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    Good News in the Tea Leaves

    Health benefits, exotic offerings continue to entice consumers.

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    Joanna Cosgrove08.15.11
    Whether it’s enjoyed hot or cold, tea’s healthy and delicious reputation continues to attract consumers. Tea and ready to drink (RTD) tea sales are on track to bring in more than $4 billion in 2011, with projected growth to $6.5 billion between 2011 and 2016, according to data from Mintel. Growth has largely been attributed to tea’s antioxidant-rich, pro-health image, plus innovations in two RTD product segments—canned/bottled tea and refrigerated teas.
     
    “New players are emerging to join existing players who have been around for a few years and traditional tea companies who have been marketing regular tea for decades are focusing an increasing amount of their efforts on these two important segments [RTD and Specialty Teas],” said Joe Simrany, president of Tea Association of the USA, Inc., Tea Council of the USA, Inc., and Specialty Tea Institute (STI).
     
    Mr. Simrany said RTD teas continue to do a great job of connecting the dots between home-steeped tea, great taste and delivery of health benefits. “At one point, many RTD tea products offered little more than an alternative to bottled water and CSD (carbonated soft drinks) but there is firm evidence that several suppliers are seeking to deliver a similar experience to steeping tea in the home,” he said. “We expect that trend to continue as packers and bottlers tweak their recipes to move closer to that goal. Honest tea (which was recently acquired by Coca Cola) is certainly leading the parade in this direction and Lipton’s premier line of teas are also great examples of this movement.”
     
    Mintel credited RTD teas with doing a great job of introducing different types of teas—green, black, red, white—while marrying traditional health benefits with modern convenience.
     
    In its July 2011 report, "US Teas and RTD Teas," Mintel found that the RTD canned and bottled segment accounted for more than 50% of the total market share. The segment grew more than 19% between 2009 and 2011—the highest growth among all segments. Growth in the canned/bottled segment came both from value-priced products as well as premium products, with attributes such as organic, special brewing method, fair-trade-certified all performing well.
     
    Bagged and loose tea sales didn’t fare so well in comparison to the RTD format, but gains of 3.5% were achieved from 2009 to 2011 and are projected to increase 10% from 2006 to 2011. One innovation that is helping to light a fire under this segment is the advent of single-cup tea pods for use in Keurig-type beverage brewers.
     
    According to Mintel’s research, 23% of all tea drinkers brew tea in a single-cup beverage maker. “The impressive FDMx growth of 162% in Celestial Seasonings’ single-cup pods during the 52 weeks ending April 17, 2011, suggests that single-cup pods may be the answer to revive the stagnating sales in the segment,” the research firm wrote.
     
    More bagged and loose teas are targeting wellness as a product attribute. Earlier this year, Celestial Seasonings launched three new offerings to compete in what the company termed “the fast-growing wellness segment"—LaxaTea Wellness Tea, Metabo Balance Wellness Tea and Antioxidant Max Blackberry Hibiscus Herbal Tea.
     
    More recently, New York-based HELPS Teas, part of the Spanish pharmaceutical company Pharmadus, introduced it long-selling range of “health” teas to the US. The HELPS Teas adult product line includes: Just For Her, a menopause supplement; Organic R&R, a “relaxing” tea; Organic Easy Digestion, a digestion supplement; Make It Easy, which addresses constipation woes; Breathe, for respiratory issues; Organic Green Tea Leaves, for an overall improved well being; and For Low Sugar Diets, which “may help stabilize blood sugar.”
     
    There is also a HELPS Teas line for children formulated with flavors that are said to appeal to a child’s picky taste buds. The line includes: Breathe, which addresses cold and flu symptoms; Dreams, which is said to “calm and relax” before bedtime; For Little Tummies, which promotes gastrointestinal relief; and For Rehydration Diets, which is said to help replenish a sick child’s fluid levels.
     
    Darrick Blinoff, vice president of sales for Traditional Medicinals, said although unit growth for tea “is in the low single digits this year,” the exception has been "medicinal" tea, which continues to be the growth leader across all channels in double digits. “Medicinal tea has been the growth champion of the bag tea category for the past three years running,” he said. “Consumers are looking for tea as a healthy option, so it’s no wonder that medicinal tea is performing so well. 
     
    “Consumers are wanting less ingredients and are interested in the quality and purity of ingredients,” he continued. “Medicinal tea provides a natural solution to some common health concerns.”  
     
    Top Teas
     
    Among all of the varieties of tea on the market, green reigns supreme, with about 77% of all tea drinkers reporting their affinity for green tea, the variety most recognized for perceived health benefits ranging from anti-aging and weight loss to anti-cancer benefits.
     
    Black tea is the second most popular tea, with 70% of all tea drinkers reporting that they drink black tea and 54% claiming they drink black tea with fruit flavors or fruit juice. Mintel found that nearly half of all tea drinkers say they drink herbal teas like rooibos or chamomile. Both white tea and oolong tea showed consumption incidence among a third of all tea drinkers, suggesting that these teas are on their way to becoming accepted among mainstream shoppers.
     
    Pu-erh and kombucha are relative newcomers to the mainstream tea market yet they exhibit 10% consumption incidence each among tea drinkers. Mintel found both these types of tea appeal more to men, compared to women.
     
    Celestial Seasoning’s entered the kombucha arena last year, launching five fermented tea beverages blended with fruits, herbs and botanicals and a light effervescence. The company said its flavor blends challenge kombucha’s perceived taste barrier. It also proclaimed to be the first brand to augment kombucha’s naturally occurring enzymes, probiotics and antioxidants with all-natural functional ingredients that provide an additional targeted wellness boost.
     
    The five varieties are Digestion: Meyer Lemon Ginger with prebiotics and ginger to support digestive health and meyer lemon for a sweet-tart taste; Antioxidant: Superfruit with vitamin C to support immunity and well-being and acaí, goji and pomegranate; Metabolism: Berry Guava with green tea extract and B vitamins to support healthy metabolism and huckleberry, blueberry and guava; Energy: Pomelo Citrus with B vitamins and ginseng to maintain healthy energy levels and pomelo; and Super Green: Tropical Blend with spirulina for concentrated green food nutrients and mango and other tropical flavors.
     
    Mintel confirmed that flavor is the top reason consumers drink tea. “Nearly three-fourths of all tea drinkers report that flavors are the major reason for drinking tea,” the firm wrote. This is why flavor innovation has helped drive growth in the RTD tea segment [and] also suggests the importance of continued flavor innovation in the tea market.”
     
    Following closely behind the flavor driver was the relaxation effect associated with drinking tea, as well as its health perception. “More than half of all adults report drinking more tea after learning about its health benefits,” Mintel said. “The importance of antioxidant claims cannot be overlooked as more than half of all tea drinkers report drinking tea because of the presence of antioxidants in tea.”
     
    Looking forward, Mintel said it foresees a positive future outlook for the tea segment, with RTD innovations continuing to lead the way.
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