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US tea market growth to continue, predicts Packaged Facts

By Caroline Scott-Thomas, 06-Dec-2011

Related topics: Health and nutritional ingredients, Markets

The US market for tea has surged 22% in the past five years, reaching more than $6.5bn in 2011, according to a new report from Packaged Facts.

The report, Tea and Ready-to-Drink Tea in the US, said that increasing demand for tea has been driven by the ready to drink (RTD) and refrigerated tea segments in particular, which have taken off in recent years, despite a weak economy. Retail tea sales across segments were up 5.2% in 2011 compared to a year earlier, and rose from $5.4bn five years ago.

Bright horizons

The market researcher said that growth in the US tea market is likely to continue its upward trajectory over the next five years, driven by the success of refrigerated and RTD tea; the acquisitions of Honest Tea by Coca-Cola and Sweet Leaf Tea by Nestlé Waters, which will open new distribution channels for these and other specialty brands; broadening consumer recognition of tea’s health benefits; and continued expansion of tearooms and tea offerings by retailers, restaurants and coffeehouses.

“While the country is still mired in its economic doldrums, tea will continue to outpace market growth in the near term,” the report said.

Packaged Facts projects that the US tea market will grow from about 6.6% in 2012, to 8.7% in 2014, to reach $8.3bn.

Fair Trade gains

Fair Trade has also proved to be a major trend in the US tea industry. There was a big jump in products certified as fair trade during 2011, up 38% on 2010 levels, and over 90 tea companies now have products certified, the market researcher said. According to SPINS sales data, consumers are increasingly interested in Fair Trade tea, with certified product sales up 24% in 2010.

In particular, Honest Tea said in October last year that all of its teas would carry Fair Trade certification.