Tea market

Tea is a hot beverage and is the second most consumed beverage around the globe. It is prepared by infusing boiled brewing leaves of the Camellia sinensis plant and this plant is mostly grown in Northeast India, north Myanmar, Southwest China, and Tibet. Tea is classified into green tea, black tea, oolong tea, and herbal tea.

The global tea market was valued at US$ Mn in terms of revenue in 2020 and is predicted to grow at a CAGR of 5.0% during the forecast period (2021 to 2027).

Drivers:

Health benefits associated with tea consumption is a prime factor propelling the market growth of tea. Tea offers various health benefits, such as its lower risk of cardiovascular disease, diabetes, cancer, and other chronic diseases. Moreover, it has high nutritional value due to its antioxidants and low calories content. Moreover, it is considered an excellent source of antioxidants and alkaloids and also other vitamins such as vitamins like A, D, E, and C. Due to its various health benefits the market of tea is growing exponentially.

Shifting preferences toward flavored tea is expected to augment the market growth of tea. The increasing availability of flavored tea is increasing the consumer base. For instance, in September 2020, Vessl, Inc. has announced the launch of three new flavors of its ready-to-drink bottled tea brand Tea of a Kind. This includes Mango Yerba Mate, Prickly Pear Yerba Mate, and Blackberry Basil Yerba Mate. Thus, the advent of flavored tea is projected to favor the market growth of the tea in the near future. 

Asia Pacific region dominated the global tea market in 2020, accounting for 41.06% share in terms of volume, followed by Europe and North America, respectively.

Figure 1. Global Tea Market, Revenue Share (%), By Region, 2020

Market Restraints

The availability of substitutes for tea such as coffee is expected to restrict market growth. This is attributed to the changing taste and preferences of consumers as customers in Britain highly prefer coffee over tea. Also, in keeping with today’s fast-paced lifestyle, young people are opting for instant coffee whenever and wherever they wish, along with self-service.

Fluctuating price of raw material due to unpredictable climatic conditions is leading to a gap in supply and demand. This factor is expected to hinder the market growth of the tea over the forecast period.

Market Opportunities

The growing availability of wide variants in tea is expected to serve major growth opportunities over the forecast period. For instance, Cha Bar a tea lounge in India offers 133 varieties of Indian and international tea, including flavored tea, herbal tea, and fruit tea, to their consumers. Organic tea, green tea, and Ayurveda are also some of the new varieties introduced in their menu. Thus, the advent of wide variants in tea is projected to propel the market growth of tea in the near future.

Increasing penetration of tea cafe and lounge culture especially across the North America region is expected to bring new market opportunities over the forecast period. Also, increasing consumption of tea among Americans is again expected to propel the market growth. According to the Tea Association of the USA Inc. in 2019, Americans consumed over 84 billion servings of tea or more than 3.8 billion gallons. About 84% of all tea consumed was black tea, 15% was green tea, and the small remaining amount was oolong, white and dark tea.

Figure 2. Global Tea Market – Opportunity Analysis

On the basis of type, Black tea dominates the global tea market in 2020 with around 42.31% of market share in terms of revenue, followed by Green tea and Oolong tea, respectively. The Black tea market is valued at US$ 7,371.20 million and is expected to grow at a CAGR of 5.10% between 2021 and 2027.

Figure 3. Global Tea Market, Revenue Share (%), By Type, in 2020

Market Trends/Key Takeaways

Fruit juices with herbal teas is gaining traction in the market. Nowadays, traditional teas are now getting replaced by flavored teas that are caffeine-free and have no-added-sugar. Moreover, the demand for this tea is tremendous because consumers are experimenting with the different varieties and flavors of tea. For example, Pomegranate-Blackcurrant-Blackcurrant Leaf-Peppermint and Peach-Vervain-Lemon are some of the new flavors that are gaining traction in the market.

Organic tea is gaining popularity around the globe due to the growing trend of go natural and organic. Also, the growing demand for low-calorie tea is gaining importance due to increasing health-conscious consumers and they prefer a product that contains health benefits this is supporting the overall market growth of the green tea. Moreover, the growing demand for ice-tea especially across Eastern Europe due to people seeking sugar-rich carbonated beverages is again expected to propel the market growth of the tea over the forecast period.

Global Tea Market - Impact of Coronavirus (Covid-19) Pandemic

The global tea market has experienced some transportation disruptions from the tea producing areas, as well as some consequential disruptions of cash flow. The impact on tea production itself is so far seems limited, however social distancing measures are triggering emergency response from tea producers in the country.

The strict lockdown measures in India, world’s second tea producer, had shut down production of all agricultural industries for a number of weeks in March and April. Recently, tea gardens and small tea growers have been picking up tea production and export again, but the lockdown has impacted tea producers and smallholder livelihoods significantly.

Competitive Section:

Company

1. Starbucks Corporation
2. Wissotzky Tea
3. Associated British Foods
4. Nestle S.A.
5. Akbar Brothers Ltd.
6. Tata Global Beverages
7. The Republic of Tea
8. DAVIDs Tea

Few Recent Developments

In July 2019, Wissotzky Tea Launched Nana Mint Tea. It has an exotic mint flavor.