Sales of loose and bagged tea up 5.9% in 2013, hitting $1.8 billion, ABC report finds

By Hank Schultz contact

- Last updated on GMT

Japanese tea fields.  Photo courtesy of Calli O'Brien.
Japanese tea fields. Photo courtesy of Calli O'Brien.

Related tags: Tea

Sales of herbal and other teas increased by 5.9% in the United States in 2013, capping off a decade of solid growth, according to a market report by the American Botanical Council.  It was ABC’s first such report on the tea sector.

According to the report, published in ABC’s online magazine HerbalEGram, sales of loose, bagged, concentrated and herbal tea reached  $1.8 billion in the US in 2013, a 5.9% increase from 2012.  Ready to drink (RTD) tea sales actually declined slightly by comparison, coming in at $2.4 billion.

Ash Lindstrom, managing editor of HerbalGram who participated in the production of the report, said that health and wellness and an evolving retail landscape have helped drive the health increase in sales.  And she said teas have benefited from positive media coverage, something that other dietary supplement ingredients have not enjoyed in recent years.

“People are embracing other modalities for the delivery of healthy products and the notion of food as medicine is big.  Under supplements you can have some shifty products in the sports nutrition or sexual enhancement areas.  Or you can have tainted products masquerading as supplements.  Tea has the benefit of not being under that umbrella,”​ Lindstrom told NutraIngredients-USA.

Big market opportunity

The report also looked at tea sales through a year’s period ending in August, 2014.  In that period tea sales were up 5% over the same period a year previously, indicating that growth in 2014 should remain solid, too.

The report noted that the retail landscape is rapidly evolving, driven by the emergence of tea-specific retail outlets and suppliers devoted to tea.  The development has caught the eye of retailers of other beverages, most notably Howard Schultz, CEO of Starbucks, who was quoted in the report calling tea a “$90 billion global market opportunity.” 

Starbucks has acquired the Tazo line of herbal teas and more recently acquired specialty tea retailer Teavana.  The report quotes Schultz as saying the company has a goal for 1,000 Teavana outlets.

Lindstrom said tea has a long history of use and seems ideally positioned to tap into consumers’ concern for health and wellness.

“When you ask consumers what they want, they want to support their immune system, they want some more energy, and they want things that can help calm them down. Tea is positioned to take advantage of this trend to think of food as medicine and it has a ritual associated with it that goes back thousands of years,”​ Lindstrom said.

Sales breakdown

When looking at the data, which was supplied by market research firm SPINS, black tea was the clear leader, with sales of black tea in bags coming in at $580 million in 2013.  But those sales had little momentum, rising only 2.5% year-over-year.  The big winners were herbal teas in bags, coming in at $199 million for an 11% gain, and medicinal teas in bags, which sold $177 million during the period for a 15.4% rise.  Other categories that grew strongly included chai tea bags ($66 million, 21.4% increase) and liquid tea concentrates ($41 million, up 44.3%).

Among individual herbal ingredients, chamomile was the leader both in herbal and medicinal teas. Rounding out the list of the top five flagship ingredients in the medicinal lines (measured as single-ingredient products or multi-ingredient formulations where the herb was the  primary  ingredient) were senna, ginger, echinacea and dandelion.  On the herbal side, the rest of the top five were various forms of mint, ginger, valerian and acai.

Bright outlook

The report’s authors said that tea sales are likely to maintain their current momentum.  Tea is after all the world’s second most consumed beverage, they noted.

“More impressive than the current size of the tea industry is the fact that, for more than a decade, annual sales totals … have grown consistently in the United States with very few types of tea showing anything other than consistent gains,”​ the authors wrote. “The onslaught of hundreds of new retail tea outlets — and thousands more projected to open in the next few years — parallels the germinal stages of the fledgling US natural foods industry circa 1980-2000.”

“Growth in the tea market parallels the growth in the herbal supplement market, indicating continued interest by millions of American consumers in tea and other herbal beverages and their associated health benefits,”​ said ABC Founder and Executive Director Mark Blumenthal.

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