Several 2018 beverage trends bode well for the tea business.
- Five of every $25 spent dining out is for beverages.
- Beverage servings increasingly are non-alcoholic.
- Millennials, now the largest cadre of consumers, favor tea.
- Sales of loose leaf tea in 2017 grew in volume and value.
2017 Packaged Tea SalesWholesale tea sales are estimated at $12 billion last year with RTD accounting for $7.14 billion. Hemphill says the fastest growing segment in tea is ready-to-drink, up 3.1 percent in 2016 and expected to grow by 3.5 percent in 2017. RTD accounts for 46 percent of total tea volume, while tea bags represent 44 percent. Loose leaf accounts for less than 1 percent of tea by volume but grew by 4 percent in the first half of 2017, he said. Flavored and fortified water showed the greatest gain in volume at 12.3 percent. Carbonated soft drinks experienced their 13th straight annual decline (-0.8 percent). Consumption of liquid refreshment beverages overall grew by 3.4 percent and topped 32.9 billion gallons. RTD tea was 1.7 billion gallons of that total. Demand for tea sold in single-serve capsules continued its decline, according to retail sales data from IRI. In the 52 weeks ending Nov. 5, the entire category lost 11.5 percent dollar share in grocery, drug, convenience and mass market stores, earning $116 million on 15 million units sold. Hemphill reported a similar 11.1 percent decline in 2015-16. The beverage landscape is changing. “Niche categories continue to outperform traditional mass-market categories,” explains Hemphill, who noted a slowing of sales in early 2017 but still lists RTD tea as a “winner” with a gain of 4.8 percent, up 641 million gallons in the 10 years ending 2016.
Foodservice Tea MarketMarket research firm Technomic reports $181 billion was spent on away-from-home beverages in 2016. This is equal to about 113 billion beverage servings. Inexpensive, refreshing and healthful, tea is a major beneficiary as sales of regular and diet soda, milk and fruit beverages declined. "Beverages account for $1 out of every $5 consumers spend away from home," writes David Henkes, Technomic senior principal. "They are a critical part of the overall experience, and because of their central importance, it's absolutely crucial for restaurant operators and their suppliers to understand how innovation impacts consumer satisfaction." The 2017 Away-From-Home Beverage Study notes that “key attributes like taste and refreshment still dominate the consumer mindset, there is an increased emphasis on beverage health and functionality due to demographic (i.e., generational, ethic) and regulatory (e.g., regional soda taxes, mandatory calorie labeling) shifts.”
Consumer Beverage TrendsConsumers are more conscious than ever about making responsible food choices, and increasingly want to know what is in their food and how it is produced, says Lu Ann Williams, director of innovation at Innova Market Insights. She labels the trend “mindful choices” in the company’s Top Ten Trends for 2018 report. “While coffee is clearly trending among millennial and Generation Z consumers, tea is also seeking to reinvent itself among the younger generations. With the taste and experiential associations of coffee and the healthy image of tea, the industry is increasingly using coffee and tea as ingredients and flavors outside the hot drinks and iced tea and coffee subcategories across a wide variety of products as varied as energy bars, yogurt and jam,” she said. Utilizing traditional marketing surveys Mintel International annually identifies beverage trends, two of which for 2018 mention tea. What Mintel found in Global Food & Drink Trends 2018:
- Consumers say that managing and releasing stress is an important factor in a healthy lifestyle.
- Texture is the next facet of formulation. Vibrantly hued drinks attract attention in image-centric media, but texture can also make products captivating for customers seeking food and drink that is perceived as fresh, functional, filling or simply fun.
- Consumers want authenticity. The vast majority of 2,000 consumers (86 percent) surveyed in Australia, U.S. and U.K. believe authenticity is important when deciding the brands they like. But more than half (57 percent) think that fewer than half of brands create content that resonates as authentic.