Versatility of RTD Tea Generates Bright Spot in Global Soft Drinks

May 2014

Despite volumes currently limited to Asia, Central Europe and North America, RTD tea can appeal to consumers with an affinity for tea as well as those simply seeking an alternative to carbonates and juices. The beverage’s versatility makes it a blank canvas for manufacturers to create a variety of products that can be sold to nearly any consumer.

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RTD tea growth is strong, but still trails many other soft drinks categories

RTD tea is one of the fastest growing beverage categories in the world, but greatly trails bottled water, carbonates and juice in terms of total volume and value. As consumers move away from carbonates and juices, however, potential to grow the category in both established and new markets is high.

Consumption is limited to three key regions

The consumption of RTD tea is essentially limited to three key regions: Asia Pacific, Western Europe and North America. Asia Pacific dominates with over 77% of total RTD volume in 2013. A traditional preference for tea in growing markets such as China and Vietnam have paved the way for this success. Western Europe volumes mainly come from private label brands, whereas consumption in North America is tied to consumers seeking new beverages.

Versatility of RTD tea can help expand the product to established and new consumers

By examining Asia, Central Europe and North America, it is clear that RTD tea can be many different things to different consumers. The beverage can be sweetened to give the indulgent flavour of carbonates, unsweetened and natural to taste more like traditional tea, or even mixed with juice to give familiar flavours. This versatility will help the category grow in years to come.

Multi-branding approach helps maximise potential

The varying positions of RTD tea also create potential for multiple brands and sub-brands. Products such as Arizona Iced Tea has many different flavours. Similarly, Coca-Cola has found success using over a dozen brands in different markets.

On-trade channel could inspire innovation

The versatility of RTD tea also makes it an ideal beverage for foodservice operators seeking to create their own unique beverages. This in turn can inspire retail versions of popular on-trade drinks, growing both channels concurrently.

What this report includes

  • Top-level strategic analysis of how major consumer trends will influence global markets
  • Consumer insight
  • Impact across all relevant consumer markets
  • Unique graphics and case studies
  • Key market snapshots
  • Accompanying presentation to synthesise main findings

Why buy this report

  • Identify factors driving change now and in the future
  • Understand motivation
  • Forward-looking outlook
  • Briefings and presentation should provoke lively discussion at senior level
  • Take a step back from micro trends
  • Get up to date estimates and comment

I ntroduction

Scope

Introduction

Key findings

Global Performance

RTD tea still trails bottled water, carbonates and juice
Despite versatility, RTD tea volumes concentrated in three regions
Versatility of RTD tea makes it appealing to a variety of consumers
China dominates thanks to growing consumer disposable income
Premium or economy: RTD tea prices reflect its versatility
Distribution shows strong presence across multiple channels
Three distinct regions grow RTD tea using different tactics

Historic Growth in Key Markets

Per capita consumption shows three key regions
Key markets drive global growth
Three strategies, three regions
Varying flavours across varying markets demonstrate versatility
For Asian consumers, tea represents something familiar yet new
Vietnam’s brands use familiarity with consumers to dominate share
Discounting cultures in Central Europe pave way for private label
Highlighting health properties could help RTD tea grow
US presents combination of tradition and innovation
Distribution highlights RTD tea’s popularity as impulse purchase
Arizona’s packaging offers premium and economy pricing
RTD tea grows across three regions with three different strategies

Brand Strategy

Chinese brands lead fragmented field
Top brands outside Asia Pacific
Case study: Coca-Cola’s multi-brand global strategy
Coca-Cola’s multi-brand strategy
Japan’s varied soft drinks market ideal for Coca-Cola’s brands
Replacing carbonates in the fridge and pantry in the US
An honestly healthy alternative
Coca-Cola’s Fuze /Fuse brand helps bring RTD tea to new markets
Multiple-brand strategies maximise profits
Multiple brands help RTD tea grow in new and established markets

F uture Prospects

Future growth nears US$20 billion but largely in China

Future Prospects

New opportunities in Mexico due to health-conscious consumers
Foodservice an opportunity for operator and manufacturer alike
Foodservice as inspiration for retail products
Growth strategies across the world
Keys to growing RTD tea
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