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Tea and RTD Tea - US - September 2018

"The vast majority of adults drink tea and many are daily tea drinkers. The complex array of tea formats, varieties, and flavors offers options that appeal to a broad spectrum of consumers. Yet category sales improved only slightly from 2017-18, as sales softened in the leading canned/bottled RTD (ready to drink) segment. Tea and RTD tea sales are expected to see modest growth as competition continues to intensify and consumer beverage interests diversify."
- Mimi Bonnett, Director - Food and Drink, Foodservice

This Report looks at the following areas:

  • Tea and RTD tea growth rates stalling
  • RTD tea brands struggle
  • Sugar and artificial ingredients complicate the appeal of RTDs

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Table of contents

  1. Overview

    • What you need to know
      • Definition
      • Executive Summary

        • Overview
          • Figure 1: Tea consumption, May 2018
        • The issues
          • Tea and RTD tea growth rates stalling
            • Figure 2: Total US sales and fan chart forecast of tea and RTD tea, at current prices, 2013-23
          • RTD tea brands struggle
            • Figure 3: MULO sales of canned/bottled RTD tea, by select brands, rolling 52 weeks 2017 and 2018
          • Sugar and artificial ingredients complicate the appeal of RTDs
            • Figure 4: Attitudes toward RTD tea, by age, May 2018
          • The opportunities
            • Increase consumption frequency
              • Figure 5: Frequency of consumption, by select demographics, May 2018
            • Associating tea consumption with self-care
              • Figure 6: Reasons for tea consumption, May 2018
            • Further out: look to adjacent categories for inspiration
              • Figure 7: Attitudes toward tea, May 2018
            • What it means
            • The Market – What You Need to Know

              • Growth rate cools as competition increases
                • Canned/bottled RTD tea lead category, refrigerated tea adds growth
                  • Variety of non-alcoholic beverages provide options for consumers
                    • Health trends have a varied impact on tea market
                      • Hispanic consumers offer market opportunity
                      • Market Size and Forecast

                        • Once strong growth stalling amid competitive beverage market
                          • Figure 8: Total US sales and fan chart forecast of tea and RTD tea, at current prices, 2013-23
                          • Figure 9: Total US sales and forecast of tea and RTD tea, at current prices, 2013-23
                      • Market Breakdown

                        • Canned/bottled RTD tea dominates category
                          • Figure 10: Share of US retail sales and forecast of tea and RTD tea, by segment, at current prices, 2018
                        • Refrigerated tea drives growth
                          • Figure 11: Total US retail sales of tea and RTD tea, by segment, at current prices, 2016 and 2018
                        • Other retailers
                          • Figure 12: Total US retail sales of tea and RTD tea, by channel, at current prices, 2016 and 2018
                      • Market Perspective

                        • Competitive space in non-alcoholic beverages
                          • Sparkling waters
                            • Coffee
                              • Hybrid beverages
                                • Energy drinks
                                  • Carbonated soft drinks
                                  • Market Factors

                                    • Demonized sugar stalls growth in RTD beverages
                                      • Tea strikes high alignment as a healthy beverage
                                        • The family factor
                                          • Figure 13: US households, by presence of own children, 2007-17
                                          • Figure 14: Daily tea consumption, by parental status, May 2018
                                          • Figure 15: Attitudes toward tea, by repertoire of tea types, May 2018
                                        • Hispanic consumers offer opportunity for category growth
                                          • Figure 16: US Population, by Hispanic origin, 2013-23
                                          • Figure 17: Daily tea consumption, by Hispanic origin, May 2018
                                        • Strong economy supports premiumization
                                          • Figure 18: Consumer Sentiment Index, January 2007-July 2018
                                      • Key Players – What You Need to Know

                                        • Pepsi Lipton maintain strong foothold on market share
                                          • New refrigerated teas tracking fresh, healthy
                                            • Kombucha rising
                                              • Stalled sales necessitate segment innovation
                                                • Leverage functional attributes to elevate health benefits
                                                • Company and Brand Sales

                                                  • Pepsi Lipton maintains commanding lead in market share
                                                    • Sales of tea and RTD tea by company
                                                      • Figure 19: MULO sales of tea and RTD tea, by leading companies, rolling 52 weeks 2017 and 2018
                                                  • What’s Working?

                                                    • The mainstreaming of kombuchas
                                                      • Health and wellness associations fuel interest in refrigerated tea
                                                        • Figure 20: MULO sales of refrigerated tea, by companies and brands, rolling 52 weeks 2017 and 2018
                                                      • Refrigerated tea launches support interest in clean beverages
                                                        • Figure 21: Refrigerated tea launches, by leading claims, 2014-18
                                                    • What’s Struggling?

                                                      • AriZona and Snapple falter, triggering canned/bottled RTD cool down
                                                        • Figure 22: MULO sales of canned/bottled RTD tea, by companies and brands, rolling 52 weeks 2017 and 2018
                                                      • Decline in share of RTD tea launches
                                                        • Figure 23: Tea launches, by format, 2014-18
                                                      • Instant tea sales continue to decline
                                                        • Figure 24: MULO sales of instant tea mixes, by companies and brands, rolling 52 weeks 2017 and 2018
                                                    • What’s Next?

                                                      • Promoting tea as part of functional self-care
                                                        • Figure 25: Reasons for tea consumption, May 2018
                                                      • For taste: tea to satisfy treat mentality
                                                        • For energy: tea as the healthy energy drink
                                                          • For relaxation and stress relief…tea to help body and mind unwind
                                                            • For improved digestion: tea to help restore balance
                                                            • The Consumer – What You Need to Know

                                                              • Tea nearly universally consumed
                                                                • Tea characteristics exemplify market depth and breadth
                                                                  • Bottled, single-serve drive RTDs
                                                                    • Sweet tea still popular, despite sugar revolt
                                                                      • Daypart, season, and function influence tea choice
                                                                        • Taste is primary appeal, drinkers also motivated by health and function
                                                                          • High sugar content, artificial ingredients plague RTDs
                                                                          • The Tea Consumer

                                                                            • Majority of adults are tea drinkers
                                                                              • Figure 26: Tea consumption, by select demographics, May 2018
                                                                            • A third of all adults drink tea daily
                                                                              • Figure 27: Frequency of consumption, May 2018
                                                                            • Daily tea users are more likely to be younger, Hispanic, and parents
                                                                              • Figure 28: Frequency of consumption, by select demographics, May 2018
                                                                          • Tea Characteristics

                                                                            • Iced and hot teas have equal incidence of use
                                                                              • Figure 29: Tea temperature, May 2018
                                                                            • Tea temperature by demographic
                                                                              • Figure 30: Tea temperature, by select demographics, May 2018
                                                                            • Bagged tea captures strongest penetration
                                                                              • Figure 31: Forms of tea, brewed teas, May 2018
                                                                            • Forms of tea by demographic
                                                                              • Figure 32: Forms of tea, by select demographics, May 2018
                                                                            • A variety of tea types show strong consumer acceptance
                                                                              • Figure 33: Types of tea, May 2018
                                                                            • Connection between daily tea drinkers and large repertoire of tea types
                                                                              • Figure 34: Repertoire of tea types, by select demographics, May 2018
                                                                          • Tea Varieties

                                                                            • Green tea is the most popular variety
                                                                              • Figure 35: Tea varieties consumed, May 2018
                                                                            • Flavored teas popular among young tea drinkers
                                                                              • Figure 36: Tea varieties consumed, by age, May 2018
                                                                            • Hispanic consumers are more likely users of tea blends and therapeutic teas
                                                                              • Figure 37: Tea varieties consumed, by Hispanic origin, May 2018
                                                                            • Strong repertoire of tea types encourages broad use of tea varieties
                                                                              • Figure 38: Tea varieties, by repertoire of tea types, May 2018
                                                                          • Tea Formats

                                                                            • RTD tea drinkers prefer bottled tea, sweetened regular, single-serving
                                                                              • Figure 39: RTD tea formats, May 2018
                                                                            • Opportunities for RTD marketers to offer a variety of bottled, single-serving teas
                                                                              • Figure 40: TURF analysis – RTD tea formats, May 2018
                                                                              • Figure 41: TURF analysis – RTD tea formats, May 2018
                                                                            • Varied repertoire of tea types translates to greater acceptance of formats
                                                                              • Figure 42: RTD tea formats, by repertoire of tea types, May 2018
                                                                          • Tea Drinking Occasions

                                                                            • Hot tea popular at morning and night; iced tea dominates afternoon
                                                                              • Figure 43: Tea drinking occasions – Time of day, May 2018
                                                                            • Hot tea encourages relaxation; iced tea quenches thirst
                                                                              • Figure 44: Tea drinking occasions – Functionality, May 2018
                                                                          • Reasons for Tea Consumption

                                                                            • Taste drives tea use
                                                                              • Figure 45: Reasons for tea consumption, May 2018
                                                                            • Tea’s health value provides an impetus for use among 18-34s
                                                                              • Figure 46: Reasons for tea consumption, by age, May 2018
                                                                            • Women drink tea because it has fewer calories
                                                                              • Figure 47: Reasons for tea consumption, by gender, May 2018
                                                                            • Tea’s healthy beverage association drives consumption by Hispanic consumers
                                                                              • Figure 48: Reasons for tea consumption, by Hispanic origin, May 2018
                                                                            • Taste, relaxation drive use among heavy users
                                                                              • Figure 49: Reasons for tea consumption, by repertoire of tea types, May 2018
                                                                          • Attitudes toward Tea

                                                                            • High sugar content and artificial ingredients are negatives of RTD tea
                                                                              • Figure 50: Attitudes toward tea, May 2018
                                                                            • Younger adults show interest in tea innovation
                                                                              • Figure 51: Attitudes toward tea, by age, May 2018
                                                                            • Hispanic consumers will pay more for teas with additional attributes
                                                                              • Figure 52: Attitudes toward tea, by Hispanic origin, May 2018
                                                                            • Tea users with a varied repertoire are willing to pay more innovative tea
                                                                              • Figure 53: Attitudes toward tea, by repertoire of tea types, May 2018
                                                                          • Appendix – Data Sources and Abbreviations

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

                                                                                              • Figure 54: Total US sales and forecast of tea and RTD tea, at inflation-adjusted prices, 2013-23
                                                                                              • Figure 55: Total US retail sales and forecast of tea and RTD tea, by segment, at current prices, 2013-23
                                                                                              • Figure 56: Total US sales of tea and RTD tea, by channel, at current prices, 2013-23
                                                                                          • Appendix – Key Players

                                                                                              • Figure 57: MULO sales of bagged, loose leaf, and single-cup tea, by companies and brands, rolling 52 weeks 2017 and 2018

                                                                                          Tea and RTD Tea - US - September 2018

                                                                                          £3,435.47 (Excl.Tax)