Trend watching in tea & coffee: New varieties, artisanal products and functional attributes

By Rachel Arthur contact

- Last updated on GMT

Matcha tea: Gaining ground thanks to its nutritional properties & serving ritual. iStock/grafvision
Matcha tea: Gaining ground thanks to its nutritional properties & serving ritual. iStock/grafvision
The tea and coffee categories are evolving: particularly with the rise of a variety of RTD products that appeal to the all-important millennial consumer group. From functional products to new production processes, Packaged Facts explores some of the innovation in the US.

Across the beverage category – including in tea and coffee - consumers are looking for more healthful products with clean labels, and millennials in particular are receptive to trying new products and ideas.

And in tea and coffee the categories are starting to blur with other sectors – particularly with functional attributes such as energy attracting today’s busy consumers.

Tea: health, functionality and nutrition

Category sales in the refrigerated tea category in the US have shot up 9.2% in the last year, according to IRI (52 weeks ending Oct 2, 2016), reaching just over $1bn.

Tea has benefited from a ‘health halo’ of being naturally low-calorie and containing antioxidants. Adventurous millennials are receptive to new kinds of tea and their health positioning – take for example matcha and sencha. Helping emphasize such positioning is the demand for clean label products and natural and organic ingredients – in fact, “organic has been one of the biggest trends impacting RTD tea,”​ says Packaged Facts.   

Organic tea sales grew 17% in 2015, reaching $601m, according to the Organic Trade Association.

Once a category dominated by sweet and sugary flavors, the RTD tea category is now turning to premium products with less sugar, natural ingredients, and superfood formulations.

Green tea has made its way into mainstream brands, both in loose leaf and RTD. Next to come into the limelight will be sencha green tea, predicts Packaged Facts.

“It is actually the most popular tea in Japan, so it is interesting that it has yet to show up in the US in a bigger way,” ​says Packaged Facts in its RTD beverage trend forecast 2017.

“But there are signs that could be changing,” ​it says, noting the fast growth rates seen to date.

Meanwhile, matcha is also catching on with younger consumers, again thanks to its nutritional value (high concentrations of potassium, magnesium, vitamins A and C, and L-theanine); but also due to the ritual involved in preparing a hot cup of matcha.

As in coffee, functional attributes are becoming more and more important in RTD tea. Category blurring between energy drinks and tea is seen as teas turn to energizing ingredients such as guayusa – take for example Runa Tea,​ which is backed by celebrities Channing Tatum and Leonardo DiCaprio.

“The ready-to-drink tea category remains a strong one, with a lot more runway in its future,” ​concludes Packaged Facts.

Coffee: cold brew, cold press and nitro

coffee beans sumnersgraphicsinc

The ‘third wave’ of coffee innovation has swept through America, with products and brands focusing on smaller batch, local, niche and artisanal attributes. Discerning consumers care about where beans come from and how their coffee is made.

Cold brew coffee – made by seeping beans in cold water for several hours for a less acidic, smoother coffee - has seen a ‘veritable explosion’ in the number of products over the past year.

And Packaged Facts believes there is still a lot of room for growth. Big players like Coca-Cola are entering the category (Gold Peak’s cold brew coffee brand is entering the market this year) while other brands are expanding distribution agreements.

Meanwhile, cold press coffee (which uses a different production method to cold brew, claiming to have an even smoother result than cold brewed) is starting to gather pace.

“But only time will tell if there is really a trend here that will grow into something that will rival cold brewed coffee in its popularity,” ​observes Packaged Facts.

nitro coffee istock bhofack2
Nitro coffee

Meanwhile, nitro coffee – cold brew coffee infused with nitrogen for a creamy foamy texture – is making its way from chains like Starbucks into packs on supermarket shelves.

Packaged Facts pinpoints coffee with added functionality as one to watch for the future: take for example the launch of High Brew Coffee’s RTD cold brew drink with added protein (12g protein and 3g fiber per serving).

And – given that it is already naturally energizing – coffee brands have emphasized its energy functionality, thanks to caffeine as well as other ingredients. For example Sunniva contains caffeine from the coffee as well as coconut oil (with medium chain tryglycerides for further sustained energy) and protein. 

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