Technavio’s predicted increase, at an annualised rate of 4%, will be spurred by rising awareness of the various health benefits associated with tea, of which polyphenols and flavonoids account for more than one-third the weight of its leaves.
“The global tea market is subject to rapidly changing consumer demands and preferences,” said Vijay Sarathi, lead analyst at Technavio for food research.
“Vendor performance in the market may be affected by changing consumer spending patterns. It may also be affected by consumer tastes; regional, national, and local economic conditions; and demographic trends.
“These changing economic conditions affect consumers’ living standards and will thus also affect vendors' businesses.”
Tea contains antioxidants that help in decreasing the damaging effects of ageing and pollution and also aids in reducing the risk of stroke and heart attack, as well as tannins and fluorides that help in keeping plaque at bay.
Therefore, the extensive health benefits of tea, especially its role in protecting against cancer and controlling diabetes and obesity in people will propel the growth prospects of this market, according to Technavio.
Growing consumer demand for flavoured tea is also expected to contribute to growth now that tea producers are actively experimenting with different flavour profiles, such as chocolate, pomegranate, acai and turmeric in tea sachets.
For instance, the turmeric tea launched by Numi in 2014 has gained considerable visibility in the market, Technavio says. Also, Teavana offers unique flavours such as acai blueberry and watermelon mint.
In 2015, hypermarkets and supermarkets dominated the global tea market with more than 67% of market share. Factors like the availability of a vast array of products at discounted prices and the emergence of organised retail in Asian markets will bolster the growth of this market segment until the end of 2020, the researcher predicts.
Globally, Asia-Pacific dominated the tea market last year and is expected to be worth more than US$29bn in the next five years.
Since tea is the most preferred hot beverage in the likes of India, China, and Japan, growing demand from these countries is primarily responsible for the growth of this segment.
Moreover, tea is considered healthier than other beverages, thereby encouraging health-conscious individuals to opt for tea instead for carbonated beverages. Furthermore, tea is also a traditional and social drink in most parts of Asia which will aid in the growth of this market.
The global tea market is highly fragmented, however, due to the presence of numerous small and large suppliers. These providers in the market compete on the basis of price, quality, innovation, service, reputation, and distribution. The report predicts that intense competition and declining profit margins constitute significant risk factors in the vendor’s operations.
Other prominent vendors include Apeejay Tea, Barry’s Tea, Betty's and Taylors of Harrogate, Celestial Seasonings, Fukujuen, Harney and Sons, McLeod Russel, Mighty Leaf Tea, Numi, The Republic of Tea, Tazo Tea Company and Teavana.