global state of the industry: a review of the top tea trends and markets around the world

GLOBAL STATE OF THE INDUSTRY

A REVIEW OF THE TOP TEA TRENDS AND MARKETS AROUND THE WORLD HOWARD TELFORD

MAY 2015

© Euromonitor International

2 INDUSTRY: SECTOR

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3 INDUSTRY: SECTOR

Volume v Brewed Volume

Retail/off-trade; Foodservice/on-trade

Brewed iced tea = packaged tea

CAGR (Compound annual growth rate) over a 5 year period

Definitions

DEFINITIONS

Coffee Tea

Black Tea

Fruit/

Herbal Tea

Green Tea

Instant Tea

Other Tea

Other Hot Drinks



WHERE IS TEA TODAY?

OPPORTUNITY AREAS

WHERE ARE WE GOING?

43.1 US$ BILLION 2014 RETAIL VALUE RSP

7.7% COMPOUNDED ANNUAL GROWTH SINCE 2009

13.3 US$ BILLION ABSOLUTE RETAIL VALUE GROWTH SINCE 2009


6 INDUSTRY: SECTOR

Tea is the second largest global packaged beverages by volume

WHERE IS TEA TODAY?

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

Mil

lio

ns

of

Lit

res

Global Beverage Market, Total RTD Volume, 2014

286 BILLION LITRES




7 INDUSTRY: SECTOR

Top 10 Volume (Litres) 2014 Growth

China 48,335 mn 5%

Russia 23,929 mn -

India 17,450 mn 4%

Egypt 15,929 mn 1%

Pakistan 12,895 mn 4%

UK 9,852 mn -3%

Indonesia 9,348 mn 5%

Iran 8,887 mn 9%

Japan 6,746 mn 1%

Turkey 6,564 mn 2%

Global top ten in retail volume in 2014

WHERE IS TEA TODAY?




8 INDUSTRY: SECTOR

Top 10 Value (Dollars)

China $9,671 mn

Russia $3,954 mn

Japan $3,538 mn

USA $2,390 mn

India $2,065 mn

Germany $2,014 mn

Turkey $1,327 mn

UK $1,283 mn

Pakistan $1,170 mn

Uzbekistan $1,111 mn

Global top ten in retail value in 2014

WHERE IS TEA TODAY?




9 INDUSTRY: SECTOR

How tea preferences look by market…

WHERE IS TEA TODAY?

Leading Tea Category

By Retail Brewed Volume, 2014

Black Tea

Green Tea

Fruit/Herbal Tea

Other Tea

No Data




10 INDUSTRY: SECTOR

Consumption of black and green tea dominates emerging markets

WHERE IS TEA TODAY?

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

Black Tea Green Tea Fruit/HerbalTea

Instant Tea Other Tea

Ret

ail

RT

D V

olu

me

( m

illi

on

lit

res

)

Retail Brewed Volume 2014

Developed Markets Emerging Markets




11 INDUSTRY: SECTOR

Hot Drinks by Volume… ….Hot Drinks by Value

0

50

100

150

200

250

300

350

Volume

To

tal

Bre

wed

Vo

lum

e -

bil

lio

n l

itre

s

Coffee

Tea

Other HotDrinks

0

10

20

30

40

50

60

70

80

90

Value

Ret

ail

RS

P (

Fix

ed,

Cu

ren

t) -

US

$ b

illi

on

Coffee

Tea

Other HotDrinks

Value versus volume: The song remains the same

WHERE IS TEA TODAY?




12 INDUSTRY: SECTOR

A slow down in Russia

What’s changed in the last year?

WHERE IS TEA TODAY?

-0.2

0

0.2

0.4

0.6

0.8

1

1.2

2009-10 2010-11 2011-12 2012-13 2013-14 2014-15(Forecast)

% g

row

th

Russia– Tea Retail Brewed Volume Growth 2009-14




13 INDUSTRY: SECTOR

A (sort of) slow down in China


WHERE IS TEA TODAY?

0

2

4

6

8

10

2009-10 2010-11 2011-12 2012-13 2013-14 2014-15(Forecast)

% g

row

th

China – Tea Retail Brewed Volume Growth 2009-14




14 INDUSTRY: SECTOR

India’s ascension into the global value top 5


WHERE IS TEA TODAY?

2009 2014

1 China China

2 Japan Russia

3 Russia Japan

4 USA USA

5 Germany India

6 UK Germany

7 Turkey Turkey

8 India UK




15 INDUSTRY: SECTOR

Strong tea growth; but traditional styles of consumption are old-fashioned

New tastes, new occasions lead to new opportunities for value growth

EMERGING: Distribution, Local Appeal, Convenience

DEVELOPED: Health, Functionality, Variety

Consumers are seeking something new

WHERE IS TEA TODAY?




16 INDUSTRY: SECTOR

Our tastes are changing…

Developed market baby boomers, Millenials

Urban growth, growth of global cities

Smaller households

Experimentation with new flavours, formats and use occasions

What are the changing consumer drivers?

WHERE IS TEA TODAY?

30

32

34

36

38

40

42

44

1984 1994 2004 2014 2024

Me

dia

n A

ge

Median age in US, AUS, CA

US Australia Canada

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

UrbanPopulation

RuralPopulation

Global expected population growth 2014-19




17 INDUSTRY: SECTOR

…and how we shop is changing


WHERE IS TEA TODAY?

Hard Discounters

Premium Grocery

Image: Whole Foods Market® Own Image




18 INDUSTRY: SECTOR


WHERE IS TEA TODAY?

0% 20% 40% 60% 80% 100%

Emerging

Developed

2014 Tea Retail Distribution, Developed v. Emerging Markets

Modern Grocery

Traditional Grocery

Non-Grocery + Non-Store

…in developed and emerging markets…

Modern v Traditional




19 INDUSTRY: SECTOR

Tea’s versatility makes it special

OPPORTUNITY AREAS

Flavour Wellness

Occasion Format

Iced tea blends

Fruit teas

Milk teas/bubble teas

Tea Lattes

Tea and Juice Blends

Specialty Teas




20 INDUSTRY: SECTOR

05

10152025

US

0

10

20

30

UK

When do you snack, drink coffee, or drink tea? US and UK

OPPORTUNITY AREAS

Source: Euromonitor Out and About Survey (2012)




21 INDUSTRY: SECTOR

05

10152025

India

0

10

20

30

Mexico

When do you snack, drink coffee, or drink tea? Mexico and India

OPPORTUNITY AREAS




22 INDUSTRY: SECTOR

FLAVOUR

Embrace flavour versatility

Lighter, fruitier hot teas

Indulgent, milkier tea lattes

Non traditional: flavour to win younger consumers

FUNCTION & WELLNESS

Wellness claims drive higher prices (4x) and more category value

Flavour and function

OPPORTUNITY AREAS

http://www.angelica.it/ https://www.dolce-gusto.co.uk/ http://www.tetley.co.uk/

http://fr.special-t.com/




23 INDUSTRY: SECTOR

Gold Peak

• +22% (2014) • Doubled in

size since 2010

Pure Leaf

• +44% (2014) • New growth

driver for Pepsi/Lipton

Wong Lo Kat

• +25% (2014) • Brewed tea is

China’s #2 soft drinks category

Fuze Tea

• +30% (2014) • Latin

American volume growth

Beyond hot tea? Some of the top brands in soft drinks are tea!

OPPORTUNITY AREAS

Image:

http://www.thirstydudes.com/review/ma

ster-kong-honey-jasmine-iced-tea-3446

Own image Own image Own image




24 INDUSTRY: SECTOR

Versatility: Carrier for functional ingredients

Sparkling, CSD alternative

Super-premium

Beyond hot tea? Exploring new use occasions

OPPORTUNITY AREAS

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1.60

1.80

2.00

NorthAmerica

WesternEurope

US

$/l

itre

off

-tra

de

Hot Tea v Iced Tea Unit Price Comparison

Hot Tea - UP perlitre

Iced Tea - UP perlitre

Image: www.bevnet.com






25 INDUSTRY: SECTOR

0

1

2

3

4

5

6

7

2009 2010 2011 2012 2013 2014

% o

f to

tal

reta

il s

ale

s

US Tea Pods Share of Category Retail Value

Format: Where are we with tea pods?

OPPORTUNITY AREAS




26 INDUSTRY: SECTOR

Occasion: How we buy tea..

OPPORTUNITY AREAS

http://www.indesignlive.com/

http://www.hhcid.com//

Own image Own image




27 INDUSTRY: SECTOR

0

10

20

30

40

50

60

70

80

90

China India

Ho

use

ho

lds

(% o

f T

ota

l) w

ith

an

An

nu

al

Dis

po

sab

le

Inco

me

Ov

er U

S$

15,0

00

(P

PP

)

Population Entering ‘Consumer Class’

2004

2009

2014

2019

2024

But the future is bright…

WHERE ARE WE GOING?

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

Mn

lit

res

Historic and Forecasted Total Tea Brewed Volume 2000/2019

Asia Pacific Middle East and Africa

Western Europe Eastern Europe

North America Latin America

Australasia




28 INDUSTRY: SECTOR

Driving value in global tea in 2019

WHERE ARE WE GOING?

Flavour Wellness

Occasion Format

Top 10 Largest Hot Drinks Markets by Value 2014 and Growth 2014-2019

Country Sales 2014

(US$ million) % CAGR

2014-2019

China 9,671 4.1

Russia 3,954 0.7

Japan 3,538 -0.8

USA 2,390 1.3

Germany 2,065 2.8

India 2,014 7.0

United Kingdom 1,327

-1.4

Iran 1,283 10.0

Uzbekistan 1,170 2.5

Pakistan 1,111 7.3



THANK YOU FOR LISTENING Howard Telford| Senior Industry Analyst - Beverages

[email protected]

@HowardT_EMI

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global state of the industry: a review of the top tea trends and markets around the world

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