Tea Bags, as measured through Grocery and DMM, continue to lag with little or no growth. Private Brands are growing in both volume and dollars. Total category is growing in dollar terms, but lagging in volume. Tea Pods are a bit of a mixed story, with Private Brand sales exploding, some key brands growing and others declining. Innovation along flavor lines and new offerings appear to be a key driver in this segment.
Tea’s Popularity in Foodservice Continues to Grow. Foodservice continues to grow with tea becoming a more and more important offering in all types of restaurants.
Between 2010 and 2015, tea saw a 16% increase in menu occurrences, according to Technomic. Refrigerated iced tea remains a top tea beverage consumed away from home, and we see this trend continuing to grow. We estimate growth in this segment to be in the 2.5 – 4% range. The tea market represents almost $11 billion in consumer dollars spent in foodservice.
Marketing and Innovation in the Industry
Marketing and innovation in the industry continue to drive U.S. tea consumption. As consumer demand has grown, frequent innovation and the marketing of new products have helped keep tea top-of-mind for consumers. Many companies have started developing interesting new tea products and marketing tea in new and unique ways. Further, new delivery formats and flavored blends, refined messaging about tea, its origins and health benefits, as well as increased availability, offer opportunities for growth.
- Established bottled water and soft drink companies have expanded product lines to include ready-to-drink tea. This helps to combat their share losses in CSD’s.
- New flavors in both bagged and RTD tea varieties drive consumer experimentation. Companies have begun playing with new flavor profiles and creating better quality ready-to-drink teas, with characteristics and flavors of home-brewed tea.
- The long-banned Pu’erh tea (under the Tea Importation Act of 1896) is finding its way into the American market. Though still relatively unknown in the U.S., Pu’erh has significant promise for driving future sales because of its unique flavor profile and purported health properties. Continuing to educate consumers about Pu’erh’s, and all tea’s, history and health benefits will continue to boost overall category sales.