Transformation of RTD Tea Positioning in Key European Markets

June 2021

RTD tea has changed its positioning in Europe over recent years, moving from something highly commoditised and refreshment-driven to something that aligns with current consumer trends and a more premium positioning. This briefing explores the different strategies brands have been using in key Western European markets to transform and revamp RTD tea: from reducing sugar, to changing the taste profile, to focusing on consumer need states.

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Key findings: RTD tea has successfully transformed its positioning

RTD tea upgrades its positioning

In Western Europe, RTD tea is a mature category with well-established brands. Its positioning changed over recent years. It has moved from a highly commoditised and refreshment positioning with a high private label share to a category that clearly aligns with current consumer trends and creates value by refining its positioning.

The sugar reduction trend drives growth in healthier RTD tea variants

The healthy living trend encompasses the reduction of sugar in consumers’ diets. This trend has been forcing the wider soft drinks space, including RTD tea, to reformulate or to innovate with reduced sugar variants.

Consumers ask for more natural and organic RTD tea

Consumers who are health- and eco-conscious have been actively purchasing RTD tea brands that have natural and/or organic credentials. As a result, new entrants and legacy brands have had to readjust their portfolios.

Companies use functionality to address consumer need states

Brands emphasise the functionality of RTD tea by positioning it to address different consumer needs. From natural energy, to botanicals and probiotics, functional RTD teas have been gaining popularity in Western Europe, which has helped in driving value.

Brands transform the taste and flavour profiles of RTD tea

RTD tea brands have changed their traditional taste and flavour profiles to more original combinations. Fuze Tea, by Coca-Cola, is a notable example, which has paved the way for a series of innovations from large and smaller brands.

Scope of the Report

Scope
Key findings: RTD tea has successfully transformed its positioning

Category Performance Review

RTD tea brands premiumise the category around four axes
RTD tea moves from a mass-market to a more premium positioning
RTD tea set to post a 3% retail volume CAGR over 2020-2025
RTD tea will continue to grow in Western Europe over the next five years
Category transformation: Pricing strategy evolution

Major Trends and NPDs

Sugar reduction set to be the most influential trend in soft drinks
Brands use sugar reduction to reposition RTD tea as a healthier drink
European consumers are actively seeking natural and organic products
As a result, RTD tea brands emphasise their natural positioning
RTD tea leverages functionality to address consumer need states
Natural energy boost, botanicals and gut health attract new investment
RTD tea moves from a traditional taste profile to new fusions of flavours
Brands introduce new flavours to revamp RTD tea

Key Takeaways

Key findings: RTD tea has successfully transformed its positioning
RTD tea brands premiumise the category around four axes
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