Tea in the Philippines

PROSPECTS

Tea sees higher growth through foodservice than retail, where black tea keeps losing ground to more dynamic green and fruit/herbal variants

The Philippines is not a traditionally tea-drinking nation, which is reflected in the far higher growth of tea in foodservice than in retail. This makes standard black tea a less dynamic category, albeit Lipton variants continue to account for the bulk of retail volume.

Health consciousness drive Filipinos to demand more green tea and fruit/herbal tea, looking to them for a variety of benefits

Health consciousness of Filipinos continued to drive demand for green tea and fruit/herbal tea more than for black tea in 2019 not only because consumers consider such products as healthy drinks in general, but also because such teas offer other benefits, such as aiding digestion and inducing better sleep. As consumers are becoming increasingly aware of the benefits offered by different types of tea, more shelf space – notably for green tea – has been devoted to these products in Filipino supermarkets.

Popularity of milk tea and bubble tea shops prompts major player to revitalise its offer of instant tea

The increase in popularity of milk tea and bubble tea shops in the Philippines, as has been seen in other Asia Pacific countries, is encouraging consumers to replicate the experience at home. This has renewed interest in instant tea, which has in turn encouraged Nestlé Philippines to revitalise, launch and promote its line of Lipton instant milk tea.

COMPETITIVE LANDSCAPE

Unilever maintains its lead despite declining demand for black tea

Despite suffering from declining sales for its standard black tea variants, Unilever Philippines continued to be the leading player in tea, where it ranked first in black tea and green tea, second in fruit/herbal tea and held a monopoly in value sales of instant tea in 2019. Lipton Yellow Label and Lipton Brisk Tea are the most widely distributed tea in retail, and Lipton can ride on its brand equity and the distribution reach of the company to maintain its relevance in the category; thus, Unilever does not actively promote these variants in above-the-line and below-the-line campaigns.

Local brands highly engage in innovation and widen their distribution

Local brands like Gold Leaf and Gourmet Farms offer a wide product variety of tea and are highly engaged in product innovation. While imported brands chase foodservice more, these two brands are constantly widening their distribution in modern retail channels.

Instant tea players targeting significant workforce of young professionals

Instant tea players such as Nestea and Lipton are seeing the value of appealing to young professionals that are also fans of bubble tea and milk tea shops. For example, since there is a flourishing business-processing outsourcing industry in the Philippines employing a significant workforce of young professionals, Nestea promotes its instant tea variants by having promos in 7-Eleven, such as buy-1-take-1.

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