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Changing Consumer Needs and Opportunities for Tea in Asia Pacific

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Amidst the cost-of-living crisis and inflationary environment, tea in Asia Pacific remains a resilient category. In 2022, sales of tea in Asia Pacific amounted to USD24.2 billion.

Between 2017 and 2022, tea recorded growth in off-trade brewed volume sales of 19 billion litres in Asia Pacific

Source: Euromonitor InternationalTea in Asia Pacific Chart 1.svg

This is attributed mainly to its strong health positioning, rich tea culture and affordable price points as well as local production. China, India, Japan and Indonesia are the leading tea markets in Asia, owing to their tea cultures and production, coupled with large populations. Moreover, there has been increasing consumer interest in new flavours, origins and sustainability. 

Black tea continues to dominate due to its wide availability and affordable price, while facing competition from green tea and fruit/herbal tea. Nevertheless, in developing markets such as India, green tea was the fastest growing category over the review period, albeit from a low base, as companies launched green tea variants and strengthened consumer awareness about its health benefits. For example, Tata Consumer Products launched a new Tulsi variant under its Tetley Green Tea brand, in addition to the existing variants.

Tea players opt for premiumisation to drive value sales

While tea has traditionally been a more volume-driven category than coffee, rising disposable incomes across most regions are set to provide opportunities for premiumisation in tea. Furthermore, with the effects of inflation softening, there is an opportunity for global tea players to seek value growth in Asian markets, and for Asian brands to expand their footprint.

In Asia Pacific, per capita expenditure on tea is set to increase by 9% between 2022 and 2027 to USD6.1

Source: Euromonitor International 

This will be attributable to increasing consumer awareness of the health benefits of tea, coupled with higher disposable incomes. At the same time, tea players are focusing on premium packaging and local sourcing of loose tea leaves to attract consumers. For instance, TWG Tea in Singapore launched a limited-edition Darjeeling Nouveau, which is hailed as the “king of black teas”. The loose black tea leaves are grown in the Himalayas area and packaged in gold packaging to convey a premium image. Moreover, tea companies have capitalised on e-commerce platforms to promote their premium tea. For example, the China Tea Marketing Association and JD have a 5-year partnership agreement to encourage consumers to upgrade to higher-quality tea and push digitalisation in tea by maximising e-commerce.Tea in Asia Pacific Chart 2.svg

Wellbeing and its evolving meaning for Asia Pacific consumers provides opportunities for tea

According to Euromonitor International’s Voice of the Consumer: Health and Nutrition Survey, consumers in Asia Pacific put a high value on emotional, mental and holistic wellbeing.

In 2023, 59% of respondents defined health as having good mental wellbeing and having a healthy immune system

Source: Euromonitor International’s Voice of the Consumer: Health and Nutrition Survey

In addition, better sleep and emotional wellbeing are also top priorities of consumers’ health in Asia Pacific.

There is an ongoing shift in attitudes in Asia Pacific, as consumers focus on themselves and increasingly ignore societal pressures in both work and play. This offers tea players an opportunity to address consumers’ health concerns, tapping into health functionalities such as stress relief, aiding sleep and boosting the immune system in their products.Tea in Asia Pacific Chart 3.svg

An example is Sancha Tea Boutique from India, which offers a stress relief-orientated caffeine-free herbal tea. The camomile and lavender flowers, using Ayurveda traditions, serve to aid in relieving stress. Similarly, Dilmah’s Arana Relief Tea, which is inspired by Sri Lankan Ayurvedic tradition, also serves to relieve stress with its content of ginger, pepper and Ayurvedic herbs.

Cold brew tea set to gain momentum in Asia Pacific

Besides health functionalities, convenience remains important for consumers. With stiff competition posed by RTD tea, due to its convenience and cold brew offerings, tea players face a challenge, given that preparation of hot tea is considered a chore. In order to provide convenience for consumers, tea players have entered the cold brew space, where tea bags are brewed with cold water and left in the refrigerator. The presence of more brands has contributed to this trend becoming more popular.

In South Korea, consuming iced drinks during winter is a growing habit. Leading company Dongsuh Foods launched One Cup Barley Tea as an extension of its signature Dongsuh Barley Tea. Over the review period, barley tea was one of the teas to benefit most from the at-home consumption trend. Thanks to barley tea’s positioning as a traditionally home-made drink, more consumers have put barley tea on their shopping lists, and consume it daily as a substitute for water. This has spilled over into the RTD tea space where tea brands like Dilmah, for example, have launched premium iced tea in RTD format in Singapore, Malaysia and Australia.

Winning in the tea space in Asia Pacific

In order to strengthen their competitiveness, tea players must not only constantly launch product innovations that address consumers’ health concerns, but also widen the consumer base. This is done through engaging young consumers through digital interaction. This includes offering innovative experiences and social media content to engage young consumers and garner consumer loyalty. This is especially so among Generation Z and Generation Alpha consumers, where there is growing interest in exploring virtual games, NFTs and engaging with brands that deliver personalisation.

At the same time, price inflation and the cost of living are set to remain, and tea players need to balance affordability and premiumisation, through offering both affordable options as well as value-added premium products.

Learn more about Changing Consumer Needs and Opportunities for Tea in Asia Pacific in our report for in-depth trend descriptions, case studies and strategic recommendations.

Read our article, Retail Prices for Coffee and Tea Unlikely to See Much Relief in 2023, to understand how inflation is set to impact tea globally.


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