Tea outperforms, calmly

June 12, 2012

Tea continues its winning ways - riding consumer interest in health, convenience and niche specialty drinks.

Tea. It looks like the beverage darling of scientists.

Barely a month goes by without a new study identifying another supposed health benefit of the 5,000-year-old drink. Some have thousands of human subjects, and others just a small fraction of that; some research lasts for years, and other studies last for months; some are funded by tea brand manufacturers, while others aren’t.

In 2012 alone, green tea has been associated with fewer aging disabilities, and less bad breath and mouth cancer, while black tea has been linked to a potentially slight reduction in blood pressure.

Studies like these frame a collective public perception that tea is a healthful choice—and that adds to demand. At last count (2010), Americans drank more than 65 billion servings of tea—about 80% of it Black, 19.5% Green, and the rest Oolong and White Tea. Iced tea is most popular, accounting for about 85% of U.S. volume, according to The Tea Association of the USA.

Moreover, tea bags are the most popular form for brewing tea in the nation, used 65% of the time. Ready-to-drink and iced tea mixes have about a one-quarter share of all tea prepared in the U.S., and instant and loose tea account for the rest. The latest trend is a decline in instant tea and a climb in loose tea, the trade group adds.

Following a sustained 19-year rise in total tea consumption, the tea association predicts “strong, continuous growth over the next five years.” At this point in its stretch of gains, supermarket sales surpassed the $2.15 billion mark in 2010, and away-from-home tea drinking escalated at least 10% annually over the past decade.

SymphonyIRI Group, a Chicago-based market research firm, tracks retail tea sales by different segments. For example, dollar sales of canned and bottled tea rose 1.87% to $1.30 billion, on a 3.91% unit sales gain, during the 52 weeks ended March 18, 2012 in U.S. supermarkets, drug stores and mass merchandise outlets (excluding Walmart, club stores and gasoline/convenience stores), the SymphonyIRI Group data show.

Loose tea bags posted a dollar sales advance of 4.26% to $806.8 million, despite a 0.47% unit sales decline during the same period.

Meanwhile, dollar sales of refrigerated teas jumped ahead by 8.87% to $442.8 million, on a 4.83% unit sales gain, over the same period a year ago.

Yet dollar sales of instant tea mixes slid by 7.16% to $268.8 million, on a 5.84% decline in unit sales in the same time frame, added SymphonyIRI Group.

The widespread appeal of tea has food marketers combining it with other products to develop niches. For example, major brewers were set this spring to launch new iced-tea beers to U.S. and Canadian markets, according to The Wall Street Journal. And Whole Foods Market and Trader Joe’s are among chains that expected 60% growth in 2011 in dollar sales of Kombucha, a drink made of fermented black tea and sugar, according to SPINS figures reported by The Fiscal Times.