Premium brands are driving out-of-home tea sales

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An opportunity to grow boutique tea sales has been flagged up by trendspotter Allegra.

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.

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The majority of cups are consumed at home or at work.

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.

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 per cent 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 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.

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.

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.

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).

The launch of ready-to-drink teas such as matcha green tea from Teapigs mirrors the recent trend in ready-to-drink coffee beverages.
 

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