Growth of ready-to-drink tea may have slowed, but industry experts say the segment still has room to grow as consumers increasingly turn to tea as a healthy alternative. Future growth is likely to come from specialty, lightly sweetened or unsweetened teas.
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Over the past 10 years, the ready-to-drink tea segment has grown more than 15-fold, according to the Tea Association of the U.S.A. The Tea Association anticipates “continuous growth over the next five years” from all segments “driven by convenience, interest in the healthy properties of tea, and through the continued discovery and appreciation of unique, flavorful and high-end specialty tea.”
Ashley Sellers, a spokeswoman for Euromonitor, said consumers view ready-to-drink tea as healthier and lower in calories than other alternatives, even if most consumption is of the sweetened variety. Manufacturers, said Sellers, are going beyond traditional black tea to include lemonade and juice blends.
Mintel analysts believe that continued category success could depend on innovations that answer consumers’ desires for all-natural, functional and flavored teas.
Lauren Freundlich, national brand director for Honest Tea, agreed, saying growth is coming from organic and healthier bottled teas, which are lower in calories and sugar.
“Within the drug channel, we recently came out with Unsweet Lemon, in 16-oz. plastic bottles,” Freundlich said. “We’ve been presenting it to customers and feel good about gaining shelf space in the coming months.”
Dr Pepper Snapple Group also has seen strong growth coming from the unsweetened category and is testing Straight Up tea, which tastes like real, brewed tea with a touch of sugar. The company also recently launched Snapple Apple in six-packs, based on the flavor’s strong performance.
Argo Tea recently introduced a line of unsweetened teas in three flavors, an herbal Hibiscus Apple, Green Tea Strawberry and Ginger Peach black tea.
Promotional pricing dominated the category last year. “The average unit price of ready-to-drink tea declined in 2013,” Sellers said. “There is heavy discounting in ready-to-drink tea, with retailers frequently discounting even the AriZona ready-to-drink tea that is pre-priced at 99 cents for 79 cents or 50 cents to bring consumers in.”