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Tea and Other Hot Drinks - UK - July 2014

“Higher-caffeine teas could help brands increase usage by positioning the drink as an energy-boosting alternative to coffee while in hot chocolate, new formats would provide a platform for trading drinkers up.”

– Richard Ford, Senior Food Analyst

Some issues covered in this report include:

  • Higher-caffeine tea has scope to compete with coffee
  • Black tea with added health benefits appeals to half of tea drinkers
  • New hot chocolate formats should add value to the category

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Table of contents

  1. Introduction

      • Definition
        • Excluded
          • Abbreviations
          • Executive Summary

              • The market
                • The future
                  • Figure 1: UK retail value sales and forecast for the tea*, hot chocolate and hot malted drinks market, 2009-19
                • Market factors
                  • Tea consumption is in long-term decline
                    • Climate change could negatively impact tea yields
                      • Slower growth of the 15-34 age group could limit tea’s growth
                        • Companies, brands and innovation
                          • Unilever holds over a quarter of the UK retail tea market by value
                            • Figure 2: Estimated manufacturer shares in the UK retail tea market, by value, 2013/14*
                          • Own-label’s share of NPD reaches a four-year high
                            • Adspend falls for a second year
                              • The consumer
                                • Four in five Brits drink tea
                                  • Figure 3: Consumption of tea, hot chocolate and hot malted drinks, April/May 2014
                                • A well-known brand is the most important factor in tea drinkers’ choice
                                  • Figure 4: Factors considered when buying tea, April/May 2014
                                • Tea is seen as a good option to curb hunger between meals
                                  • Figure 5: Attitudes towards tea, April/May 2014
                                • Smaller teabags interest a quarter of users
                                  • Figure 6: Attitudes towards teabags, April/May 2014
                                • New flavours of malted drinks interest a third of users
                                  • Figure 7: Attitudes towards hot chocolate and malted drinks, April/May 2014
                                • What we think
                                • Issues and Insights

                                    • Higher-caffeine tea has scope to compete with coffee
                                      • The facts
                                        • The implications
                                          • Black tea with added health benefits appeals to half of tea drinkers
                                            • The facts
                                              • The implications
                                                • New hot chocolate formats should add value to the category
                                                  • The facts
                                                    • The implications
                                                    • Trend Application

                                                        • Extend My Brand
                                                          • Help Me Help Myself
                                                            • Minimize Me
                                                            • Market Drivers

                                                              • Key points
                                                                • Tea consumption is in long-term decline
                                                                  • Figure 8: UK household purchases of coffee and tea, 1974-2012
                                                                • Climate change threatens long-term production in tea-producing regions
                                                                  • Tea brands should do more to position tea as an alternative to alcohol
                                                                    • Figure 9: Trends in UK per capita consumption of 100% alcohol, 2000-13
                                                                  • Slower growth of the 15-34 age group could affect growth of tea
                                                                    • Figure 10: Trends in the age structure of the UK population, 2009-14 and 2014-19
                                                                  • Warm weather in 2013 puts pressure on tea sales
                                                                    • Figure 11: Hours of sunshine in the UK, by month, 2008-14
                                                                • Strengths and Weaknesses

                                                                  • Strengths
                                                                    • Weaknesses
                                                                    • Who’s Innovating?

                                                                      • Key points
                                                                        • Teabags accounted for nine in 10 new launches in the tea category in 2013
                                                                          • Figure 12: New product launches in the UK tea market, by format type, 2010-13
                                                                        • Own-label accounts for two in five new launches in 2013
                                                                          • Figure 13: NPD in the UK tea market, by own-label and brands, 2010-13
                                                                          • Figure 14: New product launches in the UK tea market, by top 10 ultimate companies, 2010-13
                                                                        • Ethical claims continue to gain ground
                                                                          • Figure 15: New product launches in the UK tea market, by top 10 claims, 2010-13
                                                                        • Strong growth in caffeine-free and premium variants
                                                                          • Flavoured teas gain share in new launches
                                                                            • Figure 16: New product launches in the UK tea market, by top 10 flavour components, 2010-13
                                                                          • Functional claims feature on minority of launches
                                                                            • New formats and ones to watch
                                                                              • Matcha tea
                                                                                • Teabags for cold water
                                                                                  • Tea pods/sticks
                                                                                    • Brands accounted for four in five new launches in hot chocolate and malted drinks in 2013
                                                                                      • Figure 17: New product launches in the UK malt and other hot beverages market, by top 10 ultimate companies, 2010-13
                                                                                    • Manufacturers look to liquids to make mixing teas and hot chocolates easier and quicker
                                                                                      • Hot chocolate takes cues from the chocolate confectionery market with ‘additions’
                                                                                      • Market Size and Forecast

                                                                                        • Key points
                                                                                          • Value growth expected to accelerate while volume decreases should ease
                                                                                            • Figure 18: UK retail sales value and volumes for the tea*, hot chocolate and hot malted drinks market, 2009-19
                                                                                            • Figure 19: UK retail value sales and forecast for the tea*, hot chocolate and hot malted drinks market, 2009-19
                                                                                          • Tea value sales will grow with volumes set to post a sluggish performance
                                                                                              • Figure 20: UK retail value and volume sales of tea*, 2009-19
                                                                                              • Figure 21: UK retail value sales and forecast for tea*, 2009-19
                                                                                            • Hot chocolate and malted drinks volumes to fall whilst value remains flat
                                                                                                • Figure 22: UK retail value and volume sales for the hot chocolate and hot malted drinks market, 2009-19
                                                                                                • Figure 23: UK retail value sales and forecast for the hot chocolate and hot malted drinks market, 2009-19
                                                                                              • Methodology
                                                                                              • Segment Performance

                                                                                                • Key points
                                                                                                  • Ordinary teabags continue to decline while green, fruit and herbal rocket
                                                                                                    • Figure 24: UK retail value sales of tea, by segment, 2011-13
                                                                                                    • Figure 25: UK retail volume sales of tea, by segment, 2011-13
                                                                                                  • Ordinary teabags struggle
                                                                                                    • Strong growth in other segments
                                                                                                      • Hot chocolate leaps ahead while malted drinks continue their decline
                                                                                                        • Figure 26: UK retail value sales of hot chocolate and hot malted drinks, by segment, 2011-13
                                                                                                        • Figure 27: UK retail volume sales of hot chocolate and hot malted drinks, by sector, 2011-13
                                                                                                    • Market Share

                                                                                                      • Key points
                                                                                                        • Unilever accounts for over a quarter of UK tea sales
                                                                                                          • Figure 28: Top five manufacturers’ sales and shares in the UK tea market, by value and volume, 2012/13 and 2013/14
                                                                                                        • PG Tips leads the market but Twinings sees fastest value growth
                                                                                                          • Figure 29: Top five brands’ sales and shares in the UK tea market, by value and volume, 2012/13 and 2013/14
                                                                                                        • Cadbury brands dominate the hot chocolate market
                                                                                                          • Figure 30: Top five brands’ sales and shares in the UK hot chocolate market, by value and volume, 2012/13 and 2013/14
                                                                                                        • Malted drinks sector sees market decline
                                                                                                          • Figure 31: Leading brands’ sales and shares in the UK malted drinks market, by value and volume, 2012/13 and 2013/14
                                                                                                      • Companies and Products

                                                                                                        • Apeejay (Typhoo)
                                                                                                          • Background
                                                                                                            • Product range
                                                                                                              • Product innovation
                                                                                                                • Advertising and promotion
                                                                                                                  • Associated British Foods (Twinings, Options, Ovaltine)
                                                                                                                    • Background
                                                                                                                      • Product range
                                                                                                                        • Product Innovation
                                                                                                                          • Advertising and promotion
                                                                                                                            • GlaxoSmithKline (Horlicks)
                                                                                                                              • Background
                                                                                                                                • Product range
                                                                                                                                  • Product innovation, advertising and promotion
                                                                                                                                    • Mondelēz International (Cadbury)
                                                                                                                                      • Background
                                                                                                                                        • Product range
                                                                                                                                          • Product innovation, advertising and promotion
                                                                                                                                            • Taylors of Harrogate (Yorkshire Tea)
                                                                                                                                              • Background
                                                                                                                                                • Product range
                                                                                                                                                  • Product innovation
                                                                                                                                                    • Advertising and promotion
                                                                                                                                                      • Tata Global Beverages (Tetley)
                                                                                                                                                        • Background
                                                                                                                                                          • Product range
                                                                                                                                                            • Product innovation
                                                                                                                                                              • Product advertising and promotion
                                                                                                                                                                • Unilever (PG Tips, Lipton)
                                                                                                                                                                  • Background
                                                                                                                                                                    • Product range
                                                                                                                                                                      • Product innovation
                                                                                                                                                                        • Advertising and promotion
                                                                                                                                                                        • Brand Communication and Promotion

                                                                                                                                                                          • Key points
                                                                                                                                                                            • Adspend falls below £20 million after second consecutive year of decline
                                                                                                                                                                              • Figure 32: Main monitored media advertising expenditure in the UK tea and hot drinks market, 2010-14
                                                                                                                                                                            • Taylors of Harrogate overtakes Unilever for highest adspend in 2013
                                                                                                                                                                              • Figure 33: Main monitored advertising expenditure in the UK tea and hot drinks market, by top five advertisers, 2010-14
                                                                                                                                                                            • Twinings aims to corner premium and mainstream sectors
                                                                                                                                                                              • Figure 34: Main monitored advertising expenditure in the UK tea and hot beverages market (excluding coffee), by top five brands, 2013
                                                                                                                                                                            • TV adspend falls while outdoor gains
                                                                                                                                                                              • Figure 35: Main monitored advertising expenditure in the UK tea and hot drinks market, by media type, 2010-14
                                                                                                                                                                            • Brands also look for visibility on social media
                                                                                                                                                                            • Channels to Market

                                                                                                                                                                              • Key points
                                                                                                                                                                                • Supermarkets account for two thirds of sales of soft drinks
                                                                                                                                                                                  • Figure 36: Estimated consumer spending on soft drinks (including tea and other hot drinks), by type of retailer, 2013
                                                                                                                                                                                • Specialists work hard to carve out a point of difference in the market
                                                                                                                                                                                  • Various brands look online
                                                                                                                                                                                  • The Consumer – Frequency of Usage

                                                                                                                                                                                    • Key points
                                                                                                                                                                                      • Five in every six consumers drink tea
                                                                                                                                                                                          • Figure 37: Consumption of tea, hot chocolate and hot malted drinks, April/May 2014
                                                                                                                                                                                        • Standard tea leads by usage
                                                                                                                                                                                          • Fruit and herbal teas chime with women
                                                                                                                                                                                            • Indulgent image limits hot chocolate usage
                                                                                                                                                                                                • Figure 38: Frequency of consumption of tea, hot chocolate and malted drinks, April/May 2014
                                                                                                                                                                                                • Figure 39: Repertoire of usage of tea, April/May 2014
                                                                                                                                                                                            • The Consumer – Factors Considered when Buying Tea

                                                                                                                                                                                              • Key points
                                                                                                                                                                                                • A well-known brand is the most widely noted as important in tea choice
                                                                                                                                                                                                    • Figure 40: Factors considered when buying tea, April/May 2014
                                                                                                                                                                                                  • Younger cohorts are less interested in brands
                                                                                                                                                                                                    • More users consider low prices important than price promotions
                                                                                                                                                                                                      • Less than one in five users see ethics as important when buying tea
                                                                                                                                                                                                        • A fifth of users see a clear regional British heritage as important in tea
                                                                                                                                                                                                          • Brands rebrand to tap into regional interest
                                                                                                                                                                                                          • The Consumer – Attitudes Towards Tea

                                                                                                                                                                                                            • Key points
                                                                                                                                                                                                              • Tea is widely seen as a good option to curb hunger between meals
                                                                                                                                                                                                                  • Figure 41: Attitudes towards tea, April/May 2014
                                                                                                                                                                                                                • Tea is deemed a good alternative to alcohol on a night in
                                                                                                                                                                                                                  • Other markets can offer inspiration for marketing
                                                                                                                                                                                                                    • Links with chocolate can support treat proposition
                                                                                                                                                                                                                      • Flavours tailored for the seasons interest over a third of tea users
                                                                                                                                                                                                                        • Packaging can highlight seasonal positioning
                                                                                                                                                                                                                          • Tea pods spark interest among a third of tea users
                                                                                                                                                                                                                          • The Consumer – Attitudes Towards Teabags

                                                                                                                                                                                                                            • Key points
                                                                                                                                                                                                                              • Smaller teabags interest a quarter of standard tea users
                                                                                                                                                                                                                                  • Figure 42: Attitudes towards teabags, April/May 2014
                                                                                                                                                                                                                                • Liquid tea concentrates interest one in seven
                                                                                                                                                                                                                                  • One in 10 would pay more for teabags made from a better quality material
                                                                                                                                                                                                                                  • The Consumer – Attitudes Towards Hot Chocolate and Hot Malted Drinks

                                                                                                                                                                                                                                    • Key points
                                                                                                                                                                                                                                      • New flavours of malted drinks interest a third of users
                                                                                                                                                                                                                                          • Figure 43: Attitudes towards hot chocolate and malted drinks, April/May 2014
                                                                                                                                                                                                                                        • Over a quarter of users think that powdered hot chocolate does not dissolve well
                                                                                                                                                                                                                                          • Liquid formats could take cues from other markets
                                                                                                                                                                                                                                            • Hot chocolate flavoured with alcohol interests a quarter of adults
                                                                                                                                                                                                                                              • Fortified hot chocolates would appeal to one in four
                                                                                                                                                                                                                                              • Appendix – Market Size and Forecast

                                                                                                                                                                                                                                                  • Figure 44: Best and worst case forecasts for the total UK tea*, hot chocolate and hot malted drinks market, by value, 2014-19
                                                                                                                                                                                                                                                  • Figure 45: Best and worst case forecasts for the total UK tea* hot chocolate and hot malted drinks market, by volume, 2014-19
                                                                                                                                                                                                                                                  • Figure 46: UK retail volume sales and forecast for the tea*, hot chocolate and hot malted drinks market, 2009-19
                                                                                                                                                                                                                                                  • Figure 47: Best and worst case forecasts for the UK tea* market, by value, 2014-19
                                                                                                                                                                                                                                                  • Figure 48: Best and worst case forecasts for the UK tea* market, by volume, 2014-19
                                                                                                                                                                                                                                                  • Figure 49: Best and worst case forecasts for the UK tea* market, by volume, 2009-19
                                                                                                                                                                                                                                                  • Figure 50: Best and worst case forecasts for the UK hot chocolate and hot malted drinks market, by value, 2014-19
                                                                                                                                                                                                                                                  • Figure 51: Best and worst case forecasts for the UK hot chocolate and hot malted drinks market, by volume, 2014-19
                                                                                                                                                                                                                                                  • Figure 52: Best and worst case forecasts for the UK hot chocolate and hot malted drinks market, by volume, 2009-19
                                                                                                                                                                                                                                              • Appendix – The Consumer – Frequency of Usage

                                                                                                                                                                                                                                                  • Figure 53: Frequency of usage of hot drinks in the last month, by type, April 2014
                                                                                                                                                                                                                                                  • Figure 54: Frequency of usage of hot drinks in the last month, by type – Standard tea, by demographics, April 2014
                                                                                                                                                                                                                                                  • Figure 55: Frequency of usage of hot drinks in the last month, by type – Speciality tea, by demographics, April 2014
                                                                                                                                                                                                                                                  • Figure 56: Frequency of usage of hot drinks in the last month, by type – Green tea, by demographics, April 2014
                                                                                                                                                                                                                                                  • Figure 57: Frequency of usage of hot drinks in the last month, by type – Fruit tea or herbal tea, by demographics, April 2014
                                                                                                                                                                                                                                                  • Figure 58: Frequency of usage of hot drinks in the last month, by type – Instant tea, by demographics, April 2014
                                                                                                                                                                                                                                                  • Figure 59: Frequency of usage of hot drinks in the last month, by type – Hot chocolate in any format, by demographics, April 2014
                                                                                                                                                                                                                                                  • Figure 60: Frequency of usage of hot drinks in the last month, by type – Hot malted drink, by demographics, April 2014
                                                                                                                                                                                                                                                • Repertoire of usage of tea
                                                                                                                                                                                                                                                  • Figure 61: Repertoire of usage of tea in the last month, by type, April 2014
                                                                                                                                                                                                                                                  • Figure 62: Repertoire of usage of tea in the last month, by type, by demographics, April 2014
                                                                                                                                                                                                                                                  • Figure 63: Frequency of usage of tea in the last month, by type, by repertoire of usage of tea in the last month, April 2014
                                                                                                                                                                                                                                              • Appendix – The Consumer – Factors Considered when Buying Tea

                                                                                                                                                                                                                                                  • Figure 64: Factors considered when buying tea, April 2014
                                                                                                                                                                                                                                                  • Figure 65: Most popular factors considered when buying tea, by demographics, April 2014
                                                                                                                                                                                                                                                  • Figure 66: Next most popular factors considered when buying tea, by demographics, April 2014
                                                                                                                                                                                                                                                  • Figure 67: Other factors considered when buying tea, by demographics, April 2014
                                                                                                                                                                                                                                              • Appendix – The Consumer – Attitudes Towards Tea

                                                                                                                                                                                                                                                  • Figure 68: Attitudes towards tea, April 2014
                                                                                                                                                                                                                                                  • Figure 69: Agreement with the statement ‘Tea is a good option to have between meals to prevent hunger’, by demographics, April 2014
                                                                                                                                                                                                                                                  • Figure 70: Agreement with the statement ‘Drinking tea is a good alternative to having alcohol on a night in^’, by demographics, April 2014
                                                                                                                                                                                                                                                  • Figure 71: Agreement with the statement ‘I would be interested in trying standard black tea that offered added health benefits’, by demographics, April 2014
                                                                                                                                                                                                                                                  • Figure 72: Agreement with the statement ‘I prefer teas with a higher level of antioxidants’, by demographics, April 2014
                                                                                                                                                                                                                                                  • Figure 73: Agreement with the statement ‘Teas with flavours tailored for the seasons would appeal to me’, by demographics, April 2014
                                                                                                                                                                                                                                                  • Figure 74: Agreement with the statement ‘Ready-to-drink teas are a healthier alternative to soft drinks’, by demographics, April 2014
                                                                                                                                                                                                                                                  • Figure 75: Agreement with the statement ‘I would like to see a greater variety of standard black teabags with added flavours’, by demographics, April 2014
                                                                                                                                                                                                                                                  • Figure 76: Agreement with the statement ‘I would be interested in trying tea with a higher caffeine content as an alternative to coffee’, by demographics, April 2014
                                                                                                                                                                                                                                                  • Figure 77: Agreement with the statement ‘I would be interested in using tea pods to make tea drinks’, by demographics, April 2014
                                                                                                                                                                                                                                                  • Figure 78: Agreement with the statement ‘I would like to see more varieties of chai lattes’, by demographics, April 2014
                                                                                                                                                                                                                                                  • Figure 79: Agreement with the statement ‘Hot tea does not appeal to me in hot weather’, by demographics, April 2014
                                                                                                                                                                                                                                                  • Figure 80: Agreement with the statement ‘Tea takes too long to make at breakfast time during the week’, by demographics, April 2014
                                                                                                                                                                                                                                              • Appendix – The Consumer – Attitudes Towards Teabags

                                                                                                                                                                                                                                                  • Figure 81: Attitudes towards standard teabags, April 2014
                                                                                                                                                                                                                                                  • Figure 82: Most popular attitudes towards standard teabags, by demographics, April 2014
                                                                                                                                                                                                                                                  • Figure 83: Next most popular attitudes towards standard teabags, by demographics, April 2014
                                                                                                                                                                                                                                                  • Figure 84: Frequency of usage of hot drinks in the last month, by type, by most popular attitudes towards standard teabags, April 2014
                                                                                                                                                                                                                                                  • Figure 85: Frequency of usage of hot drinks in the last month, by type, by next most popular attitudes towards standard teabags, April 2014
                                                                                                                                                                                                                                              • Appendix – The Consumer – Attitudes Towards Hot Chocolate and Hot Malted Drinks

                                                                                                                                                                                                                                                  • Figure 86: Attitudes towards hot chocolate and hot malted drinks, April 2014
                                                                                                                                                                                                                                                  • Figure 87: Most popular attitudes towards hot chocolate and hot malted drinks, by demographics, April 2014
                                                                                                                                                                                                                                                  • Figure 88: Next most popular attitudes towards hot chocolate and hot malted drinks, by demographics, April 2014

                                                                                                                                                                                                                                              Companies Covered

                                                                                                                                                                                                                                              • Apeejay Tea Limited
                                                                                                                                                                                                                                              • Associated British Foods Plc
                                                                                                                                                                                                                                              • Cadbury Schweppes Plc
                                                                                                                                                                                                                                              • Debenhams UK
                                                                                                                                                                                                                                              • Evening Standard
                                                                                                                                                                                                                                              • Facebook, Inc.
                                                                                                                                                                                                                                              • GlaxoSmithKline Plc
                                                                                                                                                                                                                                              • ITV plc
                                                                                                                                                                                                                                              • Mondelez International
                                                                                                                                                                                                                                              • PG Allder & Partners Ltd
                                                                                                                                                                                                                                              • R Twining and Company Limited
                                                                                                                                                                                                                                              • Royal Botanic Gardens, Kew
                                                                                                                                                                                                                                              • Tetley Group
                                                                                                                                                                                                                                              • The Redbush Tea Company Ltd
                                                                                                                                                                                                                                              • Twitter, Inc.
                                                                                                                                                                                                                                              • Unilever Bestfoods UK Ltd
                                                                                                                                                                                                                                              • Unilever Plc
                                                                                                                                                                                                                                              • YouTube, Inc.

                                                                                                                                                                                                                                              Tea and Other Hot Drinks - UK - July 2014

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