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Tea and Herbal Tea - UK - February 2009

Backed by greater demand for speciality and herbal varieties, the UK retail market for tea and herbal tea managed to post modest growth in 2008 (1% in volume and value) despite a more lacklustre performance by standard tea, which, however, still accounts for the bulk of sales.

Key report themes

  • Does tea still have an emotional appeal for Brits or has it become just another everyday commodity?

  • Tea’s consumer base is contracting, but frequent consumption prevails.

  • The impact of consumers’ greater health awareness and suppliers’ efforts to add market value through premiumisation on driving sales of speciality tea and herbal/fruit infusions.

  • Herbal tea as a complement to, rather than a replacement of, standard tea.

  • The growing importance of ethical trading.

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Table of contents

  1. Issues in the Market

      • Key themes
        • Definition
          • Abbreviations
          • Future Opportunities

            • Standing out from competition
              • Do not overcrowd the fixture
                • Fighting commodisation
                • Market in Brief

                  • Brits’ love of tea remains
                    • Health trend shapes demand
                      • A brand-led, concentrated market
                        • Tea for two... different consumer groups
                          • What the future holds
                          • Internal Market Environment

                            • Key points
                              • Healthy does it
                                • Figure 1: Trends in attitudes towards health and diet, 2004-08
                              • Recent scientific research into tea’s health benefits
                                • Is noni the next big thing?
                                  • Let’s get ethical
                                    • Figure 2: Trends in attitudes towards ethical issues, 2004-08
                                  • Britain is still a tea-drinking nation
                                    • Figure 3: Comparison of consumption and frequency of drinking tea (standard and herbal) across Europe, 2007
                                  • Trendy yogurt drinks gain ground in soft drink choices
                                    • Figure 4: Trends in consumption of soft drinks, 2004-08
                                  • A shift upmarket
                                    • Emotional approach remains, but the ‘ritual’ of tea drinking is waning
                                    • Broader Market Environment

                                      • Key points
                                        • Standard tea little affected by demographic changes
                                          • Figure 5: Structure of the UK population, by age. 2003-13
                                        • Will deteriorating economy hit premium products?
                                          • Figure 6: UK workforce and employment, by gender, 2003-13
                                        • Rising raw material costs
                                        • Competitive Context

                                          • Key points
                                            • Tea vs coffee
                                              • Figure 7: UK retail value sales of selected hot drinks, 2003-12
                                            • Is tea a premium or a commodity product?
                                              • Hot chocolate gains, but other malted hot drinks decline
                                              • Strengths and Weaknesses in the Market

                                                • Strengths
                                                  • Weaknesses
                                                  • Who’s Innovating?

                                                    • Key points
                                                      • New product launches
                                                        • Organic and natural products appeal
                                                          • Figure 8: New product activity, by positioning, 2007-08
                                                        • Safety concerns
                                                          • Figure 9: New product activity, by type, 2008
                                                        • Manufacturers and brands
                                                          • Cheeky Teapigs
                                                            • Herbal and specialities
                                                              • Own-label in tune with trends
                                                                • Product innovation elsewhere
                                                                • Market Size and Forecast

                                                                  • Key points
                                                                    • Herbal tea keeps market in the black
                                                                      • Figure 10: UK volume and value sales of tea and herbal tea, 2003-13
                                                                    • Health matters
                                                                      • Pressure on prices
                                                                        • The future of the market
                                                                          • Wellness trend here to stay
                                                                            • Expanding herbal tea beyond core consumers
                                                                              • Economic downturn may have a mixed impact
                                                                                • Market to plateau in next five years
                                                                                  • Factors used in the forecast
                                                                                  • Segment Performance

                                                                                    • Key points
                                                                                      • Green tea and Redbush outperform
                                                                                        • Figure 11: UK retail value sales of tea and herbal tea, by type, 2006-08
                                                                                        • Figure 12: UK retail volume sales of tea and herbal tea, by type, 2006-08
                                                                                      • Standard tea
                                                                                        • Departure from the ordinary
                                                                                          • Product bonding
                                                                                            • Decaffeinated tea gaining ground
                                                                                              • Instant tea
                                                                                                • Not so hot
                                                                                                  • Speciality tea
                                                                                                    • The gourmet choice
                                                                                                      • Loose tea
                                                                                                        • In need of a marketing boost
                                                                                                          • Herbal/fruit tea
                                                                                                            • Appealing on healthiness and functionality
                                                                                                              • Lacking a ritual
                                                                                                                • A philosophical approach
                                                                                                                  • Green tea
                                                                                                                    • Going for gold
                                                                                                                      • Adding flavour
                                                                                                                        • Promotions give a boost
                                                                                                                          • Redbush tea
                                                                                                                            • From South Africa with love
                                                                                                                              • The best of both worlds – black and herbal tea
                                                                                                                                • Tea bag sales by format
                                                                                                                                  • Hip to be square
                                                                                                                                    • Figure 13: UK retail value sales of standard tea bags*, by type, 2006-08
                                                                                                                                  • Tea in a stick
                                                                                                                                    • Sustainable packaging
                                                                                                                                    • Market Share

                                                                                                                                      • Key points
                                                                                                                                        • A concentrated market with high brand loyalty
                                                                                                                                          • Figure 14: Estimated retail value brand shares of the UK tea and herbal tea market, 2006-08
                                                                                                                                        • Standard tea suppliers move into herbal
                                                                                                                                          • Own-label to benefit from economic slowdown?
                                                                                                                                            • Market leader Tetley also number-one in decaf
                                                                                                                                              • Clipper takes top spot in green tea
                                                                                                                                                • Big players eye up competition
                                                                                                                                                  • Small independent premium suppliers – will they make it?
                                                                                                                                                  • Companies and Products

                                                                                                                                                    • Bettys & Taylors of Harrogate
                                                                                                                                                      • Cafédirect
                                                                                                                                                        • Clipper Teas
                                                                                                                                                          • Spicers Ltd
                                                                                                                                                            • Teapigs
                                                                                                                                                              • Tetley (Tata Group)
                                                                                                                                                                • Twinings (Associated British Foods)
                                                                                                                                                                  • Typhoo (Apeejay Surrendra Group)
                                                                                                                                                                    • Unilever
                                                                                                                                                                    • Brand Communication and Promotion

                                                                                                                                                                      • Key points
                                                                                                                                                                        • Declining adspend
                                                                                                                                                                          • Figure 15: Main monitored media advertising spend on tea, 2003-08
                                                                                                                                                                        • Adspend by advertiser
                                                                                                                                                                          • Figure 16: Main monitored media advertising spend on tea, by advertiser, 2003-08
                                                                                                                                                                        • Trading up
                                                                                                                                                                          • A repertoire of teas
                                                                                                                                                                            • Marketing themes
                                                                                                                                                                            • Channels to Market

                                                                                                                                                                              • Key points
                                                                                                                                                                                • Multiple dominance
                                                                                                                                                                                  • Figure 17: UK retail value sales of tea and herbal tea, by outlet type, 2006-08
                                                                                                                                                                                • Co-op’s Fairtrade commitment
                                                                                                                                                                                  • Online and mail order sales still limited, but posting steady growth
                                                                                                                                                                                  • The Consumer – Consumption and Frequency of Use

                                                                                                                                                                                    • Key points
                                                                                                                                                                                      • A slowly contracting user base, but tea remains popular
                                                                                                                                                                                        • Figure 18: Trends in tea consumption (both standard and herbal tea made in bags), 2004-08
                                                                                                                                                                                      • Standard tea still very much part of daily routine
                                                                                                                                                                                        • Figure 19: Trends in frequency of drinking standard tea, 2004-08
                                                                                                                                                                                      • Herbal tea lightweights
                                                                                                                                                                                        • Figure 20: Trends in frequency of drinking herbal tea, 2004-08
                                                                                                                                                                                      • Branded herbal tea makes gains
                                                                                                                                                                                        • Figure 21: Trends in consumption of own-label versus branded standard and herbal tea, 2004-08
                                                                                                                                                                                      • Who drinks what?
                                                                                                                                                                                        • Figure 22: Most valuable consumers for standard tea (VII) by age, 2008
                                                                                                                                                                                        • Figure 23: Most valuable consumers for herbal tea (VII) by age, 2008
                                                                                                                                                                                    • The Consumer – Tea Perceptions

                                                                                                                                                                                      • Key points
                                                                                                                                                                                        • Seeking solace in a cuppa
                                                                                                                                                                                            • Figure 24: Words and phrases associated with standard and herbal tea, November 2008
                                                                                                                                                                                          • Herbal tea classified through functionality
                                                                                                                                                                                            • Attributes by demographics
                                                                                                                                                                                            • The Consumer – Targeting Opportunities

                                                                                                                                                                                              • Key points
                                                                                                                                                                                                • Standard tea scores high on tradition and taste
                                                                                                                                                                                                    • Figure 25: Perception of five most important qualities of standard tea and how they compare with herbal tea, November 2008
                                                                                                                                                                                                  • Herbal tea scores high on health benefits
                                                                                                                                                                                                      • Figure 26: Perception of five most important qualities of herbal tea and how they compare with standard tea, November 2008
                                                                                                                                                                                                    • Herbal tea lacks an obvious occasion to drink
                                                                                                                                                                                                        • Figure 27: How people perceive occasions to drink standard and herbal tea, November 2008
                                                                                                                                                                                                      • Identifying targets for standard tea
                                                                                                                                                                                                          • Figure 28: Size of standard tea attitudinal groups, November 2008
                                                                                                                                                                                                          • Figure 29: How standard tea attitudinal groups differ on key dimensions, November 2008
                                                                                                                                                                                                        • Tea Lovers (10%)
                                                                                                                                                                                                          • Tea Traditionalists (20%)
                                                                                                                                                                                                            • Morning Drinkers (26%)
                                                                                                                                                                                                              • Disinterested (45%)
                                                                                                                                                                                                                • A family affair
                                                                                                                                                                                                                  • Identifying targets for herbal tea
                                                                                                                                                                                                                    • Figure 30: Size of herbal tea attitudinal groups, November 2008
                                                                                                                                                                                                                    • Figure 31: How herbal tea attitudinal groups differ on key dimensions, November 2008
                                                                                                                                                                                                                  • Hardcore Herbals (8%)
                                                                                                                                                                                                                    • Health Heeders (19%)
                                                                                                                                                                                                                      • Refreshed (15%)
                                                                                                                                                                                                                        • Disinterested (58%)
                                                                                                                                                                                                                          • Taste a barrier for those seeking health benefits from herbal tea
                                                                                                                                                                                                                            • A generation gap
                                                                                                                                                                                                                            • Appendix

                                                                                                                                                                                                                              • Consumer research
                                                                                                                                                                                                                                • ACORN
                                                                                                                                                                                                                                  • Advertising data
                                                                                                                                                                                                                                  • Appendix – Internal Market Environment

                                                                                                                                                                                                                                      • Figure 32: Attitudes towards ethical issues, by demographics, 2008
                                                                                                                                                                                                                                      • Figure 33: Further attitudes towards ethical issues, by demographics, 2008
                                                                                                                                                                                                                                  • Appendix – Broader Market Environment

                                                                                                                                                                                                                                      • Figure 34: Structure of the UK population, by age and gender, 2003-13
                                                                                                                                                                                                                                  • Appendix – Consumer Consumption and Frequency of Use

                                                                                                                                                                                                                                      • Figure 35: Trends in tea consumption (both herbal and standard, tea made in bags), by demographics, 2008
                                                                                                                                                                                                                                      • Figure 36: Penetration and frequency of drinking standard tea, by demographics, 2008
                                                                                                                                                                                                                                      • Figure 37: Penetration and frequency of drinking herbal tea, by demographics, 2008
                                                                                                                                                                                                                                  • Appendix – The Consumer: Tea Perceptions

                                                                                                                                                                                                                                      • Figure 38: Words and phrases associated with standard tea, by demographics, 2008
                                                                                                                                                                                                                                      • Figure 39: Words and phrases associated with standard tea, by demographics, 2008
                                                                                                                                                                                                                                      • Figure 40: Words and phrases associated with standard tea, by demographics, 2008
                                                                                                                                                                                                                                      • Figure 41: Words and phrases associated with herbal tea, by demographics, 2008
                                                                                                                                                                                                                                      • Figure 42: Words and phrases associated with herbal tea, by demographics, 2008
                                                                                                                                                                                                                                      • Figure 43: Words and phrases associated with herbal tea, by demographics, 2008
                                                                                                                                                                                                                                  • Appendix – The Consumer: Targeting Opportunities

                                                                                                                                                                                                                                      • Figure 44: Standard tea attitudinal groups, 2008
                                                                                                                                                                                                                                      • Figure 45: Standard tea attitudinal groups, by demographics, 2008
                                                                                                                                                                                                                                      • Figure 46: Herbal tea attitudinal groups, 2008
                                                                                                                                                                                                                                      • Figure 47: Herbal tea attitudinal groups, by demographics, 2008

                                                                                                                                                                                                                                  Companies Covered

                                                                                                                                                                                                                                  • Asda Group Ltd
                                                                                                                                                                                                                                  • Associated British Foods Plc
                                                                                                                                                                                                                                  • Betty's and Taylors of Harrogate Ltd
                                                                                                                                                                                                                                  • British Heart Foundation
                                                                                                                                                                                                                                  • British Market Research Bureau (BMRB)
                                                                                                                                                                                                                                  • British Soft Drinks Association
                                                                                                                                                                                                                                  • CACI Limited
                                                                                                                                                                                                                                  • Cafédirect Ltd
                                                                                                                                                                                                                                  • Clipper Teas
                                                                                                                                                                                                                                  • Co-operative Group
                                                                                                                                                                                                                                  • Coffee Republic Plc
                                                                                                                                                                                                                                  • Daily Express
                                                                                                                                                                                                                                  • Daily Mail
                                                                                                                                                                                                                                  • Daily Star (The)
                                                                                                                                                                                                                                  • Facebook, Inc.
                                                                                                                                                                                                                                  • Fleming Family & Partners
                                                                                                                                                                                                                                  • Innovia Films
                                                                                                                                                                                                                                  • J. Sainsbury
                                                                                                                                                                                                                                  • Marks & Spencer
                                                                                                                                                                                                                                  • Nestlé UK Ltd
                                                                                                                                                                                                                                  • Outdoor Advertising Association of Great Britain
                                                                                                                                                                                                                                  • OXFAM
                                                                                                                                                                                                                                  • Pukka Herbs Ltd
                                                                                                                                                                                                                                  • R Twining and Company Limited
                                                                                                                                                                                                                                  • Rainforest Alliance
                                                                                                                                                                                                                                  • Republic of Tea Inc., The
                                                                                                                                                                                                                                  • Somerfield
                                                                                                                                                                                                                                  • Starbucks Coffee Company UK Ltd
                                                                                                                                                                                                                                  • Tata Group
                                                                                                                                                                                                                                  • Tesco Plc
                                                                                                                                                                                                                                  • Tetley Group
                                                                                                                                                                                                                                  • The Redbush Tea Company Ltd
                                                                                                                                                                                                                                  • The Sun
                                                                                                                                                                                                                                  • Unilever Bestfoods UK Ltd
                                                                                                                                                                                                                                  • Waitrose
                                                                                                                                                                                                                                  • Whittard of Chelsea

                                                                                                                                                                                                                                  Tea and Herbal Tea - UK - February 2009

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