Tea in Mexico

PROSPECTS

Tea’s healthy image supports sales as consumers search for healthier beverages

In Mexico, sales of tea are dominated by fruit/herbal tea, with black tea and green tea registering far lower sales overall. For this reason, tea is a category of products that are known primarily for their health benefits.

Tea’s traditional image as a functional beverage gives it a sales advantage

As mentioned above, in Mexico tea has traditionally been seen as a beverage with specific medicinal functions. Infusions of fruits and herbs have historically been perceived as akin to medicines and for this reason, many of the products in the category are positioned as functional hot drinks.

More sophisticated consumer tastes as rising incomes encourage higher spending

As Mexico’s consumers become more sophisticated in their tastes in tea, they are becoming increasingly willing to pay higher prices for a more rewarding and fulfilling tea experience. In particular, flavour is becoming an increasingly important aspect of tea, with demand previously based mainly on perceptions of functionality rather than taste.

COMPETITIVE LANDSCAPE

The importance of private label in sales of tea continues to increase

The tea portfolios of the leading private label players have expanded in recent years as Mexico’s leading chained retailers have sought to cash in on strong and rising demand for fruit/herbal tea. This has involved the introduction of products with new flavours as well as products marketed by reference to specific functionalities.

Royal Tea struggles due to human resources management challenges

During the second half of the review period, one of the category’s leading players Royal Tea, the owner of the Lagg’s brand, faced various significant challenges related to the management of its human resources. This led the company to cease production for several months during 2017, and by the end of the review period the company and its brands had not yet recovered fully from the situation.

McCormick launches a line of functional teas to tap into traditional demand

February 2018 saw Mexico’s leading brand of tea McCormick launch a line of functional teas as the brand sought to tap into strong demand for traditional products that have traditional functionalities. These new products include En Forma, a product with a weight loss positioning, as well as Digestivo which, as the name suggest, is marketed as a digestive aid.

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