According to the Tea Is “Hot” Report (5th edition) just released by Sage Group International (Seattle), specialty tea is “hot” and getting hotter—and will stay that way through, at least, the end of the decade. In much the same way the specialty coffee industry accelerated from a slow trot to a full-speed march in less than a decade, specialty tea is now poised for high-paced growth that may surprise even veteran beverage industry watchers.

Sage Group International founder Brian Keating points to chai, certified organic offerings, green tea and flavored iced teas as especially strong categories to watch in 2004. The tea industry has risen from less than $1 billion in annual sales around 1990 to more than $5 billion in 2003. Much of that was due to the high performance of RTD teas in the later 1990s and early 2000s.

“Americans are beverage explorers,” Keating explains. “They constantly seek out new liquid offerings in bottles, cans, bags and other formats. Tea will increasingly serve as the single base or primary platform ingredient within many of these powerful beverage categories.”

The report notes that specialty teas sold through many distribution channels, especially natural foods outlets, are experiencing powerful growth, even as mass-market sales of regular black tea bags and instant teas remain sluggish. “Under the broadest definition, specialty tea is any tea that is processed, packaged or promoted in a creative way that moves it beyond unflavored black, green and oolong teas in tea bag or instant formats…Specialty tea includes everything from Earl Grey tea bags to bottled RTD teas and long-leaf style loose teas. Tighten the definition—something not yet agreed upon even within the specialty tea industry—to include only 'natural' tea products made without artificial additives and often with orthodox tea leaves [higher-grade, long-leaf styles] and you still have a substantial marketplace experiencing double-digit growth,” says Keating.

American consumers are being swayed toward tea by two powerful influences. Hundreds of scientific research studies on tea are gaining positive media coverage. Additionally, many physicians now suggest that their patients drink tea—primarily green tea—for its numerous health benefits.

America's 76 million middle-aged Baby Boomers are feeling more stressed out than ever as they try to balance careers, family responsibilities and stress-reducing activities. They perceive tea as an affordable and interesting way to help them stay healthy, lower their caffeine intake, and naturally reduce stress while, at the same time, indulging in a calming lifestyle practice. Many of these 40- to 50-something men and women are attracted to tea's gentle stimulation, plentiful antioxidants and vast choice of flavors and brewing methods.

Going forward, the Tea Is “Hot” Report forecasts very solid growth for green, certified organic and chai tea offerings, followed closely by strong activity in beverage, medicinal and functional herbal teas, including yerba maté (the South American “energizer”) and rooibos (a caffeine-free herbal tea ingredient from South Africa).

In the long-shot category, Keating suggests that there is a slowly awakening giant in specialty teas that have been decaffeinated without the use of harsh chemical solvents. However, tea marketers must be able to prove two things to specialty tea consumers: that the antioxidant-rich nutritional benefits consumers enjoy with regular teas remain intact in decaffeinated versions and, equally important, that flavor is generally comparable to non-decaffeinated tea. “If specialty tea brands accomplish these two tasks, a stressed-out and health-conscious sea of thirsty consumers is ready to heat up additional sales volumes,” he predicts.

For more information, contact Brian Keating at the Sage Group International LLC, 206-282-1789 or usteareport@aol.com, website: www.usteareport.com.