Tea could learn from coffee success, says Euromonitor

By Guy Montague-Jones

- Last updated on GMT

Related tags Tea Coffee Euromonitor

The tea industry could take a leaf out of coffee’s innovation book as it looks to target the value potential in the premium market, according to Euromonitor.

Growth figures for hot drinks suggest at first glance that tea is keeping up well with the coffee consumer boom of recent years. Euromonitor figures for 2005 to 2010 put constant value growth in the coffee market at 14 per cent compared to 16 per cent for tea.

But the chief of global beverage research at Euromonitor, Richard Haffner, told this publication that the numbers can be misleading as tea is growing from a much lower base. And he said: “Consumption is moving from unpackaged to packaged tea so that it now comes onto the Euromonitor radar… that is not so much the case with coffee.”

Value difference

The analyst believes that the tea industry could learn from coffee, which he said has done a better job of looking for profitable niches. Euromonitor data for 2010 indicates that the average litre of coffee globally commands three times the value of an equivalent pot of tea.

“In teas, increases in volume sales still outpace those in value sales, making the sector ripe for development of premium brands, particularly in new categories such as white and rooibos teas where health credentials can justify a price premium.”

Exploiting premium niches

The analyst said premiumisation has been crucial to the success of coffee in recent years.

In the US, Haffner said one company really led the way. “Starbucks introduced a premium taste that wasn’t there before – it did a really good job of bringing that into the market.”

And in Europe pods have really taken off of late – providing another significant boost to value.

Haffner said the tea industry could learn from the creativity in coffee innovation even if the avenues to success could different. Possible approaches include a focus on health and wellness or convenience.

One recent success story is instant tea in China. Haffner said: “In China instant tea has been growing a lot because of its convenience – this had been a surprise in our research given how instant tea has really done well in traditional tea markets.”

Turning to predictions, Euromonitor expects there to be two very different growth stories for emerging and developed markets.

“Traditional markets such as Russia and China will drive most of the future growth in tea. Developed markets will see much lower growth with the UK even expected to see declines,” ​said Haffner.

Related topics Markets Tea and Coffee

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