Although the economic recession has clearly affected the U.S. tea market, slowing previously double-digit sales growth in the pricier RTD segment while slightly lifting sales in the more affordable bags/loose tea segment, tea’s appeal as an “affordable luxury” and its compelling image as a healthy product have kept sales in the black when many other CPG categories have seen declines. Moreover, considering the 2005-2009 period overall, sales have done well, and as the economic picture brightens the recession may turn out to have a silver lining in that it has compelled tea marketers to innovate along value-added lines likely to continue to resonate well with consumers in the years ahead.

Market thrusts examined in the report include exotic superfruit flavors; hybrid products designed to compete with other beverage categories including bottled waters, energy drinks and sodas; new RTD spins on green tea that promise to mainstream this tea type once and for all; emerging segments including yerba mate and Kombucha; the upswing in fair trade and other “ethical” appeals; social marketing via nontraditional media like Facebook and Twitter; and a strong tea push in the convenience store channel by marketers and operators alike. At the same time, foodservice players from fine restaurants on down are expanding their tea offerings even as tea rooms and coffee/tea shops surge, suggesting tea may be headed toward much broader levels of distribution and popularity à la Starbucks.

This fully updated report examines the U.S. market for tea across the retail and foodservice spectrum, including ready-to-drink (RTD) tea, leaf (bagged and loose) tea, and instant tea. Following an introductory chapter documenting tea types, packaging trends, “the ethics of tea,” and global market trends, the report segments and quantifies the market by channel and product type, providing historical sales figures and projections through 2014. The report examines market drivers and trends and thoroughly maps out the competitive situation to the marketer and brand share level, profiling brands including Arizona RTD Tea (Ferolito, Vultaggio & Sons), Bigelow Tea (R.C. Bigelow, Inc.), Celestial Seasonings (The Hain Celestial Group, Inc.), Honest Tea (Honest Tea, Inc.), Lipton (Unilever) and Starbucks and Tazo Tea (Starbucks Coffee Co.). Trends in new product introductions are analyzed at length, based on data from Datamonitor’s Product Launch Analytics, as are trends in the c-store and foodservice channels.

An exclusive feature of this report is custom survey data from Packaged Facts’ February 2009 online poll of 2,600 U.S. adults, which was conducted to measure purchasing patterns, attitudes and demographics specific to tea and other functional foods and beverages. Drilling down to the brand level, the analysis also relies on consumer survey data from Experian Simmons’ Spring 2009 National Consumer Study to chart consumer demographic and psychographic trends, Information Resources, Inc. InfoScan Review data tracking product sales in mass-market channels, and wholesale data from leading natural/specialty channel distributor United Natural Foods, Inc. (UNFI) to quantify sales and market shares of natural and specialty products.

Chapter 1: Executive Summary

Scope and Methodology

Scope of Report

Exclusions

Report Methodology

Market Trends

Sales Notch Up to $8.5 Billion

Retail vs. Foodservice

Figure 1-1: Share of U.S. Sales of Tea: Retail vs. Foodservice, 2005-2009 (percent)

RTD Tea Feels Economic Pinch

Organic Tea Leads Growth in Natural Supermarket Channel

Supermarkets and C-Stores Lead

Looking Ahead

The Marketers

Range of Players

Acquisitions, Alliances and Corporate Changes

Crossing Category Lines

Unilever Strong in Both Major Categories

Top Natural Products

Corporate Responsibility and Environmental Initiatives

The New Marketing Buzz: Social Media

C-store Trends Favor Tea Expansion

Foodservice Trends Also Favorable

Coffeehouses Focus on Tea

New Product Trends

Tea: A Healthy, Affordable Luxury

Tea Intros Swell, Drop in Economic Recession

“Upscale” Tops Marketing Claim/Package Tag List

“Affordable Luxury” and Health Appeals Reign Supreme

Green Tea Still Seeing Plenty of Action

The Superfruit Surge

Fast-Food Chains Increase Tea Offerings

Consumer Trends

Household Purchasing Rates for Retail Tea Products

Figure 1-2: Household Purchasing of Retail Tea Products, 2009 (percent and number)

Retail vs. Restaurant Purchasing Rates

Purchasing Patterns

 

 

Chapter 2: Introduction

Scope and Methodology

Scope of Report

Exclusions

Report Methodology

Types of Tea

“Real” Tea and Tisanes

Four Basic Tea Types

A Fifth Tea Type: Pu’er Tea

Tisanes and Tea Blends

Bubble Tea and Chai

The Grading of Tea

Whole Leaf

Broken Leaf

Fannings

Dust

Additional Modifiers for Grades

Green and Oolong Teas

Additional Terms

Packaging Options and Variations

Ready-to-Drink (RTD) Options

Bottles and Cans

Box and Bag-in-Box

Jugs and Cartons

Leaf Tea Options

Bag

Filter Packs and Pods

Bulk

Tin

Other Loose Tea Formats

Instant Tea Mix Options

Jars and Canisters

On-the-Go Packets and Caps

Pumps and Droppers

Overview of Government Regulation

The Role of the FDA and FTC

Tea Labeling

Advertising Tea

Other Governmental Efforts

The Ethics of Tea

Defining “Fair Trade”

TransFair Monitors Fair Trade Products in U.S

Other Organizations Monitoring Tea

The Ethical Tea Partnership

The Rainforest Alliance

UTZ Certified Tea

Global Market Overview

Top Country Producers, Importers, and Exporters

Table 2-1: Top 20 Global Tea-Producing Countries, 2007 (in thousands of metric tons)

Table 2-2: Top 20 Countries by Tea Exports, 2007 (in thousands of metric tons)

Table 2-3: Top 20 Countries by Tea Imports, 2007 (in thousands of metric tons)

Climate Change May Impact Supply Quantity, Quality

Growth in U.S. Tea Imports

Table 2-4: Value of U.S. Tea Imports, 1999-2008 (in millions of dollars)

Table 2-5: Value of U.S. Tea Imports by Country of Origin: 2000, 2004 and 2008 (in millions of dollars)

Green Tea Imports Increase

Global Tea Product Launches Chart Steady Increases

Figure 2-1: Number of Global Tea Product Launches: Reports and SKUs, 2005-2009

Asia-Pacific Regions Leads in New Product Introductions

Figure 2-2: Share of Global Tea Product Launches by Region: 2000, 2004 and 2008 (percent)

Unilever, Ito En Lead Global Tea Introductions

Table 2-6: Top 10 Global Marketers of Tea Based on Level of New Product Launches, 2005-2009 (number)

Natural, Organic Are Top Global Tea Claims

Table 2-7: Top 20 Package Tags/Marketing Claims: By Number of Global Tea Product Launches, 2005-2008

Table 2-8: Natural and Ethical Package Tags/Marketing Claims: By Number of Global Tea Product Launches, 2005-2009

Table 2-9: Functional Package Tags/Marketing Claims: By Number of Global Tea Product Launches, 2005-2008

 

 

Chapter 3: Market Trends

Market Size and Composition

Sales Notch Up to $8.5 Billion

Table 3-1: U.S. Sales of Tea: 2005-2009 (in millions of dollars)

Retail vs. Foodservice

Figure 3-1: Share of U.S. Sales of Tea: Retail vs. Foodservice, 2005-2009 (percent)

Table 3-2: U.S. Sales of Tea: Retail vs. Foodservice, 2005-2009 (in millions of dollars)

IRI-Tracked Tea Sales Flatten

Table 3-3: IRI-Tracked Sales of Tea: 2005-2009 (in millions of dollars)

Shelf-Stable RTD Tea Dominates Retail Market

Figure 3-2: Share of IRI-Tracked Sales of Tea by Category: 2005, 2007 and 2009 (percent)

RTD Tea Feels Economic Pinch

Table 3-4: IRI-Tracked Sales of Tea: By Category, 2005-2009 (in millions of dollars)

Table 3-5: Growth of IRI-Tracked Sales of Tea: By Category, 2006-2009 (percent)

Table 3-6: IRI-Tracked Dollar Sales and Volume Sales of Tea: By Category, 2009 (in millions of dollars and ounces)

Organic Tea Leads Growth in Natural Supermarket Channel

Table 3-7: Market Share and Sales Growth of Leaf Tea Products in Natural Supermarket Channel: By Category, 2008 (percent)

Table 3-8: Market Share and Sales Growth of Leaf Tea Products in Natural Supermarket Channel: By Organic Content, 2008 (percent)

Specialty Teas Going Strong

Figure 3-3: Growth of Leaf Tea Products in the Natural Supermarket Channel: By Product Type, 2008 (percent)

Figure 3-4: Share of United Natural Foods, Inc. (UNFI)

Wholesale Distribution of Leaf Tea by Type, 2009 (percent)

Packaged RTD Tea Leads in Foodservice

Table 3-9: Share of U.S. Foodservice Sales of Tea: By Product Category, 2005-2009 (percent)

Supermarkets and C-Stores Lead

Figure 3-5: Share of U.S. Retail Sales of Packaged Tea by Channel, 2008 vs. 2009 (percent)

Market Outlook

Recessionary Concerns Linger

Table 3-10: Consumer Price Index for Food at Home and Beverage Materials Including Coffee and Tea: 1999-2009

Tea Not Immune to Consumer Cutbacks

Gourmet Teas Demonstrate Recession Resistance

Tea’s Health Halo

FDA Hedges with Green Tea Claims

But Canada Rulings May Pave Way for Additional Claims

Research Supports Tea’s Health Benefits

The Wellness Connection

Packaged Facts Survey Confirms Healthy Interest in Tea

Table 3-11: Percent of U.S. Consumers Who Have Purchased Beverage Products in the Last 12 Months Because of Special Nutritional Benefits, 2009

Table 3-12: Percent of U.S. Consumers Who Have Purchased Food or Beverage Products in the Last 12 Months Because of Specific Nutritional Content, 2009

Table 3-13: Level of Agreement with Statement, “Rather Than Vitamin/Supplement Pills, I Prefer to Buy Foods or Beverages with Specific Nutritional Benefit