Tea in South Africa

PROSPECTS

Tea to benefit from improved market conditions

Retail volume sales are predicted to benefit from improved market conditions, with the South African economy recovering after years of stagnation. From a manufacturing perspective, an increase in GDP is likely to translate into a stronger Rand, which in turn will minimise importation costs of leading categories such as black tea.

Retail value set to continue rising at a faster rate than volume sales

Retail current value sales continued to increase in 2018 despite declining volume sales. This was due to rising unit prices, partly driven by a weakening Rand as the bulk of black tea remained imported from Asia, in addition to rising inflation.

Green tea to record highest growth

Over the forecast period, green tea is expected to record the fastest growth within tea in both retail volume and value sales. The trend will be supported by increased awareness of tea variants, with such ranges often considered healthier by consumers.

COMPETITIVE LANDSCAPE

Value share remains consolidated amongst key players

The competitive landscape remained consolidated amongst key players in 2018. However, increased offerings from private label resulted in manufacturers such as National Brands using packaging innovation as a key differentiation.

New entrants target convenience

The number of new entrants increasingly opted for convenience to attract niche consumers. Hence, alongside leading brands such as Freshpak, it was increasingly common to see emerging tea pods such as Red Espresso, a Nespresso compatible pod which targets middle to high LSM urban consumers.

Joekels Tea Packers gains momentum in green tea

Joekels Tea Packers profited from the affordability of Tetley in green tea as it continued to offer value for money to health-conscious consumers. Only introduced in 2017, the new range has been gaining shelf space with various packaging formats being introduced.

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