Beverages From coffee and kombucha to seltzer and champagne, we explore the latest insights on the consumer trends and new products shaping the beverages industry.

Applying the Chinese Instant Tea Model to Instant Coffee

7/1/2014
Euromonitor International Profile Picture
Euromonitor International Bio
Share:

Between 2008 and 2013, instant tea has been the driving force in the Chinese tea market, increasing sales by US$ 1.7 billion. To date, the popularity of instant tea is almost entirely a Chinese phenomenon, as China accounted for 92% of Asia-Pacific’s instant tea sales in 2013. Instant coffee on the other hand, is immensely popular throughout the region, with China accounting for just 15% of the overall market in 2013. As instant coffee shares many of the attributes that have driven the success of instant tea in China, namely the replication of foodservice options, flavour malleability, convenience, and a young consumer base, applying the innovative packaging of instant tea to coffee may spell further success for Asia’s already booming instant coffee market.

Foodservice and Youth-Positioning Drive Success in China

Instant tea in China is composed almost entirely of instant ‘milk teas’ that aim to replicate the sweet flavours of popular street stall/kiosk and café operators like Happy Lemon, Jack Hut, and ChaTime.  Popular flavours include red bean and jasmine green, while some also include bobas (tapioca pearls found in bubble tea) for added texture. To make the beverage accessible through retail channels, manufacturers use single-serve packaging of on-the-go paper cups filled with a sealed pouch of instant tea and a straw.

 

Instant Tea 580.jpg

Photo courtesy of twitter user @baobaogeek from asimplegeekylife.blogspot.co.uk

The sweet flavour profile of these milk teas, and economical price tag compared to their on-trade equivalents, makes them particularly popular with younger Chinese consumers.  The accessible format and price of instant tea enables young consumers to partake, albeit indirectly, in fashionable foodservice. Aware of the influence of younger demographics, Chinese manufacturers including the Guangdong Strong and Zheujuian Xiangpiaopiao are deliberate in their marketing, positioning the products specifically to Chinese youth, through fun packaging, and celebrity endorsements. Appealing to this demographic yielded real results, with instant tea sales grossly outperforming all other tea types in China over the review period.

Chinese tea market by type, retail value 2013 v % CAGR 2008/13

ChinaMarketbreak-down0

Source: Euromonitor International

Limited Presence Outside of China

Although the popularity of instant milk teas is unique to China, milky tea is in fact common in many Asian markets including Japan, India, and Southeast Asian markets like Malaysia, Singapore, and Thailand, where it is common to add condensed milk is to  black tea. In 2013, Japan was the second largest market for instant tea recording US$ 138.6 million, a tiny fraction of China’s US$2.2 billion sales. One cause for the lack of traction in other Asian markets is the increasing popularity of coffee. Indeed, between 2012 and 2013, coffee outgrew tea in every major Asian market except for Taiwan in terms of retail brewed volume.

Manufacturers may consider adapting the Chinese instant tea model to instant coffee. Like instant tea, the success of instant coffee in Asia is driven largely by its ability to replicate popular foodservice options found in specialist coffee shops. In 2013, 54% of instant coffee sales in Asia were derived from instant coffee mixes – varieties with at least one added ingredient, most commonly sweetener and whitener. The often sweet and milky flavours of these instant coffee mixes, like instant tea, aim echo popular coffee speciality drinks including lattes and flavoured coffee drinks.

Packaging Innovation Could Drive Value and Sales

While many instant coffee mixes are available in single-serve sachets, they are not as compact and portable as the all-in-one packaging of instant tea.  By applying the format of instant tea to instant coffee mixes, manufacturers may be able to increase their appeal even further, particularly amongst younger consumers. Even if the unit prices of these products is higher than traditional instant coffee due to increased packaging materials, they will still be perceived as the economical choice compared  to on-trade specialist coffee options. Furthermore, the ‘to-go’ container itself may be seen as a value-add, as the image of a take-away specialist coffee shop cup is perceived as trendy and hip. The familiarity and popularity of instant coffee mixes may make an instant coffee packaged like instant tea appealing to Asian consumers. To wholly capitalize on this potential, manufacturers should look to the marketing techniques of Guangdong Strong’s U-loveit and Zheujuian Xiangpiaopiao’s Xiangpiaopiao. Positioning these products to younger demographics is likely to be key to gaining traction.

Interested in more insights? Subscribe to our content

Latest Insights

Tea & Coffee World Cup

Euromonitor International 09 August 2021

The Caffeine Paradox

Matthew Barry 08 July 2021

Shop Our Reports

Hot Drinks Quarterly Statement Q3 2021

Changing pandemic forecasts remain an issue for hot drinks in Q3 but industry focus is increasingly shifting to a variety of second-order effects from the…

View Report

Alcoholic Drinks: Quarterly Statement Q3 2021

This briefing examines Euromonitor International’s Q3 2021 alcoholic drinks forecasts, which have been updated in accordance with new macroeconomic data and the…

View Report

RTD Coffee in Asia Pacific

Asia Pacific is the key region for RTD coffee globally, accounting for nearly 80% of global sales. Much of this is due to Japan, with sales of USD11 billion.…

View Report
Passport Our premier global market research database with detailed data and analysis on industries, companies, economies and consumers. Track existing and future opportunities to support critical decision-making across all functions within your organisation Learn More