Ride Tea Wave Into Tomorrow

August 25, 2015

Tea sales are forecast to double in five years. Supermarkets could emphasize tea bars, recipes, education, and health to capitalize.

Tea’s morph from grandma’s drink to a millennial lure has new flavors and forms spawning more hot and cold drinking occasions. The world’s #2 beverage (after water) is no longer the pinky-high domain of tea elitists. This populist beverage – already in almost 80% of U.S. households - is one of the truly exciting growth stories for supermarket center-store and beyond. 

Here’s why this trend will continue, says Facts, Figures & The Future (F3): Prominent retail tea specialists are raising the craving. Abundant flavors give millennials the taste diversity they want (87% of them drink tea, says the Tea Association of the U.S.A.). The beverage exudes health without much baggage such as soda or energy drinks. People are open to experimenting with tea. 

Starbucks’ Teavana and DAVIDsTEA are two of several retail category specialists raising the bar today for excellence in tea merchandising and pushing price points beyond typical supermarket levels. Both chains educate consumers to help erase any intimidation people feel about tea, though the sensation was never on the scale of a trip to a car dealer. Though Teavana has only about 330 stores and DAVIDsTEA has about 25 in the United States, expansions are planned. Teavana is Starbucks’ fastest-growing segment, CEO Howard Schulz reportedly told analysts this spring. Consumer exposure to these stores in malls and other shopping areas will raise awareness of teas in supermarkets, says F3.

These chains cross-merchandise loose-leaf teas with margin-rich accessories in serene environments, with educated staff that willingly share knowledge, sample and sell dozens of fragrant blends that stimulate purchases. Assortments in both include sweet, fruity and citrusy blends for iced tea as well – no surprise, since 85% of tea consumed in the U.S. is iced, says TEAUSA. Also, the ubiquitous Starbucks and Dunkin’ Donuts shops treat iced teas as core products. Tea imagery is everywhere. 

Why not? Between 1990 and 2014, U.S. tea imports soared from under $2 billion (wholesale value) to $10.8 billion. And “tea sales are forecast to double over the next five years,” adds TEAUSA. The most impressive growth by form is in loose teas and single-serve pods (though 77% of brewed tea uses tea bags), and by type in green tea (though 84% of tea consumed is black), the association notes.

Supermarkets can leverage both brew and iced tea beverages in many forms - bags, loose-leaf, single pods, bottles and cans in different shelf-stable aisles, and in refrigerated bottles and cans by produce and checklanes. Chefs already use tea to infuse seafood and duck dishes, pastries and other desserts – so stores could soon see an influx of packaged products with teas as added ingredients.  

F3 suggests these ideas for supermarkets to maximize the growing tea opportunity:

  • Tea bars. Growler bars are a hit. Grocerants are on the rise. Service tea bars can be scent-filled places for shoppers to relax, sample and buy specialty teas and related goods via mounted iPads, with orders delivered to home or ready for pickup on their next trip to the store.
  • Add teas to refrigerated beverage displays of juices in the produce department.
  • Shelf talkers. Bring specialty teas into the mix and describe them on a compact in-line tea wall of top sellers. Capitalize on the small cubic space tea requires, even in smaller store formats.
  • Recipes. Advance health image with tea-based recipes on the website and near meat and seafood.