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Tea and Other Hot Drinks - UK - June 2013

“Tea enjoys a long-established role as a quintessentially British drink. Even today, the majority of consumers see tea drinking as part of being British, and report enjoying the ritual of drinking tea, offering a strong platform for communication around these issues.”

– Amy Price, Senior Food and Drink Analyst

Some questions answered in this report include:

  • How can the market stem the decline in everyday tea?
  • How can the market expand usage among older consumers?
  • Is tea making the most of its British claim?
  • Can targeting consumers’ need states broaden usage of herbal teas?
  • Should hot chocolate be placing greater emphasis on health?

Tea enjoys high levels of popularity, drunk by almost nine in ten consumers, while more than eight in ten have drunk hot chocolate and more than three in five have drunk malted drinks.

Value sales in the tea market are estimated to reach £683 million in 2013 growing on the back of price inflation. The long-term decline in tea consumption is affecting volumes which are expected to fall to 91 million kg. The smaller hot chocolate and malted drinks category is estimated to reach £155 million in value sales and 22 million kg in 2013, growing in both volume and value terms following a volatile performance in recent years.

Standard tea continues to dominate the tea market, although the decline in sales has caused manufacturers to look to premiumisation of everyday formats and investment in herbal varieties as a means of diversifying.

Tea is inherently associated with Britishness, with three in four tea drinkers saying that tea drinking is ‘part of being British’, while the majority of consumers enjoy the ritual of drinking tea.

Continuing investment in NPD and above-the-line support from major players such as PG Tips, Tetley and Twinings in the tea market and Cadbury and Horlicks in the hot chocolate and malted drinks segment will play a key role in keeping the categories front of mind with the consumer going forward, and maintaining engagement.

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Table of contents

  1. Introduction

      • Definition
        • Excluded
          • Abbreviations
          • Executive Summary

              • The market
                • The future
                  • Figure 1: Retail value sales and forecast of tea*, UK, by value, 2007-17
                  • Figure 2: Retail value sales and forecast of hot chocolate and malted drinks, UK, by value, 2007-17
                • Market factors
                  • Growth in 25-34s will support the market
                    • Health remains an issue
                      • Encouraging consumers to trade up to more premium tea will add value to the market
                        • Companies, brands and innovation
                          • Unilever leads the market
                            • Figure 3: Estimated manufacturer shares in the UK retail tea market, by value, 2012/13*
                          • NPD continues to drive the market
                            • Unilever dominates ad investment
                              • The consumer
                                • Almost nine in ten drink tea
                                  • Figure 4: Consumption of tea, hot chocolate and malted drinks, February 2013
                                • Standard tea deemed traditional and refreshing
                                  • Figure 5: Correspondence analysis of qualities associated with selected hot drinks, February 2013
                                • Three in four see tea drinking as a British trait
                                  • Figure 6: Agreement with statements on standard tea and speciality tea, February 2013
                                • Herbal teas are healthier than standard, according to a third
                                  • Figure 7: Agreement with statements on herbal tea, February 2013
                                • Sizeable minority see hot chocolate as a ‘treat’
                                  • Figure 8: Attitudes towards hot chocolate and malted drinks, February 2013
                                • What we think
                                • Issues in the Market

                                    • How can the market stem the decline in everyday tea?
                                      • How can the market expand usage among older consumers?
                                        • Is tea making the most of its British claim?
                                          • Can targeting consumers’ need states broaden usage of herbal teas?
                                            • Should hot chocolate be placing greater emphasis on health?
                                            • Trend Application

                                                • Help Me Help Myself
                                                  • Objectify
                                                    • Mintel Futures: East Meets West
                                                    • Market Drivers

                                                      • Key points
                                                        • Downward trend in tea consumption
                                                          • Figure 9: Household purchased quantities of tea, cocoa/chocolate drinks and malt drinks, average per person, per week, 1974-2011
                                                        • Tea prices look to be heading upwards again
                                                          • Figure 10: Retail Price Index for tea, coffee and other hot drinks and soft drinks, January 2006-April 2013
                                                        • Cocoa prices stabilise
                                                          • Brands fail to drive commitment
                                                            • Figure 11: Brand commitment, selected tea brands, March 2013
                                                          • British provenance could be leveraged further
                                                            • Figure 12: Factors influencing choice when buying food and (non-alcoholic) drink, March 2013
                                                          • Demographic changes
                                                            • Growth in 25-34s bodes well for the market
                                                              • Figure 13: Trends in the age structure of the UK population, 2007-12 and 2012-17
                                                            • Decline in ABC1s could threaten premiumisation in the market
                                                              • Figure 14: Forecast adult population trends, by socio-economic group, 2008-18
                                                          • Strengths and Weaknesses

                                                            • Strengths
                                                              • Weaknesses
                                                              • Who’s Innovating?

                                                                • Key points
                                                                  • Tea category dominates NPD…
                                                                    • Figure 15: Share of NPD in tea and other hot drinks market, by sub-category, 2009-13
                                                                  • …with Twinings leading NPD in tea
                                                                    • Figure 16: Product launches within the UK tea market, by leading companies, 2009-13
                                                                  • Morrisons steps up innovation in hot chocolate and malted drinks
                                                                    • Sizeable innovation on flavour within tea market
                                                                      • Figure 17: New product launches within the UK tea market, by flavour component, 2009-13
                                                                    • Premiumisation becomes a focus of NPD
                                                                      • Calorie content is less of a focus in 2012 for hot chocolate and malted drinks
                                                                        • Figure 18: Top ten claims in hot chocolate and malted drinks market, 2009-13
                                                                    • Market Size and Forecast

                                                                      • Key points
                                                                        • Growth in value sales, decline in volumes for tea
                                                                          • Figure 19: UK retail value sales of tea*, 2007-17
                                                                          • Figure 20: Retail value sales and forecast of tea*, UK, by value, 2007-17
                                                                        • Value and volume growth expected to pick up in hot chocolate and malted drinks
                                                                          • Figure 21: Retail value sales of hot chocolate and malted drinks, UK, 2007-17
                                                                          • Figure 22: Retail value sales and forecast of hot chocolate and malted drinks, UK, by value, 2007-17
                                                                        • Methodology
                                                                        • Segment Performance

                                                                          • Key points
                                                                            • Standard tea continues to dominate, despite stalling sales
                                                                              • Figure 23: UK retail value sales of tea, by segment, 2010-12
                                                                              • Figure 24: UK retail volume sales of tea, by segment, 2012
                                                                            • Sales rebound in 2012 for hot chocolate and malted drinks
                                                                              • Figure 25: UK retail value sales of hot chocolate and malted drinks, by sector, 2010-12
                                                                          • Market Share

                                                                            • Key points
                                                                              • Unilever is the leading manufacturer in the tea market
                                                                                • Figure 26: Leading manufacturers’ sales and shares in the UK retail tea market, by value and volume, 2012 and 2013
                                                                              • PG Tips sees value sales decline but still dominates the market
                                                                                • Figure 27: Leading brands’ sales and shares in the UK retail tea market, by value and volume, 2012 and 2013
                                                                              • Cadbury increases sales in the hot chocolate and malted drinks sector
                                                                                • Figure 28: Leading brands’ sales and shares in the UK retail hot chocolate and malted drinks market, by value and volume, 2012 and 2013
                                                                            • Companies and Products

                                                                              • Apeejay (Typhoo)
                                                                                • Product range
                                                                                  • Recent activity
                                                                                    • Associated British Foods (Twinings, Ovaltine)
                                                                                      • Product range and innovation
                                                                                        • Recent activity
                                                                                          • GlaxoSmithKline (Horlicks)
                                                                                            • Product range
                                                                                              • Recent activity
                                                                                                • Mondelēz International (Cadbury)
                                                                                                  • Product range and innovation
                                                                                                    • Recent activity
                                                                                                      • Taylors of Harrogate (Yorkshire Tea)
                                                                                                        • Product range
                                                                                                          • Recent activity
                                                                                                            • Tata Global Beverages (Tetley)
                                                                                                              • Product range and innovation
                                                                                                                • Recent activity
                                                                                                                  • Unilever (PG Tips, Lipton)
                                                                                                                    • Product range and innovation
                                                                                                                      • Recent activity
                                                                                                                      • Brand Research

                                                                                                                        • Brand map
                                                                                                                            • Figure 29: Attitudes towards and usage of brands in the tea sector, March 2013
                                                                                                                          • Correspondence analysis
                                                                                                                            • Brand attitudes
                                                                                                                              • Figure 30: Attitudes, by tea brand, March 2013
                                                                                                                            • Brand personality
                                                                                                                              • Figure 31: Tea brand personality – macro image, March 2013
                                                                                                                              • Figure 32: Tea brand personality – micro image, March 2013
                                                                                                                            • Brand experience
                                                                                                                              • Figure 33: Tea brand usage, March 2013
                                                                                                                              • Figure 34: Satisfaction with various tea brands, March 2013
                                                                                                                              • Figure 35: Consideration of tea brands, March 2013
                                                                                                                              • Figure 36: Consumer perceptions of current tea brand performance, March 2013
                                                                                                                              • Figure 37: Tea brand recommendation – Net Promoter Score, March 2013
                                                                                                                            • Brand index
                                                                                                                              • Figure 38: Tea brand index, March 2013
                                                                                                                              • Figure 39: Tea brand index vs recommendation, March 2013
                                                                                                                            • Target group analysis
                                                                                                                              • Figure 40: Target groups, March 2013
                                                                                                                              • Figure 41: Tea brand usage, by target groups, March 2013
                                                                                                                            • Group One – Conformists
                                                                                                                              • Group Two – Simply the Best
                                                                                                                                • Group Three – Shelf Stalkers
                                                                                                                                  • Group Four – Habitual Shoppers
                                                                                                                                    • Group Five – Individualists
                                                                                                                                    • Brand Communication and Promotion

                                                                                                                                      • Key points
                                                                                                                                        • Total adspend decreases in 2012
                                                                                                                                          • Figure 42: Main monitored media advertising expenditure in the tea and hot drinks market, 2009-13
                                                                                                                                        • Unilever continues to dominate market in 2012
                                                                                                                                          • Figure 43: Main monitored advertising expenditure in the UK tea and hot drinks market, by top ten advertisers, 2009-13
                                                                                                                                          • Figure 44: Monitored advertising expenditure in the UK tea and hot drinks market, by top five brands, 2012
                                                                                                                                        • TV accounts for almost three quarters of spend
                                                                                                                                          • Figure 45: Advertising expenditure in the UK tea and hot drinks market, by media type, 2009-13
                                                                                                                                      • Channels to Market

                                                                                                                                        • Key points
                                                                                                                                          • Supermarkets dominate distribution
                                                                                                                                            • Figure 46: Estimated consumer spending on soft drinks (including tea and other hot drinks), by type of retailer, 2012
                                                                                                                                          • Specialists and brands move online to connect with shoppers
                                                                                                                                          • Consumer – Usage

                                                                                                                                            • Key points
                                                                                                                                              • Almost nine in ten drink tea
                                                                                                                                                  • Figure 47: Consumption of tea, hot chocolate and malted drinks, February 2013
                                                                                                                                                • Majority drink tea on a daily basis
                                                                                                                                                    • Figure 48: Consumption of tea, hot chocolate and malted drinks, by frequency, February 2013
                                                                                                                                                  • 25-34s are the core users
                                                                                                                                                      • Figure 49: Consumption of tea, hot chocolate and malted drinks, by age, February 2013
                                                                                                                                                  • Consumer – Qualities Associated with Hot Drinks

                                                                                                                                                    • Key points
                                                                                                                                                      • Standard tea deemed traditional and refreshing
                                                                                                                                                          • Figure 50: Correspondence analysis of qualities associated with selected hot drinks, February 2013
                                                                                                                                                          • Figure 51: Qualities associated with selected hot drinks, February 2013
                                                                                                                                                        • Speciality tea enjoys premium status…
                                                                                                                                                          • …while herbal tea is seen to be healthy
                                                                                                                                                            • Hot chocolate should continue to market the notion of indulgence
                                                                                                                                                              • Figure 52: Selected words associated with hot chocolate, by gender and age, February 2013
                                                                                                                                                            • Methodology
                                                                                                                                                            • Consumer Attitudes Towards Tea

                                                                                                                                                              • Key points
                                                                                                                                                                • Three in four see tea drinking as a British trait
                                                                                                                                                                    • Figure 53: Agreement with statements on standard tea and speciality tea, February 2013
                                                                                                                                                                  • The ritual of drinking tea appeals to majority
                                                                                                                                                                    • 16-24s are adventurous on flavour, over-65s are brand-loyal
                                                                                                                                                                        • Figure 54: Agreement with statements on brand loyalty and trying tea flavours in standard tea and speciality tea, by age, February 2013
                                                                                                                                                                      • Encouraging consumers to trade up to more premium tea will add value to the market
                                                                                                                                                                      • Consumer Attitudes Towards Herbal Tea

                                                                                                                                                                        • Key points
                                                                                                                                                                          • Herbal teas are healthier than standard, according to a third
                                                                                                                                                                              • Figure 55: Agreement with statements on herbal tea, February 2013
                                                                                                                                                                              • Figure 56: Agreement with the statements ‘Herbal teas are healthier than standard tea’ and ‘I use herbal teas for their functional benefits (eg camomile tea for soothing)’, by gender and age, February 2013
                                                                                                                                                                            • Taste is a barrier for a fifth
                                                                                                                                                                            • Consumer Attitudes Towards Hot Chocolate and Malted Drinks

                                                                                                                                                                              • Key points
                                                                                                                                                                                • Sizeable minority see hot chocolate as a ‘treat’
                                                                                                                                                                                    • Figure 57: Attitudes towards hot chocolate and malted drinks, February 2013
                                                                                                                                                                                  • A fifth limit consumption, especially women
                                                                                                                                                                                    • Driving usage beyond a ‘cold’ weather accompaniment
                                                                                                                                                                                      • Habits differ depending on age
                                                                                                                                                                                        • Figure 58: Attitudes towards hot chocolate and malted drinks, by age, February 2013
                                                                                                                                                                                    • Appendix – Market Drivers

                                                                                                                                                                                        • Figure 59: Trends in the age structure of the UK population, 2007-17
                                                                                                                                                                                        • Figure 60: Forecast adult population trends, by socio-economic group, 2008-18
                                                                                                                                                                                        • Figure 61: UK households, by size, 2007-17
                                                                                                                                                                                    • Appendix – Who’s Innovating?

                                                                                                                                                                                        • Figure 62: NPD in the UK tea market, by private label vs branded, 2009-13
                                                                                                                                                                                        • Figure 63: NPD in the UK malt and other hot drinks market, by private label vs branded, 2009-13
                                                                                                                                                                                        • Figure 64: Top ten claims in tea market, 2009-13
                                                                                                                                                                                        • Figure 65: Top ten claims in malt and other hot drinks market, 2009-13
                                                                                                                                                                                    • Appendix – Market Size and Forecast

                                                                                                                                                                                        • Figure 66: Best- and worst-case forecasts for retail sales of tea, by value, 2012-17
                                                                                                                                                                                        • Figure 67: Best- and worst-case forecasts for retail sales of tea, by volume, 2012-17
                                                                                                                                                                                        • Figure 68: UK retail sales of tea, market size and forecast, by volume, 2007-17
                                                                                                                                                                                        • Figure 69: Best- and worst-case forecasts for retail sales of hot chocolate and malted drinks, by value, 2012-17
                                                                                                                                                                                        • Figure 70: Best- and worst-case forecasts for retail sales of hot chocolate and malted drinks, by volume, 2012-17
                                                                                                                                                                                        • Figure 71: UK retail sales of hot chocolate and malted drinks, market size and forecast, by volume, 2007-17
                                                                                                                                                                                    • Appendix – Brand Research

                                                                                                                                                                                        • Figure 72: Brand usage, March 2013
                                                                                                                                                                                        • Figure 73: Brand commitment, March 2013
                                                                                                                                                                                        • Figure 74: Brand momentum, March 2013
                                                                                                                                                                                        • Figure 75: Brand diversity, March 2013
                                                                                                                                                                                        • Figure 76: Brand satisfaction, March 2013
                                                                                                                                                                                        • Figure 77: Brand recommendation, March 2013
                                                                                                                                                                                        • Figure 78: Brand attitude, March 2013
                                                                                                                                                                                        • Figure 79: Brand image – macro image, March 2013
                                                                                                                                                                                        • Figure 80: Brand image – micro image, March 2013
                                                                                                                                                                                        • Figure 81: Profile of target groups, by demographics, March 2013
                                                                                                                                                                                        • Figure 82: Psychographic segmentation, by target groups, March 2013
                                                                                                                                                                                      • Brand index
                                                                                                                                                                                        • Figure 83: Brand index, March 2013
                                                                                                                                                                                    • Appendix – Brand Communication and Promotion

                                                                                                                                                                                        • Figure 84: Main monitored media advertising expenditure in the tea and other hot drinks market, by category, 2009-13
                                                                                                                                                                                    • Appendix – Consumer Usage

                                                                                                                                                                                        • Figure 85: Consumption of tea, by demographics, February 2013
                                                                                                                                                                                        • Figure 86: Consumption of green/herbal tea, by demographics, February 2013
                                                                                                                                                                                        • Figure 87: Consumption of standard tea (ie English Breakfast), by demographics, February 2013
                                                                                                                                                                                        • Figure 88: Consumption of hot chocolate, by demographics, February 2013
                                                                                                                                                                                        • Figure 89: Consumption of hot malted drink/malted chocolate drink, by demographics, February 2013
                                                                                                                                                                                        • Figure 90: Consumption of speciality tea, by demographics, February 2013
                                                                                                                                                                                        • Figure 91: Consumption of green tea, by demographics, February 2013
                                                                                                                                                                                        • Figure 92: Consumption of other herbal tea, by demographics, February 2013
                                                                                                                                                                                        • Figure 93: Consumption of other type of tea, by demographics, February 2013
                                                                                                                                                                                    • Appendix – Consumer – Qualities Associated with Hot Drinks

                                                                                                                                                                                        • Figure 94: Most popular words associated with coffee, by demographics, February 2013
                                                                                                                                                                                        • Figure 95: Next most popular words associated with coffee, by demographics, February 2013
                                                                                                                                                                                        • Figure 96: Most popular words associated with standard tea, by demographics, February 2013
                                                                                                                                                                                        • Figure 97: Next most popular words associated with standard tea, by demographics, February 2013
                                                                                                                                                                                        • Figure 98: Most popular words associated with speciality tea, by demographics, February 2013
                                                                                                                                                                                        • Figure 99: Next most popular words associated with speciality tea, by demographics, February 2013
                                                                                                                                                                                        • Figure 100: Most popular words associated with herbal tea, by demographics, February 2013
                                                                                                                                                                                        • Figure 101: Next most popular words associated with herbal tea, by demographics, February 2013
                                                                                                                                                                                        • Figure 102: Most popular words associated with hot chocolate, by demographics, February 2013
                                                                                                                                                                                        • Figure 103: Next most popular words associated with hot chocolate, by demographics, February 2013
                                                                                                                                                                                    • Appendix – Consumer Attitudes Towards Tea

                                                                                                                                                                                        • Figure 104: Agreement with statements on standard tea and speciality tea, February 2013
                                                                                                                                                                                        • Figure 105: Agreement with the statements ‘Drinking tea is part of being British’ and ‘I enjoy the ritual of tea drinking’, by demographics, February 2013
                                                                                                                                                                                        • Figure 106: Agreement with the statements ‘I tend to use the same brand of tea all the time’ and ‘Own-label tea is as good as branded varieties’, by demographics, February 2013
                                                                                                                                                                                        • Figure 107: Agreement with the statements ‘I enjoy trying different tea flavours’ and ‘I would like to see a wider variety of storage packs’, by demographics, February 2013
                                                                                                                                                                                        • Figure 108: Agreement with the statements ‘Ethical varieties are worth paying more for’ and ‘I wouldn’t feel confident preparing loose tea’, by demographics, February 2013
                                                                                                                                                                                        • Figure 109: Agreement with the statements ‘Loose tea is better quality than teabags’ and ‘It is worth paying extra for speciality teas’, by demographics, February 2013
                                                                                                                                                                                    • Appendix – Consumer Attitudes Towards Herbal Tea

                                                                                                                                                                                        • Figure 110: Agreement with most popular statements on herbal tea, by demographics, February 2013
                                                                                                                                                                                        • Figure 111: Agreement with next most popular statements on herbal tea, by demographics, February 2013
                                                                                                                                                                                    • Appendix – Consumer Attitudes Towards Hot Chocolate and Malted Drinks

                                                                                                                                                                                        • Figure 112: Agreement with most popular statements on hot chocolate and malted drinks, by demographics, February 2013
                                                                                                                                                                                        • Figure 113: Agreement with next most popular statements on hot chocolate and malted drinks, by demographics, February 2013
                                                                                                                                                                                        • Figure 114: Agreement with other statements on hot chocolate and malted drinks, by demographics, February 2013

                                                                                                                                                                                    Companies Covered

                                                                                                                                                                                    • Apeejay Tea Limited
                                                                                                                                                                                    • Betty's and Taylors of Harrogate Ltd
                                                                                                                                                                                    • Cadbury Schweppes Plc
                                                                                                                                                                                    • Coca-Cola GB
                                                                                                                                                                                    • Facebook, Inc.
                                                                                                                                                                                    • GlaxoSmithKline Plc
                                                                                                                                                                                    • Green & Black's Ltd
                                                                                                                                                                                    • ITV plc
                                                                                                                                                                                    • Orient-Express Hotels, Trains & Cruises
                                                                                                                                                                                    • R Twining and Company Limited
                                                                                                                                                                                    • Tetley Group
                                                                                                                                                                                    • Unilever Bestfoods UK Ltd
                                                                                                                                                                                    • Unilever Plc
                                                                                                                                                                                    • Union of European Football Association (UEFA)
                                                                                                                                                                                    • YouTube, Inc.

                                                                                                                                                                                    Tea and Other Hot Drinks - UK - June 2013

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