It’s Tea Time in Your Store

It’s Tea Time in Your Store

January 28, 2015

Retail dietitians need to pay attention to the growing tea market. Why? For starters, aging Boomers want tea’s flavonoids for health, and Millennials may graduate from energy drinks to tea as they mature. Tea is no longer grandma’s drink alone – marketers are trying to give the tea a cachet similar to what craft beers and pressed juices enjoyswith younger consumers. As this market continues to grow, here’s what retail RDs need to know.

Building on tea’s better-for-you reputation and global sourcing that appeals to many drinkers, tea now comes in many forms besides bagged and loose – which means multiple displays and demo opportunities in the supermarket. Think pods for single-cup brewing systems, water enhancers to keep consumers hydrated with little calories and sugar, and the massive ready-to-drink tea segment – either tea alone, or combined with lemonade, juice, water or energy formulas. Indeed, the canned and bottled ready-to-drink tea sector has surpassed the $3 billion benchmark, and refrigerated teas now approach $1 billion in US multi-outlet sales, according to IRi data. “Understanding Healthy Beverages” could be a dietitian-led store tour on its own, and focusing on tea would not only boost the health of shoppers, but the category as well as consumers looking for healthier ways to stay hydrated. 

Dollar sales of canned and bottled tea jumped 5.5% to $3.2 billion during 2014 in supermarkets, convenience/gasoline stores, drug stores, mass market, military commissaries and select club and dollar retail chains, according to IRi. In the same outlets and time frame, dollar sales of refrigerated teas leaped 9.7% to $968.3 million.

Moreover, the Tea Association of the USA in their latest State of the US Tea Industry report: “Ready-to-drink tea will continue to grow in popularity…with annual dollar increases in the range of 12% to 15%.” They also predict annual dollar sales growth of 10%-15% for specialty tea and 2%-3% for traditional tea. Take a look for yourself in your own store, you’ll probably notice that even in its traditional location, the amount of space devoted to tea has increased and the number and size of competitive offerings have dramatically expanded. 

Winning over children, who influence purchases and their parents who make the actual purchases, will be pivotal to ready-to-drink tea growth, says Packaged Facts. And a potential key target demographic for directing RD led educational experiences. “To win over the kids, ready-to-drink tea varieties are key to leveraging convenience. For example, liquid concentrates offer the opportunity to retain convenience, yet give kids the power to control their flavors and ‘play’ with their beverage. 

A wild card in tea and something to be aware of overall is what Starbucks will achieve with the Teavana chain it bought a little over two years ago, says Facts, Figures & the Future (F3). CEO, Howard Schultz, has said he wants to turn Teavana’s 300 mostly mall sites into 1,000 tea bars in more urban locations within five years. If Schultz’s playbook is similar to coffee, however, F3 believes this exposure could propel US consumer awareness of tea - especially to many blends and tastes from far-off lands that sound natural, exotic and exciting. It could also help develop new drinking occasions and prepare people to pay premium prices for tea-drinking experiences. This in turn could enable supermarkets to sell higher-end blends at somewhat lofty prices. If this is the case, retail dietitians need to be well versed in all things tea, from trends to health benefits.