Euromonitor report declares tea recession resistant

By Guy Montague-Jones

- Last updated on GMT

Related tags: Tea, Europe, Eastern europe, Western europe

A new Euromonitor report on the global tea market indicates that tea was one of the better performing categories in the beverage market last year.

Value sales of tea may have struggled in 2009 in comparison with previous years but the sector is still thriving in many parts of the world.

East versus west

Eastern Europe is the standout region for tea. From 2004 until 2009 tea sales grew at a CAGR of 15.1 per cent, taking value sales up from €1980.5m to €4003.4m. The market is expected to continue on an upward path and reach €5050.4m by 2014.

By contrast the Western European market is stuck on a low growth plane, having grown at a CAGR of 2 per cent from 2004. By 2009 it reached a value of €4025.5m and is expected to be overtaken by Eastern Europe over the next few years.

Euromonitor attributed the low growth in Western Europe and some other developed markets to a lack of innovation that is putting tea at a competitive disadvantage. But the market research firm said there are exceptions.

In Australasia, for example, tea sales have maintained their overall lead in packaged drinks consumption. Over the last five years sales of green tea have grown solidly in the region, while sales of instant teas have grown fast, albeit from a low level.

Growth prospects

Turning to global growth prospects, Euromonitor forecasts lower growth levels up to 2014 than have been achieved over the past five years. From 2004 to 2009, world tea sales grew from €14630.5m to €19755.1 and by 2014 they are predicted to rise to €22106.9m.

As for important trends that are predicted to drive future growth, Euromonitor picked out premiumisation and health and wellness.

It said highly saturated tea markets such as India, China, and Indonesia tend to have lower prices, meaning future growth could come from a more distinct premium tea segment.

And as for health and wellness, the research firm said consumer awareness of the health benefits of antioxidant-rich teas could be built on through the expansion of organic and functional teas, both of which currently have very low sales penetration.

For major players operating in the tea market, M&A activity could also prove to be a smart route to growth, according to Euromonitor. At the moment Unilever’s Lipton is the only big brand with a truly global presence, as others tend to focus on catering for specific regions and regional tastes.

Related topics: Tea and Coffee, Markets

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