Tea in South Africa

PROSPECTS

Consumers to embrace healthier beverages

The prevailing health and wellness trend will likely boost demand for tea over the forecast period, particularly variants such as blended, green and fruit/herbal teas, with more black tea consumers shifting to rooibos. Likewise, intensified government awareness campaigns regarding the health risks associated with obesity will stimulate sales of slimming teas.

Local production expected to continue to fall

The local production of black tea is expected to continue to fall. This will be largely down to a combination of poorer harvests due to drought, rising production costs due to inflationary pressures and intensified competition from Asian suppliers.

Convenience likely to become a key tool of differentiation

Tea capsules are set to benefit from increased demand for multi-functional pod machines, with more households embracing the convenience of these appliances. On the other hand, urban consumers will continue to support instant tea as more variants are introduced, with chai latte currently gaining momentum.

COMPETITIVE LANDSCAPE

Economic downturn affects demand for tea

Retail volume sales of tea in 2017 continued to be affected by the country’s sluggish economic performance. As unemployment and inflation rose, lower LSM consumers increasingly shifted to cheaper beverage alternatives.

Retail value sales continue to rise despite falling volume sales

Tea continued to post double-digit retail current value growth in 2017 despite falling volume sales. This was partially due to an increase in the overall cost of living, with a number of households reducing their tea consumption to match their shrinking disposable income.

New entrants target smaller niches

With competition intensifying in tea, new entrants increasingly focused on smaller niches. For example, Red espresso has been gaining shelf space with its Nespresso-compatible rooibos tea capsules.

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