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Tea: Spotlight on Bagged/Looseleaf Tea - US - August 2016

"Strong year-over-year growth continues for tea, despite struggles in dollar sales from brewed tea (bagged, loose leaf, and single cup teas) as the segment faces greater innovation within the RTD tea space, longer purchase cycles, and sales loss from leading bagged tea companies. Total category sales are expected to continue upward as consumers search for functional, healthful drinks, particularly driven by RTD tea growth."
- Elizabeth Sisel, Beverage Analyst

This report discusses the following key topics:

  • Bagged/loose leaf tea sales decline
  • Tea remains second to coffee consumption
  • High bagged tea consumption rates do not translate to sales gains
  • Need to expand usage occasions among US drinkers

This Report covers the retail market for tea purchased for at-home or on-the-go consumption. For the purposes of this Report, Mintel has used the following definitions:

  • Canned/bottled RTD tea – shelf-stable RTD teas in single-serve and multi-serve sizes
  • Refrigerated tea – fresh brewed tea requiring refrigeration or teas sold in the refrigerated or chilled areas at retail in single-serve or multi-serve sizes. This includes kombucha; however, sales are too small to reflect any effect on the category
  • Bagged, loose leaf, and single-cup teas, including black, white, green, and fruit/herbal teas - bagged may be single-cup or multi-cup sizes. Powdered teas do not refer to instant mixes or crystalized teas or powders, but rather powdered tea leaves that are brewed and ingested (eg matcha).

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Table of contents

  1. Overview

    • What you need to know
      • Definition
      • Executive Summary

        • The issues
          • Bagged/loose leaf tea sales decline
            • Figure 1: Total US retail sales and forecast of tea and RTD tea, by segment, at current prices, 2011-21
          • Tea remains second to coffee consumption
            • Figure 2: Mintel Beverage Tracker – Recent coffee/tea consumption at and away from home, trended December 2014 to April 2016
          • High bagged tea consumption rates do not translate to sales gains
            • Figure 3: Tea consumption – Any consumption, June 2016
          • Need to expand usage occasions among US drinkers
            • Figure 4: Attitudes toward brewed tea – Hot tea is only good when I am sick, June 2016
          • The opportunities
            • Brewed tea premiumization opportunity
              • Figure 5: Attitudes toward brewed tea – Premiumization, June 2016
            • Brewed tea consumers believe health benefits
              • Figure 6: Attitudes toward brewed tea – Health, June 2016
            • RTD innovation featuring health, functionality, and specialty preparation methods
              • Figure 7: Ready-to-drink tea innovation, June 2016
            • Expand usage occasions for brewed and RTD teas
              • Figure 8: Tea drinking occasion, June 2016
            • What it means
            • The Market – What You Need to Know

              • Tea and RTD tea grows 5.6% in estimated 2016
                • Canned/bottled RTD teas leading segment performer
                  • Bagged/loose leaf tea competes with RTD varieties, and tea with coffee
                  • Market Size and Forecast

                    • Category sales forecast to grow 5.6% in 2016
                      • Figure 9: Total US retail sales and fan chart forecast of tea and RTD tea, at current prices, 2011-21
                      • Figure 10: Total US retail sales and forecast of tea and RTD tea, at current prices, 2011-21
                      • Figure 11: Total US retail sales and forecast of tea and RTD tea, at inflation-adjusted prices, 2011-21
                  • Market Breakdown

                    • Canned/bottled tea segment dominates the category
                      • Figure 12: Total US retail sales and forecast of tea and RTD tea, by segment, at current prices, 2011-21
                    • Canned/bottled, refrigerated teas expected to grow through 2021
                      • Figure 13: Total US retail sales and forecast of tea and RTD tea, by segment, at current prices, 2011-21
                    • Supermarkets, “other” channels dominate in tea sales
                      • Figure 14: Total US retail sales of tea and RTD tea, by channel, at current prices, 2011-16
                    • Natural channel tea sales outpace the overall category
                      • Figure 15: Natural supermarket sales of tea, at current prices, rolling 52 weeks April 2014 to April 2016
                    • Bagged/loose leaf teas leading segment at natural channels
                      • Figure 16: Natural supermarket sales of tea, by segment, at current prices, rolling 52 weeks ending April 2016
                  • Market Perspective

                    • RTD tea versus bagged/loose leaf tea
                      • Figure 17: Tea consumption – Any consumption, June 2016
                      • Figure 18: Tea consumption – Bagged/loose leaf/single cup tea, by Tea consumption - RTD tea, June 2016
                      • Figure 19: Tea consumption – RTD tea, by tea consumption – Bagged/loose leaf/single cup tea, June 2016
                    • Coffee more popular than tea
                      • Figure 20: Mintel Beverage Tracker – Recent coffee/tea consumption at and away from home, trended December 2014 to April 2016
                    • At-home tea consumption dominates foodservice consumption
                      • Figure 21: Mintel Beverage Tracker – Recent tea consumption, by at-home and away from home usage, trended December 2014 to April 2016
                  • Market Factors

                    • US tea imports has steady rise
                      • Figure 22: U.S. imports of tea and mate, 2010 to 2014
                    • iGeneration, Millennial populations have positive growth
                      • Figure 23: Population by generation, percentage change, 2011-21
                    • Hispanic, Asian populations expect to see growth
                      • Figure 24: Population by race and Hispanic origin, percent change, 2011-21
                    • Overlap between Millennials, acculturated Hispanics, and parents
                      • Millennials as parents
                        • Figure 25: Households with own children, by age of householder, 2013
                      • Hispanics as parents
                        • Figure 26: Households with own children, by Hispanic origin of householder, 2013
                      • Hispanics as Millennials
                        • Figure 27: Generations, by Hispanic origin, 2016
                    • Key Players – What You Need to Know

                      • Leading companies experience MULO growth thanks to RTD teas
                        • RTD canned/bottled tea remains category segment leader
                          • Leading bagged tea brands struggle, affect overall segment sales growth
                            • Functionality, cold brews leading innovation opportunities
                            • Company and Brand Sales of Tea and RTD Tea

                              • Leading companies experience MULO growth thanks to RTD teas
                                • Figure 28: MULO sales of tea, by leading companies, rolling 52 weeks 2015 and 2016
                              • Company and brand sales of tea and RTD tea
                                • Figure 29: MULO sales of tea, by leading companies, rolling 52 weeks 2015 and 2016
                            • What’s Working?

                              • RTD canned/bottled tea remains category segment leader
                                • RTD refrigerated popularity continues to produce positive sales gains
                                  • Kombucha continues to thrive
                                    • English, herbal, and specialty bagged tea brands see growth
                                    • What’s Struggling?

                                      • Leading bagged tea brands struggle, affect overall segment sales growth
                                        • Figure 30: MULO sales of bagged/loose leaf tea, by leading companies and brands, rolling 52 weeks 2015 and 2016
                                      • Keurig single-cup teas experience hefty sales losses
                                          • Figure 31: Total US retail sales and forecast Keurig cups, at current prices, 2011-21
                                      • What’s Next?

                                        • Functionality for all needs and occasions
                                          • Packaging updates for RTD and brewed teas
                                            • Matcha mania
                                              • Brewed teas rebrand, redesign bagged/loose leaf offerings
                                                • Premiumization hits in the form of flavors, tea house style drinks
                                                  • Preparation methods hit on current trends, consumer interaction
                                                    • RTD teas expand past black, white, and green tea varieties
                                                    • The Consumer – What You Need to Know

                                                      • Older Millennials consume greatest variety of teas
                                                        • 76% drink bagged/loose leaf tea
                                                          • Green tea leading brewed tea type
                                                            • Sugar, lemon, honey leading brewed tea additions
                                                              • One third believe in brewed teas’ long term, therapeutic health benefits
                                                                • Brand more important than natural, organic claims
                                                                  • More than a quarter finds premium brewed teas worth the price
                                                                    • More than a third of consumers drink RTD tea at least weekly
                                                                      • Health benefits most important in RTD tea innovation
                                                                        • Antioxidants leading functionality
                                                                          • Bagged tea for relaxation, RTD tea for hydration
                                                                          • Multiple Tea Consumption

                                                                            • Older Millennials consume greatest variety teas
                                                                              • Figure 32: Repertoire analysis – Any RTD tea consumption, June 2016
                                                                              • Figure 33: Repertoire analysis – Any bagged/loose leaf tea consumption, June 2016
                                                                          • Brewed Tea Consumption

                                                                            • 76% drink bagged/loose leaf tea
                                                                              • Figure 34: Tea consumption – Bagged/loose leaf tea, June 2016
                                                                            • Older Millennials heaviest consumers
                                                                              • Figure 35: Tea consumption – Bagged/loose leaf tea, by generation, June 2016
                                                                            • Consumption increases among fathers
                                                                              • Figure 36: Tea consumption – Bagged/loose leaf tea, by parental status with/without children under 18 in the household, June 2016
                                                                            • Hispanics, Asians over index for bagged/loose leaf/single cup tea
                                                                              • Figure 37: Tea consumption – Bagged/loose leaf tea, by race/ethnicity, June 2016
                                                                            • Income influences consumption, premiumization
                                                                              • Figure 38: Tea consumption – Bagged/loose leaf tea, by income, June 2016
                                                                          • Brewed Tea Types and Attributes

                                                                            • Green tea leading tea type
                                                                              • Figure 39: Brewed tea types/attributes, June 2016
                                                                            • Consumers drink multiple brewed tea types
                                                                              • Figure 40: Brewed tea types, by brewed tea types, June 2016
                                                                              • Figure 41: Brewed tea attributes, by brewed tea attributes, June 2016
                                                                            • Women over index for majority of tea types
                                                                              • Figure 42: Brewed tea types/attributes, by gender, June 2016
                                                                            • Older Millennials drive white, Roobios, mate tea consumption
                                                                              • Figure 43: Brewed tea types/attributes, by generation, June 2016
                                                                            • Medicinal teas leading bagged/loose leaf type at natural channels
                                                                              • Figure 44: Natural supermarket sales of bagged/loose tea, by type, at current prices, rolling 52 weeks ending April 2016
                                                                          • Brewed-Tea Additions

                                                                            • Sugar, lemon, honey leading tea additions
                                                                              • Figure 45: Brewed tea additions, June 2016
                                                                            • Consumers add in multiple additions
                                                                              • Figure 46: Brewed tea additions, by brewed tea additions, June 2016
                                                                              • Figure 47: Brewed tea additions, by brewed tea additions, June 2016
                                                                            • Baby Boomers, women, Asians most likely to drink plain
                                                                              • Figure 48: Brewed tea additions – “I drink it plain”, June 2016
                                                                            • Blacks, Hispanics over index for leading add-ins
                                                                              • Figure 49: Brewed tea additions, by race, June 2016
                                                                          • Attitudes toward Brewed Tea

                                                                            • One third believe in teas’ long term, therapeutic health benefits
                                                                              • Figure 50: Attitudes toward brewed tea – Health, June 2016
                                                                            • Brand more important than natural, organic claims
                                                                              • Figure 51: Attitudes toward brewed tea – Brand and claims, June 2016
                                                                            • More than a quarter find premium teas worth the price
                                                                                • Figure 52: Attitudes toward brewed tea – Packaging and attributes, June 2016
                                                                            • RTD Tea Consumption

                                                                              • More than a third of consumers drink RTD tea at least weekly
                                                                                • Figure 53: Tea consumption – Ready-to-drink (RTD) tea, June 2016
                                                                              • Older Millennials and younger leading RTD tea consumers
                                                                                • Figure 54: Tea consumption – Ready-to-drink (RTD) tea, by generation, June 2016
                                                                              • Fathers heaviest RTD tea consumers
                                                                                • Figure 55: Tea consumption – Ready-to-drink (RTD) tea, by parental status with/without children under 18 in the household, June 2016
                                                                              • Hispanics drive RTD tea consumption
                                                                                • Figure 56: Tea consumption – Ready-to-drink (RTD) tea, by race/ethnicity, June 2016
                                                                            • RTD Tea Innovation

                                                                              • Health benefits most important in RTD tea innovation
                                                                                  • Figure 57: Ready-to-drink tea innovation, June 2016
                                                                                • Interest in RTD functionality declines with age
                                                                                  • Figure 58: Ready-to-drink tea innovation, by generation, June 2016
                                                                                • Fathers drive interest in RTD tea innovation
                                                                                  • Figure 59: Ready-to-drink tea innovation, by parental status with child(ren) under 18 in the household, June 2016
                                                                              • Tea Functionality

                                                                                • Antioxidants leading functionality
                                                                                  • Figure 60: Tea functionality, June 2016
                                                                                • iGeneration drives interest in functional attributes
                                                                                  • Figure 61: Tea functionality, by generation, June 2016
                                                                              • Drinking Occasions

                                                                                • Bagged tea for relaxation, RTD tea for hydration
                                                                                  • Brewed teas
                                                                                    • RTD teas
                                                                                      • Figure 62: Tea drinking occasion, June 2016
                                                                                  • Appendix – Data Sources and Abbreviations

                                                                                    • Data sources
                                                                                      • Sales data
                                                                                        • Fan chart forecast
                                                                                          • Consumer survey data
                                                                                            • Abbreviations and terms
                                                                                              • Abbreviations
                                                                                                • Terms
                                                                                                • Appendix – Market

                                                                                                    • Figure 63: Total US retail sales and forecast of canned/bottled tea, at current prices, 2011-21
                                                                                                    • Figure 64: Total US retail sales and forecast of canned/bottled tea, at inflation-adjusted prices, 2011-21, 2011-21
                                                                                                    • Figure 65: Total US retail sales and forecast of refrigerated tea, at current prices, 2011-21
                                                                                                    • Figure 66: Total US retail sales and forecast of refrigerated tea, at inflation-adjusted prices, 2011-21
                                                                                                    • Figure 67: Total US retail sales and forecast of bagged/loose leaf tea, at current prices, 2011-21
                                                                                                    • Figure 68: Total US retail sales and forecast of bagged/loose leaf tea, at inflation-adjusted prices, 2011-21
                                                                                                    • Figure 69: US supermarket sales of tea and RTD tea, at current prices, 2011-16
                                                                                                    • Figure 70: US convenience store sales of tea and RTD tea, at current prices, 2011-16
                                                                                                    • Figure 71: US sales of tea and RTD tea through other retail channels, at current prices, 2011-16
                                                                                                • Appendix – Key Players

                                                                                                    • Figure 72: MULO sales of canned and bottled tea by leading companies and brands, rolling 52 weeks 2015 and 2016
                                                                                                    • Figure 73: MULO sales of refrigerated tea, by leading companies and brands, rolling 52 weeks 2015 and 2016
                                                                                                    • Figure 74: MULO sales of bagged/loose leaf tea, by leading companies and brands, rolling 52 weeks 2015 and 2016

                                                                                                Companies Covered

                                                                                                • Walmart Stores (USA)

                                                                                                Tea: Spotlight on Bagged/Looseleaf Tea - US - August 2016

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