Tea in the US

PROSPECTS

Standard tea formats struggle

Tea bags black is still among the largest categories in US tea, but has been declining as consumers tire of mainstream brands and seek out more premium exotic flavours and formats. Loose black tea is picking up some of these lost sales, but the larger shift is towards fruit/herbal tea.

Functional teas are a focus

Consumers are increasingly looking for teas created with a specific health purpose in mind, although in many cases this is a general goal such as relaxation rather than a defined medical condition. Many companies are also now naming products by their functionality rather than by flavour or ingredients in recognition of this.

Green tea moves in two directions

Green tea was the worst-performing category of tea in 2018. This was partly a temporary aberration caused by the closure of Teavana, but the long-term trend for many of the leading brands is declining consumption.

COMPETITIVE LANDSCAPE

Starbucks Corp divests most of its US tea business

Starbucks Corp has closed all of its Teavana retail outlets as well as its online store, dashing the hopes of those who thought that Starbucks could do for hot tea in the US what it did for coffee. This move came after Starbucks had already sold off its major retail tea brand Tazo to Unilever Group in late 2017.

Unilever expands more heavily into premium tea

Tea sales leader Unilever United States Inc saw major share gain in 2018 thanks to the acquisition of Tazo. With Lipton sales slipping, Unilever has been expanding more heavily into premium tea to compensate.

Big players are losing share to smaller rivals

The long-term shift away from standard tea bags towards higher-end loose and sachet teas has benefited smaller players at the expense of the companies that have traditionally dominated US tea. Sales of many of the major brands, including Lipton, Celestial Seasonings and Salada, have been consistently falling in the last few years even as the category overall has grown.

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