Tea in Hong Kong, China

PROSPECTS

Premiumisation trend supports current growth of tea

Tea registered growth in retail value and volume during the review period, supported by the premiumisation trend. More and more premium tea products gained popularity in the retail channel.

Fruit/Herbal tea continues to grow thanks to health and wellness trend

Fruit/Herbal tea continued to see the most dynamic growth in retail value terms in 2019 with the health and wellness trend remaining highly relevant for consumers and with new products and flavours being launched to constantly stimulate consumer interest. Health and wellness has been a constant key trend in Hong Kong and products that are able to promote their associated health benefits such as enhancing sleeping quality are proving popular.

Challenges remain for tea

Despite growth, the tea category is facing challenges that are likely to affect its future performance. Firstly, since mass retail channels such as mass supermarkets tend to reduce resources for low profit margin categories such as tea and allocate the resources to other categories with higher profitability such as energy drinks, it is increasingly difficult for tea players to distribute their products via mass retail channels and to obtain decent in-store facings for selling.

COMPETITIVE LANDSCAPE

International brands remain popular with younger consumers

International brands with a wide range of product offerings and varieties are continuously popular among younger generation consumers, capturing their attention. Brands such as Taylors and Twinings with offerings such as Darjeeling, Green Tea and Earl Grey dominate in Hong Kong, and their popularity is continuously growing, for example.

Unilever Hong Kong continues to maintain its lead

Unilever Hong Kong retained its lead in the overall tea category over the review period. The company has been present in Hong Kong for decades and its flagship brand Lipton is globally renowned, performing impressively in the territory.

Local brand Luk Yu sees good performance but set to slow down over forecast period

Local player Multipak Ltd witnessed an impressive performance in 2019, improving its value share with its widely popular Luk Yu tea during the review period. The brand name Luk Yu was dedicated to Lu Yu (spelling of Luk Yu in Chinese Mandarin), the Chinese tea master and writer during the Tang dynasty (7th-10th centuries), who is widely respected as the Sage of Tea with the first known monograph on tea in the world.

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