Organic Tea: Sustainability Enters the Fray

Strategy Briefing

About This Report

Mar 2016

As Millennials continue to heavily influence organic tea consumption globally, and as third party sustainability certification initiatives push ethics into mainstream public discourse, the future of organic tea remains delicately poised, hinged on evolving consumer perceptions and preferences. This global briefing analyses the performance of organic tea across regions, analysing growth engines and barriers as the industry adapts to the shifting milieu.

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Organic Tea: Sustainability Enters the Fray

The market has shown signs of susceptibility to market fluctuations

Short-term spikes and troughs have been the story of organic tea, highlighting just how difficult a market it is to operate effectively in. The challenging nature of organic tea production has contributed to both its short term successes and failures. In 2015, North America was at the peak of a growth burst, reinforcing its importance as the largest global market in terms of region, with Western Europe and Asia Pacific lagged slightly behind.

A globally fragmented market has materialised, with smaller brands playing a major role

Multinational companies have entered the market, either by acquiring small organic brands or incorporating niche organic variants into their product ranges. However, given the challenges of producing organic tea on an industrial scale, these companies have shown a reluctance to make any major venture into the category. This has made the market welcoming to small brands willing to commit to organic production.

Comprehending the Millennial effect is key

The success of organic tea is driven in no small part by the highly influential millennial consumers that continue to show a thirst for new flavours, demonstrate a lack of brand loyalty, and place ethics and health at the foundation of their choices. These factors make organic tea and sustainability certification prime considerations for this demographic.

Third party sustainability certification is an attractive alternative for manufacturers

Third party certification, such as Fairtrade, Rainforest Alliance and others continues, to draw the part-time organic consumers towards ethical alternatives, especially in more commodified categories, and will continue to be a threat to the USP of organic tea.

Introduction

Scope
Key findings
Objectives of global briefing

Global market insight

Organic tea’s route to success fraught with danger
Key market organic tea preferences
Regular and organic tea reveal a shift toward healthy variants
One size does not fit all: Altering preferences in a global snapshot
Creating value in a globally fragmented market
Green shoots but weak roots
Harnessing Millennial power key to future growth
Creating an emotional consumer attachment
Innovation over stagnation: The evolution of fruit/herbal variants
Are novel formats the key to organic tea?
M ajor players make minor moves; embrace the organic challenge

Organic tea in key regions

Organic tea: Enhanced or constrained by geographical preference?
Retailers mobilise to drive organic fruit/herbal tea in North America
Will past failures determine future success in North America?
An air of tentative confidence remains in North America
Is Western Europe lacking inspiration and innovation?
In Western Europe, Germany leads an unenthusiastic pack
Local Asian brands struggle to improve organic tea position
Can increased calls for traceability benefit organic tea in China?

Opportunities and future outlook

F orecast period reveals delicate growth prospects
Is there a future for organic tea?
Demeter: “super” organic and strong on sustainability and ethics
Endless possibilities define sustainability
Organic and sustainable: A possible way forward?
T he old and the new: Organic tea in the social media era
Key recommendations for organic/sustainable players

Appendix

Health and wellness product coverage
Health and wellness category definitions
Ethical labels, preliminary research: Category definitions
Included Studies and useful links