China’s Tea Market

China is the leading producer of tea in the world. According to estimates China’s tea market (off trade) is estimated to be worth USD 3 bn in 2010. The tea market has witnessed an explosive growth in last five years, during this period it is estimated that China’s tea market almost grew by 400%. While all tea types have contributed to the growth, the key driver is rise of instant tea segment which is gaining significant popularity because of its convenience. The prospects of China’s tea market are bright in-spite of issues such as low productivity, inflation, unfavorable weather conditions, etc.

Key trends in China’s tea market:

  1. Rise in instant tea: Instant tea market (off trade) has risen by more than 15 fold in last 5 years both in terms of volume and value. It is now the biggest category way ahead from Green tea, which dominated the market in past. Instant tea is particularly popular among young population.
  2. Black tea is not popular: unlike western countries, where black tea dominates, its penetration is close to nil in China
  3. Green tea is popular: Green tea with all its health benefits (especially related to weight problems) is popular among all segments.
  4. Fruit and herbal tea: fruit and herbal tea are gaining popularity. While their volumes are low, they sell at higher price points as compared to other tea such as Green / instant tea.

Players in China’s tea market:

China’s tea market in fragmented with only a few large players and many medium sized and small players. It is important to note that prominent players in the market are local, except Unilever China. Some of the key players (off trade market) are:

  1. Guangdong Strong
  2. Zhejiang Xiangpiaopiao
  3. Tenfu Group
  4. Unilever China
  5. Eight Horse Tea
  6. Zhejiang Dahaoda Food
  7. Outsell Health
  8. Shantou Great
  9. Beijing Wuyutai Tea

Some of the popular brands in China’s tea market are:

  1. U-loveit
  2. Lipton
  3. Eight Horse Tea
  4. Xiangpiaopiao
  5. Xiang Yue Taiwan