Tea and Ready-to-Drink Tea in the U.S., 4th Edition

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Tea continues to be a shining star in the U.S. beverage market. Bolstered by consumers’ unquenchable thirst for tea’s variety of flavors and healthy qualities, tea has shown resilience in the economic downturn. The category has experienced solid growth in the last year, with double digit gains from refrigerated tea. Ready-to-drink tea has been especially strong as well, particularly in natural food stores and convenience stores. And all teas are hot in foodservice. This report takes a comprehensive look at the market for tea in the U.S., whether a hot or iced tea drink ordered at a restaurant or a CPG marketer’s offering at the supermarket. The report examines the factors driving growth in the category. Readers will learn about critical mergers and acquisitions activity that is changing the distribution landscape for niche organic brands; the diverse range of tea offerings; teas’ functional benefits and the challenge in promoting them; the embrace of tea by fast food giants, coffeehouses, specialty retailers and tea rooms; trends in new product claims; demographics and psychographics of the tea consumer, and information on consumption habits; and the new, engaging ways in which tea marketers are connecting with customers.

This report examines the U.S. market for tea across the retail and foodservice spectrum, including ready-to-drink (RTD) tea, leaf (bagged and loose) tea, refrigerated tea and instant tea. The report segments and quantifies the market by channel and product type, providing historical sales figures and projections through 2016. The report examines market drivers and trends, retail sales-tracking data from SymphonyIRI and SPINSscan, new product trends based on data from Datamonitor’s Product Launch Analytics, and national consumer survey data, both from an extensive analysis of Experian Simmons data as well as proprietary online surveys conducted by Packaged Facts. The report also thoroughly maps out the competitive situation at the marketer and brand levels, with detailed profiles of AriZona, Bigelow, Celestial Seasonings, Coca-Cola (Gold Peak, Honest Tea and Nestea), Lipton (from Unilever and the Pepsi Lipton Partnership), McDonald’s sweet tea, Nestea, Snapple, Starbuck’s Tazo, Teavana, Turkey Hill and others.

Scope of Report

This report examines the U.S. market for tea including ready-to-drink (RTD) tea and leaf (bagged and loose) tea across the retail and foodservice spectrum. Retail channels include supermarkets and grocery stores, convenience stores, supercenters/mass merchandisers, warehouse clubs, drugstores, gourmet/specialty food stores, supplement chains, direct-sales channels including catalogs and Internet, and alternative channels such as department stores, kitchenware stores and bookstores. Foodservice channels include restaurants, coffeehouses, tea rooms and tea retailers, cafés and bars, and other foodservice establishments. For the purposes of this report, foodservice sales refer to prepared tea intended for immediate consumption, such as a cup of brewed tea, a dispensed glass of iced tea, or a single RTD container. Any packaged tea—such as a tin of leaves or a multi-pack of RTD bottles—sold through a foodservice establishment is considered a retail sale for market sizing purposes.

Excluded from the scope of this report are RTD products flavored with natural or artificial tea flavors unless they are specifically marketed as tea beverages, nor does it cover foods made with tea ingredients, such as tea-infused cookies and green tea ice cream.

Report Methodology

The information contained in this report was obtained from primary and secondary research. Primary research entailed consultations with beverage market sources, on-site examination of retail venues, and fielding a proprietary Packaged Facts online consumer survey focusing on beverage product shopper insights. Secondary research included extensive Internet canvassing and research- and data-gathering from relevant consumer business and trade publications; company reports including annual reports, press releases, and investor conference calls; company profiles in trade and consumer publications; government reports; and other food and beverage market reports by Packaged Facts.

Sales estimates are based on data from the above sources as well as SymphonyIRI data for mass-market channels (supermarkets, drugstores and mass merchandisers other than Walmart); SPINSscan data for natural supermarkets; published and estimated sales of major market participants; market size estimates from other sources, including those appearing in the trade press; the performance of relevant retail venues; consumer usage rates for beverage products; and new product introduction activity in the market. Data on new product introductions are based on Product Launch Analytics, a Datamonitor service.

Our consumer analysis draws primarily on two data sources. The first is national consumer survey data from Experian Simmons in its Fall 2010 National Consumer Study, which is based on 24,463 adult respondents surveyed from October 2009 through December 2010, as well as previous-year Experian Simmons surveys. Through an ongoing program of telephone and booklet questionnaire surveys of a large probability sample of consumers who represent a statistically accurate cross-section of the U.S. adult population, Simmons is able construct detailed demographic profiles across various consumer product and service markets, including the beverage market. The discussion of consumer patterns also draws on proprietary Packaged Facts online consumer surveys, including a May/June 2011 survey based on 2,000 U.S. adults (including 1,453 tea drinkers) who in aggregate are census representative on the primary demographic measure of age, gender, geographic region, race/ethnicity, and presence of children in the household.