US Tea Market

US tea market has grown at a CAGR of 7.4% during last 20 years, a remarkable growth rate for an industry in long term. US tea market stood at USD 7.7 bn in 2010 (wholesale value) from USD 1.84 bn in 1990. According to the Tea Association of the USA, in last 19 years, the tea sales have always increased year on year. This continued even through the recession period, even though the growth was sluggish.


Some key aspects of US tea market are discussed below. 

                                      Exhibit: US tea market (in USD bn) 1990-2010

Source: The Tea Association of the USA

Trends in US tea market:
Key trends and facts regarding US tea market are:

  1. Black tea is most popular accounting for 80% of all the consumption followed by Green tea (19.5%), and a small remaining amount was Oolong and White tea. The popularity of Green tea is on a rise due to its health benefits.
  2. South and Northeast regions of America are biggest tea consumers
  3. In 2010, over 65% of all tea brewed in US was using tea bags
  4. To cater to the seasonality of the product (tea is predominantly consumed in winters), players have launched several iced tea products
  5. Popular herbal / fruit tea flavors are: Raspberry, chamomile, orange, hibiscus, etc.

Ready to drink tea is the largest segment of the tea market (USD 3.3 bn) in US followed by traditional market consisting of supermarkets, drug stores etc. Foodservice segment and specialty segments are the other two segments of the market.

                                      Exhibit: Tea market segments in US (2010) in % and USD bn

Source: The Tea Association of the USA

Drivers of US tea market:

  1. Increased convenience: Convenience of consuming tea through ready to drink tea has been a major cause of its popularity.
  2. Health consciousness: Increased health consciousness among US population and health benefits of tea such as herbal and green tea is another major cause.
  3. Low cost: Cost per serving of tea is one of the lowest among other beverages.

Key players in US tea market
List of the key players in US tea market are:

  1. Unilever (market leader)
  2. Hain Celestial Grp
  3. RC Bigelow
  4. Twining
  5. RedCo Foods

Major brands in US tea market

  1. Lipton
  2. Bigelow
  3. Celestial Seasonings
  4. Twinings
  5. Yogi Tea

Opportunity in US tea market:

  1. Specialty tea: Specialty tea (special in term of blending, limited availability, or price) has been a fast growing segment in the US market. In some sense Green tea and some expensive tea types can be considered part of it. Herbal and fruit tea are gaining popularity in US due to their health benefits and expected to show robust growth prospects in future.
  2. Innovation in preparation and serving: As the popularity of tea grows, opportunities may exists for innovation similar to Starbucks where variety of tea will be on offering and prepared using different styles catering to consumer requirements