Tea sales in the out-of-home coffee shop market are estimated at £300 million, according to a new report on tea drinking by Allegra World Coffee Portal.
In a nation of 64 million people, 165 million cups of tea are consumed every day in the UK. The majority of cups are consumed at home or at work.
Polarisation of tea brands
The market is split between premium brands (e.g. Twinings) and economy brands (e.g. Tetley). Economy brands are responding to declining black tea sales by introducing a wider variety of non-traditional teas. Exposure to premium tea is changing the preferences of habitual economy tea drinkers and High Street coffee shops are focusing on premium brands.
Growth potential for tea out of home
Consumers drink on average 11 cups of tea per week at home, 5 at work and just 0.5 in coffee shops. Tea consumption in coffee shops has risen 3 percent points in the last two years from 14% in 2012 to 17% in 2014. 15% of consumers intend to increase tea consumption in the upcoming year compared with 77% who expect to maintain their current tea consumption frequency.
Premiumisation is key
Premiumisation is an important trend in the UK market. 62% of consumers consider a premium brand such as Twinings or Teapigs to be the most important factor when ordering tea out of home. Traditional black tea sales are in decline, while premium teas such as green, fruit and herbal are becoming more popular. 53% of consumers indicated they would spend more on a premium tea.
Tea spend lower than coffee spend
Consumers spend on average £1.68 on a cup of tea out of home. This compares to £2.31 for a latte or cappuccino. This price difference means that 38% consider tea to be good value for money in a coffee shop.
Tea-focused High Street operators
Two thirds of tea drinkers would like to see specialised tea chains on the High Street. Starbucks’ US launch of Teavana Tea Shops in 2013 is a strong indicator that a similar concept could launch in the UK. Allegra expects this to be a catalyst for other specialised tea shops.
Other trends
Consumers have strong views on their preferred way of brewing tea so customisation with non-dairy, lemon, added water etc. is essential to meet their preferences. Healthier lifestyles are increasingly important. Green, fruit and herbal teas help consumers satisfy their desire for healthier choices. Health-promoting tea blends with specific benefits are growing in popularity (e.g. cold remedy, boosting immune system, aiding digestion). Launch of ready-to-drink teas such as matcha green tea from Teapigs mirrors the recent trend in ready-to-drink coffee beverages.
World Coffee Portal
The Allegra World Coffee Portal is destined to become the premier global information platform for senior decision makers across the coffee and related retail and foodservice sectors. Building upon the unparalleled coffee expertise of Allegra Strategies, the World Coffee Portal is in advance stages of development and will be available to clients in 2015. The portal will deliver real-time data, hot beverage trend information, brand profiles and strategic analysis on some of the most important coffee markets across the world including more than 20 European Markets, USA, Australia and several Asian markets.