Opportunities for Innovation in the Tea Market

Opportunities for Innovation in the Tea Market

What type of tea?

If drinking cups of tea was enough to make me a tea specialist, I qualify daily. I love tea! It could be my straightforward ‘cuppa’ , a rich black tea, drunk from a mug, oddly to either warm me after an early morning, autumn dog walk, or to refresh me in warmer weather (not many drinks can do both).  On other occasions I select something more specialist, chosen to specifically complement a meal or bring out the flavours in particular foods.  It could also be a crisp chilled sparkling tea in a ready to drink format or uncorked and shared with friends, or an indulgent freshly blended and brewed creamy chai latte.  Quality teas, specialty teas and the wonderful array of ready to drink chilled formats, kombuchas and the tea cocktails and non-alcoholic drinks served by mixologists have come a long way in recent years. All helped in part by the low and no alcohol consumer and their quest for a less sugary, more sophisticated drinking occasion. There are great opportunities for Innovation in the Tea Market.

Qualified Tea Sommelier

Around 30 years ago,  I was approached to work with a new client,  to create an instant chai tea they could use in their tea stalls at stations and sell to customers to use at home. That first product was one of the UK’s first instant chai brands and sold to retailers as well as several chains serving hot drinks to go. Later, working with a Dragon from the Den, who invested in a tea business, I used my knowledge to help shape their range and on pack descriptions. This led me to take my Tea & Herbal Association of Canada Tea Sommelier® qualifications to help me have a more rounded industry knowledge as a Certified Tea Sommelier.

Sri Lankan Artisan Teas

I’ve recently been working with a group of Sri Lankan artisan tea producers along with the ITC, to help them prepare and introduce them to retail and foodservice connections in the UK to grow their business. Some entered and won Great Taste Awards in 2024 and we hosted an event for buyers in the UK. Now a group of buyers from retail, gifting, foodservice and wellbeing are going to Sri Lanka in January to meet these producers and see their businesses first hand. There are a great mix of producers in the group who are able to meet needs for organic products, tea bags and some innovative formats which simplify service. There are also black, green, white and many herbal infusions, some with origins in traditional ayurvedic medicine.

Global Tea Market

The global hot drinks market is valued at an impressive $150 B and tea accounts for $50Bn of that, underscoring its popularity and the opportunity for growth. (Innova Marketing, 2024). Much of what is trending in tea mirrors other areas of food and drink. This is especially true since the pandemic as consumers search for clean, natural ingredients and organic products that support health and wellness. 

The UK tea market will see a slight increase in £sales (just over 1%) to £884m from 2023 -2028 (Mintel) though volume sales will decline. This highlights the need for brands to diversify into other areas such as tea as an ingredient in foods, ready to drink and easy to enjoy formats for both retail and out of home. The German tea market is thought likely to grow by 4.8% in volume sales in the same period, also helped by organic tea products, consumers’ heightened focus on health and the environment. The German government’s goal to achieve 30% organic agriculture by 2030 supports this.

Tea offers a healthy option

Health has become a significant purchasing influencer with hot tea, with 30% of consumers admitting they are most influenced by claims of ‘made with natural ingredients’.

Ingredients such as cinnamon, natural vanilla, and items that are naturally caffeine free such as citrus, rose hips and peppermint are seeing growth. Natural sweeteners such as honey and stevia leaf are also more prevalent. Fermented teas such as pu’erh and also  kombucha are gaining popularity too as people look to boost their gut health.

There are very specific rules around health claims if you want to make claims on pack – check the regulations here.

We would also advise having a legal label check and a check of all health claims before printing packaging. The Health Food Manufacturers’ Association operates Clear Check to check packaging and marketing materials for compliance and now some distributors in wellness and health are asking for this before they will list products that make claims. 

An increase in organic teas

Organic products are increasing globally. In the UK organic regulations were clarified in 2023. Products  can only be ‘organic’, or use terms relating to organic production methods, if:

• it meets organic production rules
• at least 95% of the agricultural ingredients are organic
• all other ingredients, additives and processing aids are listed as permitted within the organic regulations
• the product, its labels and any suppliers are certified by an approved UK organic control body.

These rules also apply to brands and company names and consequently a number of companies have had to remove ‘organic’ from their packaging and branding.

Tea as a sustainable product

Tea brands are actively working to improve the sustainability credentials of their products by focusing on eco-friendly packaging. Over 33% of global tea and RTD  teas launched in 2023 flagged their packaging as environmentally sustainable. To meet these rising expectations, brands are not only working to eliminate plastic from tea bags but are also exploring biodegradable and compostable alternatives. One such example is Gralgo, who have created tea coins – discs of compressed leaves, perfect for one  mug or to add to a pot without the need to measure.

The ideal pairing for snackification

There are many more  trends that present opportunities to increase tea purchase/ tea drinking . One such global trend is the snackification trend that is so popular with Gen z consumers which has also in some cases merged with the more classic afternoon tea ritual. As lines between meals and snacks  blur, consumers typically 19-24 eat snacks throughout the day and may even replace traditional meals. Brands are jumping on this trend by encouraging tea as the perfect pairing for various snacks. This strategy sees the traditional afternoon tea ritual revitalised to appeal to younger consumers. 

In the UK 1/5th of 18-24 year olds snack three or more times a day. They often enjoy tea alongside the snacks as a way of making the experience more indulgent and  relaxing. This trend is also evident in markets like Thailand where almost 50% of Thais consume tea in the afternoon. 

Opportunities for Innovation in the Tea Market

It’s great to see market demands such as sustainable products and packaging, contemporary twists on classic occasions such as afternoon tea, and health and wellbeing trends all offering opportunities within the UK tea markets in retail and out  of home.

We are always delighted to help tea businesses develop their business strategy for the UK or to help businesses develop their tea strategy within their business to reflect these trends. Get in touch via email or book a call to talk further.