Tea is 'Hotting' Up

For many years tea aficionados have been heralding a tea renaissance that would establish specialty tea as a permanent fixture in American culture. There has been one nagging problem that has so far prevented tea - specialty tea - from claiming a firm position in the 21st century American beverage scene. Until the year 2000, there was very little media coverage focused on tea. Emerging markets flourish with consistent and positive media coverage to help capture the hearts and purse strings of Americans. Recent years witnessed an explosion in positive tea media coverage, with reports on tea-health connections, fine tea service in four-star hotels and tea products of every kind (for a summary of the news articles on tea, please visit www.teasmart.com). The result was a major increase in sales of specialty tea, especially green.

Green Tea Continues to Charm the Tea Industry
Green Tea Continues to Charm the Tea Industry

For serious trend watchers it's worth noting the US tea industry is following a similar evolutionary course to the dietary supplement and natural foods industries during their painfully slow maturation into billion dollar plus markets. Both tea and natural foods are casebook examples of birth-to-maturity marketing cycles. In 1970 the entire US health food industry, including dietary supplements had annual sales of less than $250 million dollars. Thirty years later total sales exceeded $25 billion (foods, beverages, personal care, supplements, organic produce). The US tea industry had sales of under $1 billion in the 1980's, topped $4 billion in the mid 1990's and is postured for a record decade.

Without plenty of PR activity to educate the American public that black tea is very healthy in its own right, green tea will eat away ferociously at black tea sales. This will be less so in the orthodox specialty segment. Black tea sales in food service will be brisk while in retail distribution, black tea loose (conventional) and tea bags (lower grade conventional) will remain sluggish, or even decline. If Middle America learns that drinking black tea helps dental health, adds antioxidants to the body and may help prevent some diseases as part of a balanced diet and lifestyle this trend will reverse. No action and black tea in many channels and pack formats will go into hibernation.

Green tea is so hot right now it reminds one of the stock market just before a bull market crashes and the bear settles in for a year or two. The difference here is that green is going to stay red hot - booming sales - for the next few years as health news and better flavors' drive millions of consumers towards almost anything green. The big problem for green tea brands will be getting enough of the commodity that meets quality control standards, while standing out from competitors in a super-saturated marketplace. Those who remember flavored green tea will sell mega-tonnage over unflavored varieties shall retire early.

Like the internet, if you simply go by the numbers alone, specialty teas can do no wrong and is the darling of the US tea industry. Specialty green tea is nothing short of a beverage miracle. The growth is solid, even staggering for certain specialty teas and tea vendors as a nation built upon caffeine primarily delivered from the bean discover the delight of the leaf. Dispelling the myth that great tea is a hassle to brew will ultimately rip open specialty tea to the point that supplies of better quality teas will be short.

Preceding is an excerpt from the fourth edition of U.S. Tea Is "Hot" Report, published by the Sage Group. This indispensable tea industry report provides in-depth information on the U.S. and world tea industries, including statistics, trends, distribution analysis, B-2-B business resources and much more. To learn more about it, please view its description online at www.usteareport.com or call 206.282.1789.