Volume sales of ready-to-drink (R.-T.-D.) tea in the United States increased 25% during the five-year period from 2009 to 2014, from 1,242 million gallons to 1,584 million gallons, according to New York City-based Beverage Marketing Corp. Dollar sales growth was even stronger, increasing more than 30% from $3,831 million to $5,197 million.
“This category is being driven by consumer demand for healthier refreshments,” said Gary Hemphill, managing director of research at Beverage Marketing Corp. “We have seen a fair amount of innovation in the category that has also helped to drive growth.”
Peter Goggi, president of the Tea Association of the U.S.A., Inc., New York, explained that R.-T.-D. tea is on trend with what today’s label-reading, health-conscious, variety-seeking consumer is looking for in a beverage.
“Tea is the second most consumed beverage in the world, after water,” Mr. Goggi said. “Today, approximately four in five of all consumers in the U.S. drink tea. The U.S. is unique in that most tea consumed is chilled or iced. In fact, about 85% of all tea consumed in the U.S. is cold.”
An increasing portion of that is in the R.-T.-D. format as a result of Americans’ on-the-go lifestyle. The format is conducive to innovation, as brewed tea may be combined with flavors, functional ingredients, juices and even milk. It may even be fermented.
For example, kombucha refers to bacteria- and yeast-fermented black or green tea that is slightly carbonated. The substrates produced during the fermentation are associated with various health benefits, including improving digestion, stimulating the immune system and preventing cancer.
|Peter Goggi, president of the Tea Association of the U.S.A., Inc.|
“We are seeing, however, that younger consumers are drinking more hot tea, so the numbers are shifting a bit,” Mr. Goggi said. “Overall, 2014 continued to be a year of growth for the U.S. tea industry, building on a trend that started more than two decades ago. The total wholesale value of tea sold in the U.S. grew from less than $2.6 billion in 1990 to more than $10 billion today.”
Several factors are driving the growing demand for tea in the United States, most notably the fact many consumers enjoy tea even without the addition of sweetener. Tea leaves are also a source of bioactive chemicals. Tea is particularly rich in catechins, of which epigallocatechin gallateis the most abundant. Catechins and their derivatives have been shown to function as antioxidants and may improve numerous bodily functions, while at the same time assisting with heart health, preventing cancer and slowing the aging process.
“The increase in competitive beverage offerings has encouraged supermarkets nationwide to expand beyond the tea and coffee aisle, with tea products emerging in the juice, health and candy aisles,” Mr. Goggi said. “Tea shops are popping up all around the country, providing greater consumer access to finer-quality specialty teas. The demand for innovation and new products has driven an increase in awareness and interest as consumers continue to select tea as their beverage of choice.”
At the International Dairy Show, held Sept. 15-18 in Chicago, Linda Gilbert, founder and chief executive officer of EcoFocus Worldwide L.L.C., Manheim, Pa., spoke to attendees during a session hosted by Evergreen Packaging about the booming healthy beverage category, which includes R.-T-.D. tea, dairy protein-based beverages and more.
“Our recent research shows that nearly half (46%) of all grocery shoppers are healthy beverage shoppers,” she said. This “healthy beverage shopper,” as identified in the EcoFocus, evaluates the beverage’s nutrition, ingredients and package when considering a purchase.
What’s important to the healthy beverage shopper? Lower or reduced sugar is No. 1, followed by being a good source of antioxidants, Ms. Gilbert said. R.-T.-D. tea may easily be both.
“No artificial ingredients is extremely or very important to read on a beverage label for 74% of healthy beverage consumers,” she said. “And more than half (55%) want the beverage to be certified organic.
“Transparency earns trust. Seventy-one per cent of healthy beverage consumers say they pay attention to where the ingredients in their foods or beverages are grown.”
Communicating ingredient source is imperative with healthy beverages such as R.-T.-D. tea. Telling a story about the geographical region the leaves were grown in, or how the tea was brewed and bottled appeals to today’s consumer.
Interestingly, across all beverage sectors, healthy beverage consumers perceive refrigerated beverages to be fresher than shelf-stable options, Ms. Gilbert said. With R.-T.-D. tea, the information is encouraging for dairy processors, who often pasteurize and bottle tea on the same lines they process milk. This perishable R.-T.-D. tea is void of preservatives and distributed and merchandised through the refrigerated channel.
“As consumer demand has grown, frequent innovation and the marketing of new products has helped keep tea top-of-mind for consumers,” Mr. Goggi said. “Many companies have started developing interesting new tea products and marketing tea in new and unique ways.”
For starters, established bottled water and soft drink companies have expanded product lines to include R.-T.-D. tea.
“These big companies are talking up the segment, which is really helping smaller, niche companies to produce specialty and value-added products, including teas with unique origins, flavors and even package shapes,” Mr. Goggi said. “Millennials, more so than older generations, are seeking innovation and variety when it comes to current tea offerings. Start-up companies addressing this desire are pouring into the marketplace.”