Tea in the United Arab Emirates

PROSPECTS

Tea products with functional ingredients continue to gain popularity

The health and wellness trend continued to support robust in tea volume and current value sales in the United Arab Emirates in 2019, and is expected to remain one of the key drivers of demand and innovation in the category over the forecast period. While tea in general has traditionally been considered a wholesome beverage in the country, as consumers become better educated about health and nutrition, they are showing greater interest in varieties that are perceived to offer specific benefits.

Interest in tea blends that complement specific foods increases

As is the case with coffee, consumers in the United Arab Emirates are developing more refined tastes when it comes to tea. This is partly explained by the fact that the country is home to large expatriate communities with diverse tea traditions and preferences.

Use of price-based promotions increases as competition intensifies

Current value growth in the overall retail average unit price for tea in 2019 was down on 2018, and also fell below the CAGR for the entire review period. This slowdown, which was evident in all categories, reflected the increasing use of family-sized packs, discount campaigns and other types of price-based promotions to boost volume sales, win over new consumers and strengthen brand loyalty.

COMPETITIVE LANDSCAPE

Health and flavour are focal points for innovation

The health and wellness trend remained a key inspiration for new product development in tea over 2018-2019. Several companies introduced caffeine-free products in response to growing consumer concerns about the potentially negative health effects of caffeine.

Leading retailers develop more sophisticated private label offers

While their aggregate shares of overall retail volume and current value sales remained insignificant in 2019, private label products have performed well in tea in recent years. This is partly due to rising price-consciousness among consumers, but also reflective of the fact that retailers have stepped up investment in expanding and improving the quality of their private label tea lines.

Sustainability comes to the fore in tea

Like manufacturers in many other industries, tea companies in the United Arab Emirates are attempting to reduce their environmental footprint via the adoption of more sustainable sourcing, production and packaging methods. For instance, Unilever – which remained the dominant player in tea in 2019 – recently signed an agreement with the Dubai Electricity and Water Authority (DEWA) to promote cleaner energy use.

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