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UK Tea and Other Hot Drinks market report

Everything you need to make the right decisions

Providing the most comprehensive and up-to-date information and analysis of the Tea and Other Hot Drinks: Inc Impact of COVID-19 - UK market, and the behaviours, preferences and habits of the consumer.

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What are the key challenges facing the industry? Who is the consumer and what do they want? Where are the opportunities, where are the risks and what lies ahead?

Covered in this report

Having previously suffered long-term volume decline owing to the waning popularity of traditional black tea, the tea and other hot drinks market has emerged as a beneficiary of the COVID-19 pandemic. 45% of tea drinkers report turning to their hot brew more often since the outbreak started. Lockdown measures and the closure of on-premise venues created more at-home tea drinking occasions. Meanwhile, the health and emotional benefits commonly associated with this category, including the comforting nature of hot chocolate and traditional tea, as well as specific claims around wellbeing in the fruit/herbal tea segment, has also contributed to this uplift. These factors are expected to give rise to a 4.5% and 6.6% year-on-year jump in volume and value sales, respectively, in 2020.

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Expert analysis from a specialist in the field

Written by Emma Clifford, a leading analyst in the Food & Drink sector, her extensive knowledge delivers in-depth commentary and analysis to highlight current trends and add expert context to the numbers.

While proving troublesome for many markets, the COVID-19 crisis has provided the necessary ingredients needed to reverse the fortunes of the ailing tea and other hot drinks categories. Some of the long-term legacies of the pandemic will also support sales, such as greater remote working and an emphasis on physical and emotional wellbeing. The latter paves the way for more functional innovation, with claims linked to immune health offering particularly ripe opportunities Emma Clifford
Associate Director - Food & Drink

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What's included

What's included

Table of contents

Table of contents

  1. Overview

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

          • Impact of COVID-19 on the tea and other hot drinks market
            • Figure 1: Short, medium and long term impact of COVID-19 on tea and other hot drinks, 30 July 2020
          • The market
            • COVID-19 gives tea and other hot drinks a healthy boost
              • Figure 2: UK retail value sales of tea and other hot drinks, 2015-25
            • 2008-10 learnings bode well for the market in the looming recession
              • The recovery of coffee shops hampered by cautious spending habits, lingering safety concerns and more remote working
                • Companies and brands
                  • Top tea brands well-equipped to weather the COVID-19 storm
                    • Yorkshire Tea overtakes PG Tips, stellar performance from Pukka
                      • Figure 3: Leading brands’ value sales in the UK tea market, 2017/18-2019/20
                    • Innovation continues to evolve the cold brew tea segment
                      • Functional benefits are a growing focus in tea
                        • Bettys & Taylors of Harrogate leads adspend, an advertising rebrand for Tetley waves goodbye to the Tetley Tea Folk
                          • Twinings, PG Tips and Yorkshire Tea lead on quality, traditional and authentic associations respectively
                            • Figure 4: Attitudes towards and usage of selected brands, May 2020
                          • The consumer
                            • Standard black tea is still the nation’s firm favourite
                              • Figure 5: Frequency of drinking tea, May 2020
                            • A bigger focus should be put on the environmental impact of tea farming
                              • Figure 6: Behaviours relating to tea, May 2020
                            • A big gap in the market for teas with UK-sourced ingredients
                              • Figure 7: Interest in innovation in tea and other hot drinks, May 2020
                            • Loose leaf tea can benefit from more home-bound lifestyles, potentially setting a positive spiral in motion
                              • Figure 8: Attitudes towards tea and hot chocolate, May 2020
                            • Stronger associations with flavour for fruit/herbal tea, but scope for improvement
                              • Figure 9: Correspondence analysis of attributes associated with selected hot drinks, May 2020
                            • What we think
                            • The Impact of COVID-19 on Tea and Other Hot Drinks

                              • The market
                                • COVID-19 gives tea and other hot drinks a healthy boost
                                  • 2008-10 learnings bode well for tea and other hot drinks
                                    • More remote working going forward will support tea sales in the long term
                                      • The consumer
                                        • COVID-19 fuels emphasis on healthy diets
                                          • The emotional benefits of tea and other hot drinks have become more salient
                                            • Self-treating can encourage more tea drinking; rise in home baking gives cocoa a boost
                                              • Cautious spending habits will curb the return to coffee shops, fuelling a premiumisation trend in retail
                                                • COVID-19’s link to planetary health adds urgency to sustainability issues
                                                  • Companies and brands
                                                    • Large players are best poised to benefit from COVID-19
                                                      • PG Tips rallies tea brands to encourage togetherness during lockdown
                                                      • Issues and Insights

                                                        • A bigger focus should be put on the environmental impact of tea farming and a product’s lifecycle impact
                                                          • The facts
                                                            • The implications
                                                              • The time is right to invest in loose leaf tea innovation
                                                                • The implications
                                                                  • A need to boost tea’s image as being flavourful
                                                                    • The facts
                                                                      • The implications
                                                                      • The Market – What You Need to Know

                                                                        • Sales continued on their downward trajectory over 2015-19
                                                                          • COVID-19 gives tea and other hot drinks a healthy boost
                                                                            • 2008-10 learnings bode well for the market in the looming recession
                                                                              • The recovery of coffee shops hampered by cautious spending habits, lingering safety concerns and more remote working
                                                                                • COVID-19 and Brexit disruption set to cause tea supply issues
                                                                                • Market Size and Forecast

                                                                                  • Sales continued on their downward trajectory over 2015-19
                                                                                    • Figure 10: UK retail value and volume sales of tea and other hot drinks, 2015-25 (prepared on 23 July 2020)
                                                                                  • COVID-19 gives tea and other hot drinks a healthy boost
                                                                                    • Figure 11: UK retail value sales of tea and other hot drinks, 2015-25 (prepared on 23 July 2020)
                                                                                    • Figure 12: UK retail volume sales of tea and other hot drinks, 2015-25 (prepared on 23 July 2020)
                                                                                  • 2008-10 learnings bode well for the market in the looming recession
                                                                                    • Figure 13: Annual growth in UK volume and value retail sales of tea and other hot drinks, 2008-12
                                                                                  • The recovery of coffee shops hampered by cautious spending habits, lingering safety concerns and more remote working
                                                                                    • Forecast methodology
                                                                                    • Market Segmentation

                                                                                      • Sales of ordinary tea continue to wane
                                                                                        • Fruit and herbal teas steal value share
                                                                                          • Figure 14: UK retail value and volume sales of tea, by segment, 2017-19
                                                                                        • Decaffeinated tea posts robust volume growth
                                                                                          • Sales uplift in loose leaf tea sales in the first half of 2020
                                                                                            • 2019 sees no end to the fall in hot chocolate and malted drinks sales…
                                                                                              • … but 2020 is set to see a turnaround
                                                                                                • Figure 15: UK retail value and volume sales of hot chocolate and malted drinks, by segment, 2017-19
                                                                                              • Momentum builds in the rapidly growing iced tea market
                                                                                                • Figure 16: UK retail value and volume sales of iced tea, 2016-19
                                                                                            • Market Drivers

                                                                                              • Retail competition from coffee and soft drinks continues to mount
                                                                                                • Figure 17: Volume retail sales of tea and coffee, 2014-19
                                                                                              • COVID-19 and Brexit disruption set to cause tea supply issues
                                                                                                • The lockdown provides retail with respite from on-premise competition
                                                                                                  • Figure 18: Purchasing hot drinks out of home, by age and financial situation, August 2019
                                                                                                • A huge boost in tea drinking since the COVID-19 outbreak
                                                                                                  • Figure 19: Consumers who have been drinking tea more frequently since the COVID-19/coronavirus outbreak started, by age, May 2020
                                                                                                • COVID-19 has fuelled a premiumisation trend in hot drinks
                                                                                                  • The emotional benefits of tea and other hot drinks have come to the fore …
                                                                                                    • … with teas making explicit claims centred on mood well-placed to benefit
                                                                                                      • The sharp economic downturn bodes well for the market
                                                                                                        • Figure 20: Annual growth in UK volume and value retail sales of tea and other hot drinks, 2008-12
                                                                                                      • A renewed focus on the environment has implications for tea
                                                                                                        • It would be timely to focus on sustainable tea farming practices
                                                                                                        • Companies and Brands – What You Need to Know

                                                                                                          • Top tea brands well-equipped to weather the COVID-19 storm
                                                                                                            • Yorkshire Tea overtakes PG Tips
                                                                                                              • Stellar performance from Pukka
                                                                                                                • Innovation continues to evolve the cold brew tea segment
                                                                                                                  • Functional benefits are a growing focus in tea
                                                                                                                    • Bettys & Taylors of Harrogate accounted for 25% of adspend in 2019
                                                                                                                      • An advertising rebrand for Tetley waves goodbye to the Tetley Tea Folk
                                                                                                                        • Twinings, PG Tips and Yorkshire Tea lead on quality, traditional and authentic associations respectively
                                                                                                                        • Market Share

                                                                                                                          • Top tea brands well-equipped to weather the COVID-19 storm
                                                                                                                            • Figure 21: Leading brands’ value sales in the UK tea market, 2017/18-2019/20
                                                                                                                          • Yorkshire Tea overtakes PG Tips
                                                                                                                            • Figure 22: Leading brands’ value sales and shares in the UK tea market, 2017/18-2019/20
                                                                                                                            • Figure 23: Leading brands’ volume sales and shares in the UK tea market, 2017/18-2019/20
                                                                                                                          • Stellar performance from Pukka
                                                                                                                            • Only Galaxy and own-label post volume growth in hot chocolate in 2019/20
                                                                                                                              • Figure 24: Leading brands’ volume and value sales and shares in the UK hot chocolate market, 2017/18-2019/20
                                                                                                                            • Volume sales of Ovaltine and Horlicks stabilise despite price increases
                                                                                                                              • Figure 25: Leading brands’ volume and value sales and shares in the UK malted drinks market, 2017/18-2019/20
                                                                                                                          • Launch Activity and Innovation

                                                                                                                            • Twinings continues to lead launches
                                                                                                                              • Figure 26: Twinings Dark Collection, UK, 2020
                                                                                                                              • Figure 27: Share of new launches in the tea market, by company, 2015-20
                                                                                                                            • Innovation continues to evolve the cold brew tea segment
                                                                                                                              • Figure 28: Twinings Cold In-fuse launches, 2019-20
                                                                                                                              • Figure 29: Teapigs Cold Brew product launches, 2019-20
                                                                                                                            • Functional benefits are a growing focus in tea
                                                                                                                              • Figure 30: Share of new product launches in the UK tea market making functional claims, 2015-20
                                                                                                                            • Stress and sleep claims see the biggest growth
                                                                                                                              • Figure 31: Share of new product launches in the UK tea market making functional claims, by claim, 2015–20
                                                                                                                              • Figure 32: Examples of new launches in the tea market making functional stress and sleep claims, 2019-20
                                                                                                                            • Pukka taps into the hemp/CBD food and drink trend
                                                                                                                              • Figure 33: Examples of new launches in the tea market containing hemp/CBD, 2019
                                                                                                                            • Tea explores flavours inspired by sweets and desserts
                                                                                                                              • Figure 34: Examples of sweet and desserts flavoured launches in hot drinks, 2019-20
                                                                                                                            • Seasonal launches in tea
                                                                                                                              • Figure 35: Examples of seasonal launches in tea, 2019-20
                                                                                                                            • Environmentally-friendly packaging remains the leading ethical claim in tea
                                                                                                                              • Figure 36: New product launches in the tea market making ethical – environmentally friendly related claims, 2015-20
                                                                                                                            • Tata Consumer Products brings US-based Good Earth brand to the UK
                                                                                                                              • Yorkshire Tea achieves carbon neutral status
                                                                                                                                • More exciting flavours seen in hot chocolate NPD
                                                                                                                                  • Figure 37: Examples of flavoured hot chocolate, 2019-20
                                                                                                                                • Exploring different formats
                                                                                                                                  • Figure 38: Examples of new pod launches in hot chocolate, 2019-20
                                                                                                                              • Advertising and Marketing Activity

                                                                                                                                • Bettys & Taylors of Harrogate accounted for 25% of adspend on tea and other hot drinks in 2019
                                                                                                                                  • New celebrities enlisted for Yorkshire Tea’s latest campaign
                                                                                                                                    • Yorkshire Tea promotes new carbon neutral status
                                                                                                                                      • Figure 39: Total above-the line, online display and direct mail advertising expenditure on tea and other hot drinks, by advertiser, 2019 and 2020
                                                                                                                                    • An advertising rebrand for Tetley waves goodbye to the Tetley Tea Folk
                                                                                                                                      • Unilever invests in Pukka’s biggest ever campaign in 2019
                                                                                                                                        • PG Tips unveils major campaign to tackle loneliness
                                                                                                                                          • Cadbury’s launches ‘Make It Yours’ activation in pop-up homes
                                                                                                                                            • Nielsen Ad Intel coverage
                                                                                                                                            • Brand Research

                                                                                                                                                • Brand map
                                                                                                                                                  • Figure 40: Attitudes towards and usage of selected brands, May 2020
                                                                                                                                                  • Figure 41: Key metrics for selected brands, May 2020
                                                                                                                                                • PG Tips leads on trust; Twinings wins on quality associations
                                                                                                                                                  • Figure 42: Attitudes, by brand, May 2020
                                                                                                                                                • Brand personality: PG Tips and Tetley have strong associations with accessibility
                                                                                                                                                  • Figure 43: Brand personality – macro image, May 2020
                                                                                                                                                • Twinings and Pukka are seen as the most stylish and special
                                                                                                                                                  • Figure 44: Brand personality – micro image, May 2020
                                                                                                                                                • Brand analysis
                                                                                                                                                  • With a strong all-round image, Twinings is most likely to be deemed worth paying more for
                                                                                                                                                    • Figure 45: User profile of Twinings, May 2020
                                                                                                                                                  • Yorkshire Tea stands out on authenticity
                                                                                                                                                    • Figure 46: User profile of Yorkshire Tea, May 2020
                                                                                                                                                  • Perceptions of innovativeness are a key strength for Pukka, but it falls down on value for money
                                                                                                                                                    • Figure 47: User profile of Pukka, May 2020
                                                                                                                                                  • PG Tips is the most trusted brand, and wins on value for money perceptions
                                                                                                                                                    • Figure 48: User profile of PG Tips, May 2020
                                                                                                                                                  • Tetley has a lacklustre image compared to its stablemates
                                                                                                                                                    • Figure 49: User profile of Tetley, May 2020
                                                                                                                                                • The Consumer – What You Need to Know

                                                                                                                                                  • Standard black tea is still the nation’s firm favourite
                                                                                                                                                    • Other types of tea drunk most by ‘foodie’ groups
                                                                                                                                                      • Drinking of tea and other hot drinks is typically higher among those struggling financially
                                                                                                                                                        • Biodegradable/compostable tea bags important, but offer little standout; a bigger focus should be put on the environmental impact of tea farming
                                                                                                                                                          • A big gap in the market for teas with UK-sourced ingredients
                                                                                                                                                            • Loose leaf tea can benefit from more time-rich lifestyles, potentially setting a positive spiral in motion
                                                                                                                                                              • Increased associations with flavour for fruit/herbal tea, but scope for improvement
                                                                                                                                                              • Impact of COVID-19 on Consumer Behaviours

                                                                                                                                                                • Health becomes a higher priority …
                                                                                                                                                                  • Figure 50: Healthy eating as a priority since the COVID-19 outbreak, 7-14 May 2020
                                                                                                                                                                • … with immune health in the spotlight
                                                                                                                                                                    • Figure 51: Selected attitudes towards health, 23 April–7 May 2020
                                                                                                                                                                  • Widespread concerns about unhealthy eating and weight gain
                                                                                                                                                                      • Figure 52: Consumers concerned about putting on weight and unhealthy eating as a result of the coronavirus outbreak, by gender and age, 23 April–7 May 2020
                                                                                                                                                                    • A sharper focus on the need to protect planetary health
                                                                                                                                                                      • A surge in home baking
                                                                                                                                                                          • Figure 53: Changes to baking since the start of the COVID-19 outbreak, by age and gender, 23 April-7 May 2020
                                                                                                                                                                          • Figure 54: Changes to how often consumers have been eating treats since the start of the COVID-19 outbreak, by age and gender, 23 April- 7 May 2020
                                                                                                                                                                        • Some post-lockdown recovery for on-premise drinking venues
                                                                                                                                                                          • Figure 55: Activities consumers are most looking forward to doing once the current social distancing measures are relaxed, 30 April–7 May 2020
                                                                                                                                                                        • However wariness over busy public spaces will deter many
                                                                                                                                                                          • More cautious spending presents another barrier for coffee shops
                                                                                                                                                                          • Drinking Habits – Tea and Other Hot Drinks

                                                                                                                                                                            • Standard black tea is still the nation’s firm favourite
                                                                                                                                                                              • Figure 56: Drinking of tea and other hot drinks, by type, May 2020
                                                                                                                                                                              • Figure 57: Frequency of drinking tea, May 2020
                                                                                                                                                                            • Other types of tea drunk most by ‘foodie’ groups
                                                                                                                                                                              • Figure 58: Drinking of tea and other hot drinks, by type, by demographics, May 2020
                                                                                                                                                                            • Young adults are the core users of other hot drinks
                                                                                                                                                                              • Figure 59: Frequency of drinking hot chocolate and malted hot drinks, May 2020
                                                                                                                                                                            • Drinking of tea and other hot drinks is typically higher among those struggling financially
                                                                                                                                                                              • Figure 60: Drinking of tea and other hot drinks, by type, by financial situation, May 2020
                                                                                                                                                                            • Over two fifths of under-35s drink RTD cold tea
                                                                                                                                                                              • Figure 61: Drinking of ready-to-drink cold tea, by age, May 2020
                                                                                                                                                                          • Behaviours Relating to Tea

                                                                                                                                                                            • Biodegradable/compostable tea bags seen as important, but offer limited standout
                                                                                                                                                                              • Figure 62: Behaviours relating to tea, May 2020
                                                                                                                                                                            • A bigger focus should be put on the environmental impact of tea farming
                                                                                                                                                                              • Widespread enjoyment in experimentation
                                                                                                                                                                                • Opportunities for tea brands to foray into crowd-sourcing flavour inspiration
                                                                                                                                                                                  • Perceived emotional benefits are a key motivator for young tea drinkers
                                                                                                                                                                                    • Scope for brands to bolster their links to emotional wellbeing
                                                                                                                                                                                    • Interest in Innovation in Tea and Other Hot Drinks

                                                                                                                                                                                      • A big gap in the market for teas with UK-sourced ingredients
                                                                                                                                                                                        • Figure 63: Interest in innovation in tea and other hot drinks, May 2020
                                                                                                                                                                                      • Spotlight on provenance can enhance quality and sustainable associations
                                                                                                                                                                                        • Supporting British workers stands to chime
                                                                                                                                                                                          • Figure 64: Interest in innovation in tea, by drinking of tea, May 2020
                                                                                                                                                                                        • Customisation in tea chimes, with tea subscription services also offering potential
                                                                                                                                                                                          • Chilli, spices and botanicals missed opportunities in other hot drinks
                                                                                                                                                                                            • Figure 65: Interest in innovation in other hot drinks, by drinking of other hot drinks, May 2020
                                                                                                                                                                                        • Attitudes towards Tea and Other Hot Drinks

                                                                                                                                                                                          • Loose leaf tea can benefit from more time-rich lifestyles…
                                                                                                                                                                                            • … helped by perceptions of superior taste
                                                                                                                                                                                              • Figure 66: Attitudes towards tea and hot chocolate, May 2020
                                                                                                                                                                                            • Potential to set a positive spiral in motion
                                                                                                                                                                                              • Specialist tea shops deliver an enjoyable shopping experience for many
                                                                                                                                                                                                • Supermarkets should look to specialist tea brands for inspiration
                                                                                                                                                                                                  • Figure 67: ‘Discover a world of coffee’ map at Sainsbury’s, March 2019
                                                                                                                                                                                                  • Figure 68: Attitudes towards tea, by drinking of tea, May 2020
                                                                                                                                                                                                • Demand for more premium instant hot chocolate
                                                                                                                                                                                                  • Figure 69: Attitudes towards hot chocolate, by drinking of hot chocolate and hot malted drinks, May 2020
                                                                                                                                                                                              • Qualities Associated With Hot Drinks

                                                                                                                                                                                                • Methodology
                                                                                                                                                                                                  • Figure 70: Correspondence analysis, May 2020
                                                                                                                                                                                                • Improved associations with flavour for fruit/herbal tea …
                                                                                                                                                                                                  • … but a need to go further to meet demand for flavourful drinking experiences
                                                                                                                                                                                                    • Standard and speciality tea can benefit from bolstering flavour associations
                                                                                                                                                                                                      • Figure 71: Qualities associated with hot drinks, May 2020
                                                                                                                                                                                                      • Figure 72: Further qualities associated with hot drinks, May 2020
                                                                                                                                                                                                    • Scope to focus more on energy provision
                                                                                                                                                                                                      • A need to boost associations with hydration
                                                                                                                                                                                                      • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                                                                                                                          • Abbreviations
                                                                                                                                                                                                            • Consumer research methodology
                                                                                                                                                                                                            • Appendix – Market Share

                                                                                                                                                                                                                • Figure 73: Leading manufacturers’ sales and shares in the UK tea market, by volume and value, 2017/18-2019/20
                                                                                                                                                                                                                • Figure 74: Leading manufacturers’ sales and shares in the UK hot chocolate market, by volume and value, 2017/18-2019/20
                                                                                                                                                                                                                • Figure 75: Leading manufacturers’ sales and shares in the UK malted drinks market, by volume and value, 2017/18-2019/20
                                                                                                                                                                                                            • Appendix – Launch Activity and Innovation

                                                                                                                                                                                                                • Figure 76: Share of new launches in the tea market, by format, 2015-20

                                                                                                                                                                                                            About the report

                                                                                                                                                                                                            This report will give you a complete 360-degree view of your market. Not only is it rooted in robust proprietary and high-quality third-party data, but our industry experts put that data into context and you’ll quickly understand:

                                                                                                                                                                                                            • The Consumer

                                                                                                                                                                                                              What They Want. Why They Want It.

                                                                                                                                                                                                            • The Competitors

                                                                                                                                                                                                              Who’s Winning. How To Stay Ahead.

                                                                                                                                                                                                            • The Market

                                                                                                                                                                                                              Size, Segments, Shares And Forecasts: How It All Adds Up.

                                                                                                                                                                                                            • The Innovations

                                                                                                                                                                                                              New Ideas. New Products. New Potential.

                                                                                                                                                                                                            • The Opportunities

                                                                                                                                                                                                              Where The White Space Is. How To Make It Yours.

                                                                                                                                                                                                            • The Trends

                                                                                                                                                                                                              What’s Shaping Demand – Today And Tomorrow.

                                                                                                                                                                                                            Please Note: This is a sample report. All of the figures, graphs, and tables have been redacted.

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