Report: To Jumpstart Growth, U.S. Tea Companies Should Examine Evolution of Asian Pacific Market

Amid rising consumer concerns about obesity and sagging demand for highly sweetened ready-to-drink (RTD) teas, U.S. beverage marketers should look to the evolution and growth of unsweetened and fresh-brewed tea products in Asian Pacific markets as a way to jumpstart stagnant growth in the category, according to a new report from Euromonitor International, a London-based market research firm.

Jonas Feliciano, the author of the report, wrote that “concerns about sugar content and consumer demand for natural ingredients have helped less sweet teas grow in Japan and are gaining in popularity in many Asian countries.” Feliciano pointed to strong performance of unsweetened varieties of Asian brands including Oi Ocha, Ayataka and Sokenbicha as examples of products that have excelled as a result of consumer demand for low-sugar, zero-calorie teas. He also noted that Ayataka, an all-natural, zero-calorie tea marketed by The Coca-Cola Co., which claims to be the “closest [RTD tea] to authentic Japanese teapot brewed tea,” as having found traction in “a market where the flavour differences between hot tea and RTD tea continues to blur.”

“As consumers in both the U.S. and across the world examine soft drink labels more closely than ever before, calories and ingredients remain important, but taste remains paramount,” said Feliciano. “Unsweetened, brewed RTD teas are a strong option for health conscious consumers thanks to the subtleties and variety of flavours that tea provides, as well as its adaptability with other beverages.”

Indeed, momentum for reduced sugar and low-calorie teas has already had an impact on innovation within the U.S. tea category. Feliciano wrote that while large U.S. tea brands including Lipton, Arizona and Snapple have experienced value declines for 2013, others like Coca-Cola’s Honest Tea — which recently released a new PET packaged Unsweet Lemon Tea — and PepsiCo’s Lipton’s Pure Leaf are gaining market share with zero-calorie and unsweetened products, as well as those with brewed with real tea leaves.

“Preliminary 2013 data regarding sales of Honest Tea and Pure Leaf is promising, with each brand showing strong growth from the previous year,” Feliciano said. “This seems to demonstrate a shift in US consumer attitudes toward RTD teas – one where low calorie teas and teas with healthier, natural ingredients are growing in popularity.”