inc. (UNFI) to quantify sales and market shares of natural and specialty products.
Read an excerpt from this report below.
Market Insights: A Selection From The Report
Green Tea Still Seeing Plenty of Action
Consumer interest in green tea is at an all-time high, with green tea showing up as the top tea “flavor” both at retail (cited by 43% of consumers) and in the foodservice channel (16%), according to Packaged Facts’ February 2009 online survey. At the same time, some of the new product activity appears to be shifting from the hot side of the market to the RTD side, making it clear that green tea is officially entering the mainstream as tea marketers attempt to leverage the flavor and functional properties of green tea in products that are trendier and more convenient. During 2008, PLA registered a record 69 new RTD green tea product reports and 235 SKUS (up from 12 and 33 in 2005, respectively), and based on the returns as of September, 2009 may be an even stronger year. New green tea choices also continue to appear on the hot tea side of the aisle. Among the biggest entries of 2009 was Celestial Seasonings’ August launch of a line of green teas including Authentic, Honey Lemon Ginseng, and Goji Berry Pomegranate. In the instant tea segment Kraft’s Crystal Light has released an Antioxidant Green Tea mix, which is said to provide 55 mg of natural green tea antioxidants in addition to tea flavor.
The Superfruit Surge
The unusual flavors, high antioxidant content, and associated health benefits of superfruits continue to win consumers over, spanning many food and beverage categories and resonating especially well in the tea market. Among all new food and beverage product introductions, blueberry, cranberry and pomegranate are the most popular superfruits as of 2008 and 2009, with açai and goji berry also on the rise (see Chapter 3, “High Interest in ‘Superfruit’ Juices a Potential Tea Plus”). By including superfruits in their products, tea marketers can kill two birds with one stone, adding “a taste of the exotic” to their beverages and parlaying in added health benefits, while also ramping up their products’ competitive appeal vis-à-vis other beverage categories.
Fast-Food Chains Increase Tea Offerings
As part of its effort to expand its beverage line-up, fast-food giant McDonald’s added sweet tea to its menus in mid-2008, along with a line of iced coffee drinks. Summer 2009 heralded a flurry of new iced tea offerings by fast-food chains, with Subway, Jack in the Box, and Jamba Juice all adding iced tea options to their beverage menu. The Subway restaurant chain teamed up with Coca-Cola Co. to bring Fuze iced tea to its nearly 22,500 restaurants throughout the United States. Also in Summer 2009, Jack in the Box added Flavored Iced Teas to its menu, in Mango, Peach and Raspberry varieties. For its part, smoothie chain Jamba Juice has introduced a line of cold-tea infusions—part of the chain’s broader strategy to transform its overall retail concept, expanding into multiple dayparts to serve as a healthy mealtime destination.In the News
Tea Positioned as Healthy, Affordable Luxury Keeps Consumers Spending
New York, November 5, 2009 — If the recession has proven anything, it’s that American consumers are willing to pay a premium for healthy products. Due to its compelling image as an innovative yet accessible beverage that is good tasting, good for you, and budget friendly, tea has remained profitable, with 2% annual gains in 2008 and 2009, according to Tea and Ready-to-Drink (RTD) Tea in the U.S.: Retail, Foodservice and Consumer Trends, by leading market research publisher Packaged Facts.
Over the next several years, tea’s health halo will gradually return the market to the double-digit gains it experienced prior to the recession, particularly as additional research solidifies tea’s healthful and functional properties. Packaged Facts estimates the U.S. market for tea sold through retail and foodservice channels at $9 billion in 2009, forecasting a 5% increase in 2010. Steadily rising annual percentage gains are projected through 2014, when growth will reach 10% and sales will exceed $12 billion.
Consumers also flocked to tea due to the high quality of the beverage. Many new product introductions in the tea category include exotic flavored teas, tea and fruit infusions, and premium loose tea bags that are at the forefront of innovations in both the retail and foodservice arenas.
“Tea’s healthfulness is still, of course, the beverage’s primary appeal, but in the current market environment consumers are increasingly recognizing good quality, customized tea as a comforting, affordable premium beverage splurge,” says Don Montuori, publisher of Packaged Facts.
Additional factors driving overall market growth will be the greater involvement of international beverage behemoths including Coca-Cola, PepsiCo and Nestlé; a greater emphasis on tea in the foodservice channel via expansion of specialty brews into restaurants of all kinds, as well as coffee/tea chains à la Starbucks and Peet’s Coffee & Tea; hybrid tea beverages crossing over into competitive categories including sparkling water, energy drinks and superfruit juices; and the additional penetration of RTD teas into convenience channels including convenience stores and alternative outlets such as bookstores.
Tea and Ready-to-Drink (RTD) Tea in the U.S. examines the market for tea across the retail and foodservice spectrum, including ready-to-drink tea, leaf (bagged and loose) tea, and instant tea. The report provides historical sales figures and projections through 2014, in addition to examining market drivers and trends. An exclusive feature of this report is custom survey data from Packaged Facts’ February 2009 online poll of 2,600 U.S. adults, which was conducted to measure purchasing patterns, attitudes and demographics specific to tea and other functional foods and beverages.
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