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Tea and Other Hot Drinks - UK - July 2018

“While Britons continue to live up to their reputation of being a nation of tea drinkers, volume sales for ordinary teabags, which dominate the market, are down, the competition from coffee and soft drinks eroding sales. While ordinary teabags remain their core offering, operators are developing their mix of products from other segments such as green, fruit/herbal and speciality tea, as well as teas to be drunk with alternative milks, to capitalise on growth opportunities in the shrinking market.”
- Amy Price, Senior Food & Drink Analyst

This Report looks at the following areas:

  • -Cold versions of tea can help the market to better compete with soft drinks 
  • -Opportunities for brands to talk about how dairy-free milks influence tea
  • -Highlighting ethical/environmental credentials is timely given current consumer sentiment

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Table of contents

  1. Overview

    • What you need to know
      • Products covered in this Report
      • Executive Summary

          • The market
            • Inflation drives values while volume sales continue to fall in tea
              • Figure 1: UK retail value sales of tea, 2013-23
            • Ordinary teabags see ongoing drop in volume sales
              • Figure 2: UK retail value sales of tea, by segment, 2016 and 2017
            • Hot chocolate and malted drinks see ongoing decline
              • Figure 3: UK retail value sales of hot chocolate and hot malted drinks, by segment, 2016 and 2017
            • Incomes set to rise but expenditure to remain subdued
              • Drop in younger people poses potential barrier to growth
                • Companies and brands
                  • Market leader PG Tips sees sales fall in tea
                    • Figure 4: Leading brands’ value shares in the tea retail market, 2017/18*
                  • Cadbury leads in hot chocolate but sees sales fall
                    • Figure 5: Leading brands’ value shares in the hot chocolate retail market, 2017/18*
                  • Market leader Horlicks sees continued decline in malted drinks
                    • Figure 6: Leading brands’ value shares in the malted drinks retail market, 2017/18*
                  • PG Tips launches dairy-free blend
                    • Environmental claims remain widespread in tea
                      • Adspend continues downward trajectory in 2017
                        • PG Tips scores highest on brand commitment
                          • The consumer
                            • Standard tea dominates; 70% drink it, 45% daily
                              • Figure 7: Frequency of drinking tea, by tea type, May 2018
                            • Hot chocolate remains an infrequent treat
                              • Figure 8: Frequency of drinking hot chocolate and hot malted drinks, May 2018
                            • Branded opportunities in hot chocolate
                              • Figure 9: Interest in innovation in tea, hot chocolate and malted drinks, May 2018 
                            • Hydration benefits of tea noted by 83%
                              • Figure 10: Attitudes towards tea, May 2018
                            • Standard tea is seen to be traditional, comforting and refreshing
                              • Figure 11: Correspondence analysis of qualities associated with hot drinks, May 2018 
                            • A third see RTD cold tea as a good alternative to other soft drinks
                              • Figure 12: Attitudes to RTD cold tea, May 2018
                            • What we think
                            • Issues and Insights

                              • Cold versions of tea can help the market to better compete with soft drinks
                                • The facts
                                  • The implications
                                    • Opportunities for brands to talk about how dairy-free milks influence tea
                                      • The facts
                                        • The implications
                                          • Highlighting ethical/environmental credentials is timely given current consumer sentiment
                                            • The facts
                                              • The implications
                                              • The Market – What You Need to Know

                                                • Inflation drives values while volume sales continue to fall in tea
                                                  • Hot chocolate and malted drinks see ongoing decline
                                                    • Ordinary teabags see ongoing drop in volume sales
                                                      • Decline in tea drinking plateaus
                                                        • Price rises seen in the market
                                                          • Incomes set to rise but expenditure to remain subdued
                                                            • Drop in younger people poses potential barrier
                                                            • Market Size and Forecast

                                                              • Inflation drives values while volume sales continue to fall in tea
                                                                • Figure 13: UK retail value and volume sales of tea, 2013-23
                                                              • Rise in values predicted, on the back of falling volumes
                                                                • Figure 14: UK retail value sales of tea, 2013-23
                                                                • Figure 15: UK retail volume sales of tea, 2013-23
                                                              • Hot chocolate and malted drinks see ongoing decline
                                                                • Figure 16: UK retail value and volume sales of hot chocolate and malted drinks, 2013-23
                                                              • Further decline expected in hot chocolate and malted drinks
                                                                • Figure 17: UK retail value sales of hot chocolate and malted drinks, 2013-23
                                                                • Figure 18: UK retail volume sales of hot chocolate and malted drinks, 2013-23
                                                              • Forecast methodology
                                                              • Market Segmentation

                                                                • Ordinary teabags see ongoing drop in volume sales
                                                                  • Figure 19: UK retail value and volume sales of tea, by segment, 2015-17
                                                                • Continued decline in hot chocolate and malted drinks
                                                                  • Figure 20: UK retail value and volume sales of hot chocolate and hot malted drinks, by segment, 2015-17
                                                              • Market Drivers

                                                                • Decline in tea drinking plateaus
                                                                  • Figure 21: UK household purchases of tea, coffee and cocoa, hot chocolate and malted drinks, 1974-2016/17
                                                                • Under pressure from coffee and soft drinks
                                                                  • Price rises seen in the market
                                                                    • Incomes set to rise but expenditure to remain subdued
                                                                      • Figure 22: Annual percentage change in CPI and AWE (regular pay), monthly basis, January 2012-April 2018
                                                                    • Drop in younger people poses potential barrier to growth
                                                                        • Figure 23: Trends in the age structure of the UK population, 2013-23
                                                                    • Companies and Brands – What You Need to Know

                                                                      • Market leader PG Tips sees sales fall in tea
                                                                        • Twinings sees growth slow
                                                                          • Yorkshire Tea and own-label see sales rise
                                                                            • Cadbury leads in hot chocolate but sees sales fall
                                                                              • Market leader Horlicks sees continued decline in malted drinks
                                                                                • PG Tips launches dairy-free blend
                                                                                  • Environmental claims remain widespread in tea
                                                                                    • Adspend continues downward trajectory in 2017
                                                                                      • PG Tips scores highest on brand commitment
                                                                                      • Market Share

                                                                                        • Market leader PG Tips sees sales fall in tea
                                                                                          • Unilever buys Pukka
                                                                                            • Twinings sees growth slow
                                                                                              • Yorkshire Tea and own-label see sales rise
                                                                                                • Figure 24: Leading brands’ value sales and shares in the tea market, 2016/17 and 2017/18
                                                                                                • Figure 25: Leading brands’ volume sales and shares in the tea market, 2016/17 and 2017/18
                                                                                              • Cadbury leads in hot chocolate but sees sales fall
                                                                                                • Options and Galaxy grow but Tassimo falters
                                                                                                  • Figure 26: Leading brands’ value sales and shares in the hot chocolate market, 2016/17 and 2017/18
                                                                                                • Market leader Horlicks sees continued decline in malted drinks
                                                                                                  • Figure 27: Leading brands’ value sales and shares in the malted drinks market, 2016/17 and 2017/18
                                                                                              • Launch Activity and Innovation

                                                                                                • PG Tips launches dairy-free blend
                                                                                                  • Figure 28: PG Tips launches dairy-free blend, 2018
                                                                                                • Yorkshire Tea unveils Biscuit Brew
                                                                                                  • Figure 29: Yorkshire Tea launches biscuit brew, 2018
                                                                                                • Twinings targets healthy lifestyles with Superblends launch
                                                                                                  • Figure 30: Share of new product launches in the UK tea market, by top 10 companies, 2014-18 (sorted by 2017)
                                                                                                  • Figure 31: Twnings unveils Superblends range, 2018
                                                                                                • Turmeric sees increase in popularity
                                                                                                  • Figure 32: Turmeric sees increasingly popularity as a flavour component, 2018
                                                                                                • Asda ramps up activity in 2018
                                                                                                  • Figure 33: Asda launches dessert-inspired tea products, 2018
                                                                                                • Own-labels look to premiumisation trend
                                                                                                  • Figure 34: Own-labels look to premiumisation, 2017 and 2018
                                                                                                • Environmental claims remain widespread in tea
                                                                                                  • Removing plastic from teabags
                                                                                                    • Figure 35: New product launches in the UK tea market, by top 10 claims (sorted by 2017), 2014-18
                                                                                                  • Brands look to certification
                                                                                                    • Convenience appeals to time-pressed consumers
                                                                                                      • Figure 36: Brands launch teas with convenience claims, 2018
                                                                                                    • Vivid Matcha looks to single-serve sachets for OTG consumers
                                                                                                      • Hot chocolate and malted drinks NPD trails that of tea
                                                                                                        • Mars leads NPD; launching pods for Galaxy and Maltesers
                                                                                                          • M&S looks to single origin in hot chocolate
                                                                                                            • Figure 37: M&S launches single origin hot chocolates, 2017
                                                                                                          • Versatility could help to increase occasions
                                                                                                            • Figure 38: Brands pushing versatility, 2017 and 2018
                                                                                                        • Advertising and Marketing Activity

                                                                                                          • Adspend continues downward trajectory in 2017
                                                                                                            • Figure 39: Total above-the line, online display and direct mail advertising expenditure on tea and other hot drinks, 2014-18
                                                                                                          • Bettys & Taylors of Harrogate leads spend in 2017
                                                                                                            • Figure 40: Total above-the line, online display and direct mail advertising expenditure on tea and other hot drinks, 2014-18
                                                                                                          • Unilever cuts spending on PG Tips…
                                                                                                            • …as does Tetley
                                                                                                              • Twinings, Clipper, Pukka and Teapigs increase spend
                                                                                                                • Mondelēz leads spend on hot chocolate
                                                                                                                  • Nielsen Ad Intel coverage
                                                                                                                  • Brand Research

                                                                                                                      • What you need to need to know
                                                                                                                        • Brand map
                                                                                                                          • Figure 41: Attitudes towards and usage of selected brands, July 2018
                                                                                                                        • Key brand metrics
                                                                                                                          • Figure 42: Key metrics for selected brands, July 2018
                                                                                                                        • Brand attitudes: Twinings is seen to be worth paying more for
                                                                                                                          • Figure 43: Attitudes, by brand, July 2018
                                                                                                                        • Brand personality: PG Tips, Tetley and Yorkshire Tea are most accessible
                                                                                                                          • Figure 44: Brand personality – Macro image, July 2018
                                                                                                                        • Twinings offers sophistication; PG Tips, Tetley and Yorkshire Tea reassurance
                                                                                                                          • Figure 45: Brand personality – Micro image, July 2018
                                                                                                                        • Brand analysis
                                                                                                                          • Twinings is seen to be worth paying more for; attracting an affluent user base
                                                                                                                            • Figure 46: User profile of Twinings, July 2018
                                                                                                                          • Yorkshire Tea seen to be authentic
                                                                                                                            • Figure 47: User profile of Yorkshire Tea, July 2018
                                                                                                                          • PG Tips scores highest on brand commitment
                                                                                                                            • Figure 48: User profile of PG Tips, July 2018
                                                                                                                          • Tetley is the least diverse
                                                                                                                            • Figure 49: User profile of Tetley, July 2018
                                                                                                                          • Clipper is seen to be the most ethical
                                                                                                                            • Figure 50: User profile of Clipper, July 2018
                                                                                                                        • The Consumer – What You Need to Know

                                                                                                                          • Standard tea dominates; 70% drink it, 45% daily
                                                                                                                            • Hot chocolate remains an infrequent treat
                                                                                                                              • Branded opportunities in hot chocolate
                                                                                                                                • Hydration benefits noted by 83%
                                                                                                                                  • Standard tea is seen to be traditional, refreshing and comforting
                                                                                                                                    • Just 9% drink RTD cold tea
                                                                                                                                      • A third see RTD tea as a good alternative to other soft drinks
                                                                                                                                      • Drinking Habits – Tea and Other Hot Drinks

                                                                                                                                        • Standard tea dominates; 70% drink it, 45% daily
                                                                                                                                          • Figure 51: Frequency of drinking tea, by tea type, May 2018
                                                                                                                                        • Speciality, fruit and green tea are drunk by 36%
                                                                                                                                          • Figure 52: Usage of speciality, green or fruit and herbal/spice tea, by household income, May 2018
                                                                                                                                        • A desire for variety: 34% drink 3-6 types of tea
                                                                                                                                          • Figure 53: Repertoire of types of tea drunk, May 2018
                                                                                                                                        • Hot chocolate remains an infrequent treat
                                                                                                                                          • Figure 54: Frequency of drinking hot chocolate and hot malted drinks, May 2018
                                                                                                                                      • Interest in Innovation

                                                                                                                                        • Branded opportunities in hot chocolate
                                                                                                                                          • Figure 55: Interest in innovation in tea, hot chocolate and malted drinks, May 2018 
                                                                                                                                        • Environmental issues hold sway
                                                                                                                                          • 22% show interest in tea using British ingredients
                                                                                                                                            • Figure 56: Tea products highlight English ingredients, 201 5 and 2017
                                                                                                                                          • Premium cues appeal to minority
                                                                                                                                          • Attitudes towards Tea

                                                                                                                                            • Hydration benefits noted by 83%
                                                                                                                                              • Figure 57: Attitudes towards tea, May 2018
                                                                                                                                            • 43% take their own tea to work
                                                                                                                                              • 59% keep their tea in the packaging it comes in
                                                                                                                                                • 29% are tea connoisseurs
                                                                                                                                                  • Figure 58: Agreement with the statement ‘I consider myself a tea connoisseur’, by age, May 2018
                                                                                                                                                  • Figure 59: M&S provides guidance on how to make the perfect brew, 2018
                                                                                                                                                • 23% drink tea with alternative milks
                                                                                                                                                  • Knowing how much goes to the farmer would make fair trade tea worth paying more for
                                                                                                                                                    • Figure 60: Tea and other hot drinks – CHAID – Tree output, May 2018
                                                                                                                                                • Qualities Associated with Hot Drinks

                                                                                                                                                  • Standard tea is seen to be traditional, comforting and refreshing
                                                                                                                                                    • Speciality tea seen to be premium; green and fruit most healthy
                                                                                                                                                      • Figure 61: Correspondence analysis of qualities associated with hot drinks, May 2018 
                                                                                                                                                      • Figure 62: Qualities associated with tea and other hot drinks, May 2018
                                                                                                                                                    • Hot chocolate is most comforting and indulgent
                                                                                                                                                      • Figure 63: Asda calls out indulgence in product name, 2018
                                                                                                                                                    • Methodology
                                                                                                                                                    • Usage of and Attitudes Related to RTD Cold Tea

                                                                                                                                                      • Just 9% drink RTD cold tea
                                                                                                                                                        • Coca-Cola’s launch of Fuze Tea could build momentum
                                                                                                                                                          • Figure 64: Types of bottled drinks drunk, May 2018
                                                                                                                                                        • A third see RTD cold tea as a good alternative to other soft drinks
                                                                                                                                                          • Figure 65: Attitudes to RTD cold tea, May 2018
                                                                                                                                                        • Opportunities for tea brands to branch into RTD cold tea
                                                                                                                                                          • Sugar content is a concern for 29%
                                                                                                                                                            • Opportunities for non-sweet flavours
                                                                                                                                                            • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                                                                                • Abbreviations
                                                                                                                                                                  • Consumer research methodology
                                                                                                                                                                    • CHAID – Methodology
                                                                                                                                                                      • Figure 66: Tea and other hot drinks – CHAID – Table output, May 2018
                                                                                                                                                                  • Appendix – Market Size and Forecast

                                                                                                                                                                      • Figure 67: UK value sales of tea, best- and worst-case forecast, 2018-23
                                                                                                                                                                      • Figure 68: UK volume sales of tea, best- and worst-case forecast, 2018-23
                                                                                                                                                                      • Figure 69: UK value sales of hot chocolate and malted drinks, best- and worst-case forecast, 2018-23
                                                                                                                                                                      • Figure 70: UK volume sales of hot chocolate and malted drinks, best- and worst-case forecast, 2018-23
                                                                                                                                                                    • Forecast methodology
                                                                                                                                                                    • Appendix – Market Drivers

                                                                                                                                                                        • Figure 71: UK household purchases of mineral or spring waters and soft drinks, 1992-2016/17
                                                                                                                                                                    • Appendix – Market Share

                                                                                                                                                                        • Figure 72: Leading manufacturer’s value and volume sales and shares in the tea market, 2016/17 and 2017/18
                                                                                                                                                                        • Figure 73: Leading manufacturer’s value and volume sales and shares in the hot chocolate market, 2016/17 and 2017/18
                                                                                                                                                                    • Appendix – Launch Activity and Innovation

                                                                                                                                                                        • Figure 74: Share of new product launches in the UK tea market, by branded and private label, 2014-18
                                                                                                                                                                        • Figure 75: Share of new product launches in the UK tea market, by top 20 flavours (sorted by 2017), 2014-18
                                                                                                                                                                        • Figure 76: Share of new product launches in the UK tea market, by claim category (sorted by 2017), 2014-18
                                                                                                                                                                        • Figure 77: Share of new product launches in the UK hot chocolate and malted drinks markets, by launch type, 2014-18
                                                                                                                                                                        • Figure 78: Share of new product launches in the UK hot chocolate and malted drinks markets, by top 10 companies (sorted by 2017), 2014-18
                                                                                                                                                                        • Figure 79: Share of new product launches in the UK hot chocolate and malted drinks markets, by top 10 flavours (sorted by 2017), 2014-18
                                                                                                                                                                    • Appendix – Advertising and Marketing Activity

                                                                                                                                                                        • Figure 80: Total above-the line, online display and direct mail advertising expenditure on tea and other hot drinks, by top 10 brands, (sorted by 2017), 2014-18

                                                                                                                                                                    Tea and Other Hot Drinks - UK - July 2018

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