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Global Tea: Consumer Trends Converge Around Brewed Beverages

November 2016

This report considers opportunities for global tea, including hot tea and RTD tea. Combined, tea is the most consumed global beverage in terms of volume. There is growing evidence of value creation in tea, as consumer demand for healthier and natural beverages leads them to opt for versatile tea-based brewed beverages across consumption occasions.

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Tea is the most dynamic category in global beverages

Tea is a volume and value growth opportunity in beverages, thanks to its ubiquity in the largest global beverages markets and its versatility as a product – consumed hot or cold, sweet or unsweetened, and as a healthy or indulgent beverage.

Tea has entered an era of value creation

Tea has entered an era of value creation. It has long been considered a low priced commodity (in contrast to coffee and packaged soft drinks), but growth in chilled RTD tea is driving value growth, alongside growth in hot green teas and premium speciality black teas.

RTD tea is growing as a BFY option and taking share from carbonates

RTD tea has emerged as a better-for-you soft drinks option, consumed for its refreshment, hydration and functional (natural energy) benefits. The US has been a major area of growth, thanks to premium priced single serve teas. Healthier RTD teas are a growth opportunity in China. Flavourful brewed RTD teas are also an area of substantial NPD targeting young consumers.

Hot tea must focus on retaining younger consumers

Hot tea is second only to bottled water in terms of global consumption. Value sales potential is finally being realised with functional, healthier and flavourful tea blends. Maintaining loyalty among young people (who represent a sizeable portion of the population in the highest per capita tea markets) is crucial.

Outside the off-trade there is strong growth in foodservice tea and alternative tea products

Tea is finding ways to develop in non-traditional forms and channels outside the home. Alcoholic drinks and home tea appliances are two opportunities. In addition, chained tea concepts in India, the UAE and other markets are finding success, while tea in US/European foodservice is dependent on entering the menus of mixed operators – from coffee chains to fast food.

Introduction

Scope
Definitions

Tea: The US$20 Billion Opportunity

Key findings
Tea intersects with the major consumer drivers of food and drinks
Tea is the most consumed beverage on the planet
Versatility of tea creates opportunities across occasions
An era of value creation in tea
Value creation: Price-led growth in tea
Value creation is happening in emerging and developed markets
The US$20 billion opportunity for tea

The Wider Universe of Tea

A wider universe of opportunity for the category
Tea in foodservice: Undeveloped promise
Creating mainstream, affordable tea chains to grow appeal
Demand for craft creates opportunity for tea appliances in the home
Tea has niche opportunities in cocktails and RTD alcoholic drinks

Consumer Segmentation in RTD Tea

RTD tea opportunity in summary
What factors drive RTD tea growth?
Markets to watch: RTD tea category growth through 2020
Turkey: Growth in BFY tea and carbonate replacements
Southeast Asia: Local tea brands establish category leadership
The American RTD tea consumer is going upscale
Chilled, packaged tea is booming as carbonates replacement
Consumed as a BFY beverage, but is RTD tea any healthier?
Unsweetened teas can preserve the health equity of RTD tea
Bringing higher value RTD tea to the European consumer as well
The mixed RTD ‘tea’ category in China
The changing RTD tea category in China
Changing shopper habits in China lead to better, premium tea
New products to reach a younger, social tea drinker in China
Companies: Coca-Cola’s eye on RTD tea
A note of caution: RTD tea is among the most income elastic goods in fmcg
Can “soft ” drivers keep RTD tea strong in Brazil?
Keeping RTD tea strong through flavour and functional positioning

Value Creation Strategies in Hot Tea

Hot tea opportunity in summary
Hot tea dominates global sales volume of tea overall
Hot tea is moving from a commodity to a high value consumer good
Green tea leads in value but black tea is the most consumed
Markets to watch: Hot tea category growth through 2020
Iran: Sanctions relief provides a boost in tea growth
Global companies: A fragmented brand picture for global hot tea
Rising incomes boost green tea’s prospects
Black standard bags: A better builders tea in the UK?
Functional hot tea: Bolder claims for energy and focus
Millennials have a demographic advantage in giant tea markets
Winning younger consumers through education and variety
Where is the value opportunity in Indian tea?
Reaching Indian consumers for packaged tea: Two key groups
Young women experiment with new tea styles in India
Dominance of Europe in fruit /herbal blends
Indulgence in hot tea? Indulgent, flavourful chai
Takeaways: Tea in 2020

Appendix: Competitor Analytics

Competitor Analytics tool
Overview
Competitors
Market Overlap
Treemap
Overlap Matrices

Appendix: Industry Forecast Model

About Euromonitor International’s Industry Forecast Model
Soft drivers and the Industry Forecast Model
Growth decomposition explained
Significance and applications for growth decomposition
Key applications for Industry Forecast Models
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