Stellar tea prospects ahead

August 05, 2011

Iced, liquid and healthful is how America prefers to quench its thirst with tea.

Through nearly five centuries, tea has developed a lore, art, sensory appeal and ceremony unmatched by other beverages. In a sea of supermarket products, tea is a rare item that can provide a soothing respite from the day's pressures. So what is the American imprint on tea? Simply, ice. 

According to the World Tea Expo, 80% of tea consumed in the U.S. is in the form of an iced drink. Often an on-the-go thirst quencher rather than a spiritual refresher in the U.S., tea is the second most consumed beverage in the world after water, says the U.S. Department of Agriculture's Agricultural Research Service. 

Total U.S. tea sales could approach $15.0 billion in 2012, up from $8.5 billion (retail share: $5.7 billion) in 2009, forecast Packaged Facts. Mintel predicted two years ago that the U.S. tea market would grow 28% in current prices and 18% in inflation-adjusted prices between 2008-2013. The 25% growth rate of yearly tea imports over the past 20 years (International Tea Committee) has advanced with consumer interest stirred by scientists researching the beverage's numerous claimed health benefits. 

Even during the worst of the U.S. recession, dollar sales growth of tea in U.S. food stores stayed on a positive track. For at least four straight years, as far back as Nielsen data show, the category advanced by 5.4%, 0.1%, 4.7% and in the latest 52 weeks ended June 11, 2011, by 3.6% to $2.44 billion. This occurred on equivalized unit volume (EUV 16-ounce basis) dips of 0.6% and 1.5% followed by gains of 3.2% and 1.0% in the most recent full year. All data are for prepackaged, UPC-coded products only sold in U.S. food stores doing $2 million and over in annual sales (excluding supercenters). 

Although private label share now approaches 10% of category dollar sales and more than 18% of EUV sales, brand growth outpaced PL in the latest 52 weeks. 

Various health benefits generate sales growth in tea, with some claims more popular than others. Nielsen LabelTrends data reveal that in the same food stores for the same 52-week period ended June 11, 2011:

  • Dollar sales of natural tea, the largest segment by label claim, were up 3.0% and 3.7% to $523.7 million in the two latest years, on a 0.1% EUV dip followed by a 4.5% EUV rebound.
  • Dollar sales of tea with antioxidants were up for three straight years, though at progressively lower rates, before down turning by 10.3% to $454.4 million on a 2.6% EUV slip.
  • Dollar sales of caffeine-free/reduced caffeine teas were up nominally for three consecutive years before dipping 0.4% to $377.9 million, albeit on a 0.8% EUV rise. ??

Among smaller segments by label claim:

  • Organic tea dollar sales have risen four straight years, most recently by 13.1% to $88.9 million.
  • Gluten-free tea dollar sales climbed four consecutive years, most recently by 10.2% to $88.2 million.
  • Vitamin/mineral presence tea dollar sales rose by double-digits for two years, then by 5.3% a year ago before plummeting 15.4% to $57.8 million in the latest 52 weeks.
  • Fruit presence tea dollar sales rose as much as 117.0% a year ago and by 19.6% to $57.7 million most recently.
  • Probiotic tea reached the market in 2008 and approached $1.6 million in dollar sales in the latest 52 weeks.

This article is from the upcoming issue of Facts, Figures & the Future. Don't miss out on this issue! Sign up for your FREE subscription now by clicking here.