Prepared Foods Exclusive: Specialty Tea Industry Steaming Toward a Full-on Boil
By Brian Keating, www.teareport.com
For an industry that for decades has evoked images of fine ceramic tea pots, ornate Victorian-style parties and just good old black iced tea, there are major changes underway. Thousands of new tea products have been rolled out worldwide in the last few years, hundreds of hip new tea shops are serving up exotic brews in 21st century cafe motifs and leading coffee purveyor Starbucks is bolstering operations with new tea menu items. Sales of tea within the U.S. pre-1990 were less than $1 billion dollars annually, and herbal ‘’teas” often times enjoyed more of the beverage spotlight than real tea (Camellia sinensis). In the 1990’s, savvy marketers rolled out a stream of convenient, tasty and fun ready-to-drink (RTD) tea beverages that lifted tea industry revenues into the billions and captured the palates of consumers previously entrenched in soda pop. Market analysts forecast sales of tea in the U.S. will exceed $10 billion by the end of 2010 and stay on track to grow considerably more during the next few years. No longer just the darling of classical tea rooms and back-porch sun tea jars, tea as an ingredient, product category and even lifestyle component, is rising to new levels of success and enjoyment with consumers and marketers.
While specialty tea--value-added tea products vs. traditional tea formats--is flourishing internationally, the U.S. has become a proving ground for innovation, testing and launch. Tea entrepreneurs bored with conventional tea offerings are synergizing classic tea traditions with contemporary, chic twists designed to capture the palates and loyalty of younger consumers. New styles of tea bags, outrageous flavors, fortified RTDs and sustainable marketing initiatives are some of the ways in which tea is being reinvented. The 76 million American Baby Boomers born between the years of 1946-1964 are reaching for healthy lifestyle products, including tea, as they settle into middle age. Further evidence of the rising tide of “all things tea” is the emergence of a trade show dedicated exclusively to tea. The World Tea Expo (www.worldteaexpo.com), based in Las Vegas, launched in 2003 and has since experienced annual average growth (exhibitors and attendees) of over 30% a year; twice in the last three years, the event has been named as one of the fastest-growing trade shows in America. To be held May 2-4 this year, the tea-only show draws tea producers from all over the planet, branded consumer products, service companies and yes, also purveyors of ornate tea service ware. “The diversity and numbers of tea products and services showcased at World Tea Expo by micro-ventures and international corporations are staggering. The show has become both a launch pad and vital business networking site for the burgeoning tea industry,” notes George Jage, president of SFG Group and founder of the expo.
Global business marketing intelligence company Mintel International (www.mintel.com), through its Global New Products Database (GNPD), reports there are more consumer products--non-beverage applications such as cosmetics, pet food, dietary supplements and the like--containing tea as an ingredient, than tea beverages. This is mind-boggling, when one considers there are thousands of consumer products offering tea as a beverage worldwide. A search of Mintel’s GNPD covering 17 product segments, including beverages, foods, dietary supplements and, of course, tea beverages during the period between 1998 and early 2009, reveals nearly 1,845 new products were rolled out in North America. The database shows a slight slowdown for new tea product introductions for 2008 vs. 2007, perhaps in line with a slowing U.S. economy, and the tea industry focusing on building sales of existing products over its multi-year run on new product introductions. Between the years 2004-2008, the Mintel GNPD shows nearly 10,000 new tea products launched globally within the food, beverage and health care (primarily dietary supplements) segments. Add in novel uses of tea incorporated into pet foods, skin care and other non-food or beverage applications and the numbers are even higher.
To accommodate the expanding needs of an increasingly sophisticated global tea trade, World Tea Expo launched an Executive & Technical Series (ETS) at its 2008 show; it is essentially a focused series of science, regulatory and business presentations for senior management and technical personnel involved in the tea trade. “The ETS evolved in response to the increasing number of show attendees who are purchasing, formulating and marketing tea-based products, yet still in need of reliable technical information on tea. The tea industry is thousands of years old, yet the complex science behind tea is just being scientifically validated,” proclaims Jage. Kicking off the ETS event this year will be Lynn Dornblaser, director of Mintel International’s Consumer Package Goods Insight, with an annual “Tea Trends Report” presentation.
Beyond favorably shifting demographics, entrepreneurial wizardry and consumer fatigue with non-tea beverages, perhaps the current “tea renaissance” is reaching a full on boil due to some very simple factors: millions of consumers are primed for products that are essentially guilt-free (healthy), affordable in the “new” economy and available in an endless stream of enticing flavors and serving formats. Tea appears to deliver on all counts and then some. Top it off with the delightful dichotomy of tea being both energizing yet calming, due to a unique chemical profile, and this less-than-sexy botanical appears to be rising on the world consumer products scene as something of a leading-edge product panacea. Stay tuned.
Brian Keating is founder of Sage Group®, a Colorado based tea think-tank. Sage Group publishes the “Specialty Tea Is “Hot” Report®” (www.teareport.com) and provides product ideation, development, and raw materials solutions to food, beverage and nutraceutical companies worldwide. He is also a regular contributor to Prepared Foods (NutraSolutions).
From the March 2, 2009, Prepared Foods E-dition