RTD Tea in Latvia

PROSPECTS

RTD tea losing consumers to healthier bottled water

RTD tea is declining in off-trade volume terms, as it is negatively affected by consumers’ migration to healthier options such as bottled water, in particular flavoured water. Despite its long-standing presence in Latvia, the format of iced tea in local consumers’ minds seems to be lacking distinctive benefits compared to lemonade and other sugary drinks.

Herbal, low calorie and functional tea offer growth opportunities

Following general health and wellness trends, RTD tea is already reinventing itself, improving its image by introducing more natural formulas and reducing sugar levels. The combination of trends from both hot tea, such as the growing popularity of herbal teas, and from soft drinks, such as demand for fewer calories, more natural flavours and specific value of functional ingredients (vitamins and minerals), influence the dynamics of this category.

New flavours and attractive packaging to keep consumers engaged

RTD tea is expanding beyond black and green flavoured iced tea to more exotic, sophisticated and even medicinal herbal and functional varieties, as innovation remains important to retaining consumers’ loyalty, while the borders between the categories blur. Local producers, unable to compete with large international manufacturers in the mass market, are experimenting with using brewed tea, herbal tea and juice additions to challenge sugary well-established brands.

COMPETITIVE LANDSCAPE

Coca-Cola launches Fuze Tea and discontinues distribution of Nestea in Latvia

As of 2018, the new Fuze Tea from Coca-Cola was launched (which in Europe is offered in more than 20 flavours and 15 different pack types) replacing Nestea in the player’s portfolio. However, it is possible that Nestea will re-appear in Latvia with a new recipe through another distributor at some point during the forecast period.

RTD tea remains dominated by large mass-market players

The number of RTD tea brands remained rather limited in 2018. Coca-Cola, Cido and Rimi are the leading players in the category with Fuze Tea, Cido Ice Tea and Lipton respectively.

Local innovation carves out a niche in premium herbal drinks

Dzeramais tea and juice drink (or natural herbal drink, as it is referred to by the company) by Latvian start-up Dabas Dots is expanding distribution of its premium products, positioning itself as a healthier alternative to mass- market products. The drinks, which are made from brewed tea, juice and contain a low amount of sugar or honey, are a small niche, yet benefit from the health and wellness trend supported by increasing incomes.

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