Tea and Coffee Ground for Success

July 1, 2005
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Tea and Coffee Ground for Success

Iced tea sales grew nearly 13 percent through supermarket, drug store and mass merchandise channels during the year ending in June, according to Information Resources Inc. After years of trying to get off the ground, iced coffee is a bona-fide category, with more than 20 percent category growth this past year.
With the No. 1 spot in the category, Ferolito Vultaggio & Sons’ Arizona brand is the king of the ready-to-drink tea segment, boasting 48 percent growth during the same time period. The company attributes the growth to an aggressive sales effort, as well as a strong performance from its green tea line-up and Splenda-sweetened diet varieties.
Global hot drink sales
(millionS of dollars)
Subsector 2004 Forecast
2005
Coffee$36,170.7$37,195.3
Fresh coffee$21,533.6$21,889.5
Instant coffee$14,637.1$15,305.8
Tea$19,804.1$20,376.3
Black standard tea$8,011.9$8,114.2
Black specialty tea$3,165.2$3,279.9
Green tea$4,470.3$4,624.7
Fruit/herbal tea$3,387.1$3,559.7
Instant tea$215.3$212.8
Other tea$554.4$585.0
Other hot drinks$8,600.6$9,012.4
Flavored powderED drinks$5,522.6$5,709.4
Other plant-based hot drinks$3,078.1$3,303.0
Total$64,575.4$66,584.0
Source: Euromonitor International, 2005
Cadbury Schweppes’ Snapple and Diet Snapple also made a strong showing, with diets growing 12 percent during the year ending in June. Category newcomer Ocean Spray made it into the Top 10 brands with Ocean Spray Juice & Tea. The blended products were a departure for the traditional juice company and brought in $15.1 million in sales through the measured channels.
While all varieties of tea are popular right now, white and green teas have captured the imagination of product developers. Arizona, Revolution Tea, Inko’s, Origins and Fuze all rolled out ready-to-drink white teas. White tea is believed to have naturally low caffeine levels and strong antioxidant properties. While Origins went with a straight tea flavor, the rest chose fruit-flavor infusions. Fuze chose one of the year’s most popular flavors for Diet Pomegranate White Tea, Inko’s added Peach White Tea to the line-up, and Revolution introduced its line in Key Lime, Raspberry, Blackberry and Tangerine varieties. Arizona added Blueberry White Tea, the company’s first white tea, along with Pomegranate Green Tea.
Top canned and bottled teas by brand
Brand Dollar
Sales
% Change Vs. Prior Year Market Share % Change Vs. Prior Year
Arizona$175,103,90048.126.06.2
Snapple$93,866,1705.113.9-1.0
Diet Snapple$82,107,95012.012.2-0.1
Lipton Brisk$81,161,820-11.812.0-3.4
Nestea Cool$64,248,210-8.79.5-2.2
Lipton Iced Tea$40,496,500-0.56.0-0.8
Private Label$25,327,49018.93.80.2
Lipton$25,010,77055.63.71.0
Ocean Spray Juice and Tea$15,135,860408.02.21.7
Sobe$13,174,1109.12.0-0.1
Category Total$674,177,90012.8    
Source: Information Resources Inc., Total food, drug and mass merchandise (excluding Wal-Mart) for the 52 weeks ending June 12, 2005
Even though Nestea Cool sales were down 8.7 percent for the year ending in June, Nestea, a brand of The Coca-Cola Co. and Nestlé joint venture, hopes to pick things up by adding Nestea Ice to the family. The new product delivers a cooling sensation in Lime Iced Tea and Lemon Green Tea flavors. In addition, Nestea released Diet Nestea, a new calorie-free tea with Splenda. Formerly named Diet Nestea Cool, the tea has been reformulated and rebranded.
Also partaking in a reformulation, the Pepsi-Lipton Tea Partnership has revamped Lipton Original Iced Tea and added new Lipton Iced Tea to the line. Lipton Original has been reengineered to be lower in sugar – about 10 to 12 percent lower than the original formula. The Original line, which is packaged in 16-ounce glass, also includes a new Diet Sweet flavor in addition to Sweetened, Unsweetened, Lemon, Extra Sweet, Raspberry, Green Tea with Honey, Diet Lemon and Peach.
The company says new Lipton Iced Tea, which is packaged in 20-ounce, 1.5-liter and 2-liter PET, was created for the “popular tea segment,” and is available in Lemon, Diet with Lemon, Green Tea with Citrus and Diet Green Tea with Citrus varieties. The lower priced Lipton Brisk line remains unchanged.
RTD coffee is still a small market – the category’s $168.7 million is still lower than sales of Arizona’s tea brands alone – but it is becoming more mainstream. Frappuccino, produced by the Pepsi/Starbucks joint venture, is the category’s runaway bestseller, with almost 85 percent market share. And the team’s Doubleshot follows, with 12 percent. That leaves each of the other products in the category with 1 percent share or less in the measured channels. BI
Global coffee and tea sales
(millionS of dollars)
Subsector 2004 Forecast
2005
RTD tea$28,949.1$30,713.6
Still RTD tea$28,451.8$30,192.7
Carbonated RTD tea$497.3$520.9
RTD coffee$12,271.7$12,509.1
Source: Euromonitor International, 2005
Top ready-to-drink coffees by brand
BrandDollar
Sales
% Change Vs.
Prior Year
Market
Share
% Change Vs. Prior Year
Frappuccino$142,576,40017.284.5-2.3
Doubleshot$20,287,48040.812.01.7
Wolfgang Puck$2,319,3561,648.61.41.3
Starbucks$1,180,92335.10.70.1
Kahlua$799,7812.20.5-0.1
Havana$478,87315.60.3-0.0
Royal Kona$310,134374.80.20.1
Caffe D Vita$193,02334.70.10.0
Main St. Café$141,966-14.60.1-0.0
Mr. Brown$97,249-28.30.1-0.0
Category Total$168,660,88020.4    
Source: Information Resources Inc., Total food, drug and mass merchandise (excluding Wal-Mart) for the 52 weeks ending June 12, 2005

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