Tea in Asia Pacific

Key Findings

Healthy growth rates seen up to 2020

Sales of tea were recording positive growth throughout the historic period, up to 2020. In China, for example, over a third of the population drinks tea in one way or another, according to the China Tea Marketing Association, with people in their 20s in particular becoming increasingly interested in tea. Tea is seen as being attractive to people regardless of age and gender, as the widespread tea shops develop countless variants with milk and fruits. Such new tea drinks help increase the consumer base and frequency of consumption.

Sales disrupted by COVID-19 in 2020

In spite of many consumers becoming more price sensitive due to its economic impact, retail sales of tea in many countries in the region actually benefited from COVID-19, with at-home consumption boosted in 2020 by foodservice and workplace closures. However, overall regional growth slipped into negative territory. This was due to the negative consequences of COVID-19 restrictions in China, by far the region’s biggest market, with Spring Festival sales suffering from a ban on social gatherings in Q1 2020.

Foodservice milk tea hurting retail sales of instant tea in China

Milk tea is a popular drink in China, but retail sales of instant tea are in decline due to the convenience offered by fresh milk tea. Milk tea shops and online food delivery platforms enable consumers to enjoy freshly-made milk tea on the go or in just a few clicks. Street stalls/kiosks also offer a wider selection of milk tea, with consumers able to customise their drinks as well.

Return to positive growth expected from 2021

Tea has good forecast period prospects, post-2020. Healthy annual growth rates are expected from 2021, with mass consumers continuing to buy their favourite tea products, albeit possibly downtrading to cheaper brands or private label, and higher-income tea drinkers increasingly looking for more premium offerings.