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Tea sales climb steadily on product development, emergence of tea houses & innovative marketing

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By Elizabeth Crawford

Last updated on 09-Jan-2017 at 16:53 GMT2017-01-09T16:53:14Z

Source: iStock
Source: iStock

Ongoing development of ready-to-drink tea and growing awareness of the health benefits and cultural importance of tea continue to drive sales of the beverage in the US, but future growth will also rely on new products and innovative marketing, according to new research from Packaged Facts. 

Estimated at $7.25 billion, the US tea market grew 5.9% in 2015 over the prior year – a trajectory that Packaged Facts predicts will continue until the retail sales of tea in the US reaches $9 billion in 2020, according to the report published in late December.

“Growth in the industry can largely be attributed to ready-to-drink” tea in cans and bottles, which grew 7.2% in dollar sales in 2015, according to the report. This is slightly behind the growth of refrigerated teas, which were up 9.2% in 2016 over the prior year, the report notes citing IRI data.

Flavors, health & culture pave path for tea sales

The success of these categories can be attributed partly to manufacturers developing exotic flavors – especially fruit combinations, the report says.

“For mainstream RTD brands, peach tea has been a hit flavor with consumers,” it adds.

Likewise, products highlighting tea’s health benefits have performed well, according to the report.

“Research suggests a range of beneficial effects from tea, especially green tea, from heart health to cancer-fighting and anti-aging properties and others,” the report notes. It adds that these benefits are being communicated to consumers in part through the emergence of tea rooms in America.

“Tea has always had a presence in the coffee house, but was rarely the focal point,” according to the report. Now, “tea rooms and tea shops are taking root around the country. These establishments express various dimensions of tea culture, and are catalysts to spur interest in premium tea and the craft and retail of tea.”

Fueling future growth

Going forward, manufacturers can take advantage of this interest in premium products by offering more products with added value and benefits, Packaged Facts suggests.

This “upscaling effect” already is evident in the iced tea and specialty tea segments, according to the report.

In the iced tea category this plays out with a focus on product purity, rare teas, distinctive flavor profiles and functional benefit. In specialty tea it is illustrated through a shift from black tea to more exotic tea, especially in hot beverages, the report notes.

Other innovative products that will continue to drive growth forward include an emergence of tea lattes and sparkling products, the report predicts.

Advertising shifts

New marketing strategies also will lay a key role in the ongoing development of the tea category in the US, according to Packaged Facts.

The role of television marketing going forward is unclear with some brands embracing it and others turning away from it.

Last fall, Lipton shifted gears to partner with the Food Network to target “food passionate millennials,” while Pure Leaf in 2015 made its first TV investment with the “Follow the Leaf” campaign, according to Packaged Facts.

More innovative approaches included Brisk asking Dan “Mache” Gamache of Mache Custom Kicks to create customized shoes to mark the launch of its Pineapple Passion fruit flavored product, the report notes.

These new approaches, combined with new products, should continue to engaged consumers in the tea category and fuel ongoing growth, the report summarizes. 

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