Tea’s Position and Potential Remain Strong

I do not usually drink iced tea. However, after walking into a quick casual restaurant the other day—another steamy, summer day—the imagery for the “Famous Iced Tea” was so appealing, I had to try a glass. It was refreshing and delicious, and reminded me how much I enjoy iced tea (unsweetened, of course). For many years, particularly in the Southern US, “sweet tea” (black) was the offering in foodservice restaurants—there was no other option. But times have changed, certainly for the better with regard to tea choices. Sweet tea is still available, but now, not only is unsweetened black tea a standard offering in most casual quick and quick serve restaurants, several other unsweetened (predominantly fruit) teas are commonly listed on foodservice menus. Tea knowledge overall, in the US, is growing.

Foodservice establishments such as Teavana, Argo Tea and David’s Tea, are helping educate mainstream (or general) consumers about tea and proper tea preparation. This has made tea far more accessible than in the past and demonstrated that contrary to popular perception, tea is not a challenging product to prepare and consume. Thus, tea is more accessible than ever in the US. According to global market intelligence firm, Euromonitor International, on-trade volume sales of tea in the US grew by 3% in 2016 to reach 39,000 tonnes.

Tea remains the leading global beverage (after water) and continues to take share away from soft drinks as more consumers opt for unsweetened or reduced sugar, natural beverages. Tea’s value further increases given its convenience (ready-to-drink) and sheer number of varieties (from green to white to fruit to herbal) as consumers like choices. Much of the innovation in tea is coming from within the RTD category (new unsweetened flavours, real/fresh brewed, sparkling, functional, etc.)

But the tea category is not without its challenges. Howard Telford, senior beverages analyst at Euromonitor, in his presentation at World Tea Expo in Las Vegas, Nevada, this past June, discussed volatility in key tea markets. In India, for example, tea sales have been hit by demonetization, while Brexit has driven up the cost of tea by up to 50% (price of an 80kg bag of tea increased from £100 to £150.)

Additionally, demographic shifts mean marketing must change. While marketers (tea, coffee, food, tech, automotive, and basically every other consumer category) have been focusing on millennials—understandably so, given that they are the largest demographic group and thereby command the greatest purchasing power—the next generation, “Gen Z,” has different views than millennials and must be approached and marketed to differently, including beverages.

Next week I head to Arizona for the 8th Annual North American Tea Conference, organised by the Tea Association of the USA (the event alternates being organised by the US association and the Tea Association of Canada.) The NATC brings together the leading players in the global tea industry. I look forward to hearing how the tea industry plans to take advantage of the opportunities tea has in terms of continued growth, and handle the challenges as well.

In the interim, I think I’ll have another glass of iced tea, but shall it be hibiscus, strawberry kiwi, green tea passion…

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