RTD Tea in New Zealand

2020 IMPACT

Lost impulse purchase occasions for RTD tea in 2020, but off-trade growth offsets on-trade decline

Movement and trading restrictions meant that while the country was in a pandemic-enforced lockdown, supermarkets was the dominant distribution channel for sales of RTD tea from late-March to early May. This resulted in stronger volume and current value growth through off-trade.

Kombucha’s popularity continues to grow

The niche of carbonated RTD tea and kombucha remained the strongest performer within RTD tea in 2020, with double-digit growth in both current value and volume sales. The category benefits from strengthening distribution, and sales and marketing activity through supermarkets.

Cheaper alternatives from smaller players see fragmented competitive landscape in volume share terms

The competitive landscape of RTD tea is highly fragmented with smaller players under “others” dominating volume share, while Unilever New Zealand Ltd was the only player to hold double-digit volume share in 2020. However, in value share terms, Unilever dominates with its brand Lipton, followed by Coca-Cola Amatil with Fuze.

RECOVERY AND OPPORTUNITIES

Unstable conditions offer potential for greater penetration of private label

The uncertain economic outlook will place further pressure on consumer spending due to decreasing disposable incomes as a result of the pandemic. While the category will remain popular amongst local consumers, lower spending levels are likely to bring opportunities for private label within RTD tea over the forecast period as a cost-savings exercise; private label held only low volume share with the category over the review period.

Larger packaging formats likely as category becomes increasingly mature

As RTD tea matures, larger pack sizes are becoming increasingly prominent – particularly within kombucha. When the category was less popular, single-serve formats such as 300ml or 600ml were standard, as players sought to grow consumer demand and penetrate mainstream distribution channels.

Return to focusing on e-commerce

The origins of the surge in popularity of kombucha in New Zealand is linked to local brands developing this niche area of the category through selling directly to consumers, before building up sufficient demand to attract the attention of mainstream channels such as supermarkets and stock these products. The pandemic has changed the way New Zealanders shop, with distribution likely to follow the path already taken by local kombucha players such as Remedy Drinks.