Category Focus: Time for tea
Hot or iced, tea is appeasing peoples’ palates at an expanding rate. Health-conscious consumers are turning to better-for-you drinks, especially tea, and with plenty of flavors to choose from, tea companies are tailoring their drinks accordingly.
Tea trends of have been seeping toward green tea varieties and many companies also are including organic options in their lineups. The quality of tea and how it is processed is getting better as well, says industry experts.
“People used to think that tea was an emerging category, and now I would say that is has emerged,” says Seth Goldman, co-founder of Honest Tea, Bethesda, Md. “Consumers are moving away from carbonated soft drinks and they’re moving toward healthier products. And I think tea is absolutely the direction they are headed in.”
Tea in numbers
According to Information Resources Inc., Chicago, Unilever’s Lipton brand, ranked first in loose tea bag sales, bringing in approximately $172 million in overall sales, down 2.3 percent from the year ending March 23, 2008. Bigelow tea bags were No. 2 with $77 million, up 4.3 percent from the year prior. The overall loose tea and bagged tea category earned $712 million.
For canned and bottled teas, Arizona came in at No. 1 with $293.6 million, an increase of 5.7 percent. The Pepsi-Lipton Partnership’s Lipton RTD brand ranked just after that with $273.8 million, an increase of 38.2 percent in overall sales from the year prior. Lipton PureLeaf, ranking at No. 9, had $27.2 million in sales within its first year on the market.
The overall canned and bottled tea category brought in $1.2 billion, a 15.2 percent increase from the same time period a year earlier. The increasing sales of RTD teas are sweeping the nation, says Jeff Irish, vice president and creative director of Revolution Tea, Phoenix.
“Regarding ready-to-drink [tea], we know there is a decrease in traditional canned soda sales, [and] we know there has been an increase in the energy and bottled and canned tea area as well,” he says. “But we feel that there is an unanswered demand for something that is somewhat of a healthier alternative to what’s currently available.”
In addition to its bagged teas and traditional RTD offerings, the company introduced a new beverage concept called Revolution 3-D, which is available in 12-ounce slim cans.
“Revolution 3-D is what we’re classifying as a multi-dimensional beverage which plays off the benefits of super fruits, vitamins and white tea,” Irish says. The flavors of Revolution 3-D are Mango, Blueberry, Green Apple and Pomegranate.
Revolution Tea also offers an iced tea for foodservice applications called Revolution Iced. It is a liquid concentrate that comes in a 1.5-gallon pouch and uses branded dispensing equipment. The five flavors of Revolution Iced are Red Hawaiian Iced, Emerald Green Iced, Golden Peach Iced, Classic Iced and 50/50 Iced, a black tea and lemonade mix.
Revolution Tea partnered with Kraft Foodservice for national distribution in the foodservice channel. Kraft Foodservice will distribute Revolution’s tea and dispensing system as well as single-serve hot teas in boxes and foil packets.
With consumers buying more tea, new products have emerged from more traditional companies such as Lipton/Nestea, Snapple and Celestial Seasonings. This spring, the Pepsi-Lipton tea partnership expands its Lipton Pure Leaf tea varieties with Red Tea with Blueberry Pomegranate. The company also added Diet White Tea Peach Papaya to its Lipton Iced Tea line.
Last year, Snapple, Rye Brook, N.Y., introduced a line of super-premium Classic Black teas, including Earl Grey, English Breakfast and Orange Pekoe. The company also redesigned the labels for all its tea bottles. The labels have a more upscale look to keep in line with premium tea trends.
Celestial Seasonings, Boulder, Colo., celebrated its 40th birthday with a logo and packaging makeover. Changes were made to emphasize the tea flavors. For example, the woman on a tree swing on the chamomile tea was removed and more chamomile flowers were added on the box. Celestial Seasonings also added whole-leaf teas as well as gift offerings for holidays such as Mother’s Day.
Nestea, produced by The Coca-Cola Co., Atlanta, revamped its RTD iced tea line in May with new graphics and a 20-ounce straight-wall bottle. Green Tea Citrus and Diet Green Tea Citrus flavors were added to the menu, and the new green tea products contain 50 percent more antioxidants than the previous formulation.
Nestea’s Iced Tea with Lemon and Diet Iced Tea with Lemon come in the 20-ounce bottle and half-liter bottle as well as aluminum cans and 2-liter PET bottles. The company says the reason for the new labels and bottle packaging is to further distinguish the brand from carbonated soft drinks.
Arizona Beverage Co., Lake Success, N.Y., a brand known for its signature ready-to-drink tea, got into bagged tea as well last year, thanks to a partnership with Bigelow Tea, Fairfield, Conn. Bigelow and Arizona used their respective areas of expertise to help the other to sell in a different part of the tea category. Arizona Tea is now available in tea bags in three flavors produced by Bigelow: Pomegranate Green Tea with Acai, Green Tea with Ginseng and Honey, and Mandarin Orange Green Tea. And Bigelow joined RTD teas by adding Mocha Chai Latte and Vanilla Chai Latte in 10.5-ounce bottles, produced by Arizona.
Inko’s, New York City, one of the first companies to produce 100 percent natural RTD white iced teas, unveiled Inko’s Blueberry White Tea and Inko’s Honeydew White Tea, the company’s fourth and fifth flavors. The tea is available in 16-ounce stippled glass bottles containing less than 60 calories in each.
Smaller tea companies are growing at a steady rate with unique packaging designs and plenty of flavor varieties. The category is ripe with entrepreneurs, and many companies have owners or founders that started in their basements or kitchens.
“I started Sweet Leaf in 1998, brewing tea in pillow cases and selling bottles,” says Clayton Christopher, founder and chief executive officer of Sweet Leaf, Austin, Texas. “There weren’t any teas out at the time that used real tea leaves … and real cane sugar. [We] really set ourselves apart because we really taste just like homemade.”
Sweet Leaf, is known for the sweet flavors popular in its Southeast Texas home. It also made organic a foundation of its brand. Offering 11 flavors of tea, including Pomegranate Green Tea, Original Sweet Tea and Peach Black Tea, Sweet Leaf is distributed nationwide.
“We offer a more mainstream flavor profile that is sweeter, but it’s also organic, so the consumers in the natural food stores that want a more mainstream flavor, will choose Sweet Leaf,” Christopher says. The company’s newest flavor, Mango Green Tea, released in May.
Flavor options and the organic kick continue to be driving forces in the tea market. Honest Tea, co-founded by Goldman and Barry Nalebuff, celebrated its 10th anniversary in February, about the time that The Coca-Cola Co. purchased 40 percent of the company to help increase growth and expansion nationwide. The company now offers more than 20 varieties of USDA Organic certified ready-to-drink teas in PET and glass bottles.
The process that Honest Tea uses to create its tea is especially important in manufacturing a beneficial drink, Goldman says. Real tea leaves are used, which also enhances flavor.
“It has the taste of real tea [and the] health benefits of a real tea,” he says.
The number of tea flavors available in the market today are numerous, and companies continue to strive for unique and rare varieties.
Two Leaves and a Bud, an Aspen, Colo.-based company, introduced three new bagged tea flavors: Organic Tropical Goji Green, Organic Acai White Tea and Organic Pomegranate Herbal.
Two companies added carbonation to their tea lines as a way to compete with carbonated soft drinks. VidaTea, Carlsbad, Calif., introduced a Sparkling Green Tea sweetened with organic agave nectar. It is currently available in three flavors, Pomegranate, Wild Berry and Desert Pear, and more flavors are set to debut this summer, the company says.
Steaz, Newtown, Pa., introduced Decaffeinated Sparkling Green teas in 12-ounce cans. The RTD teas are not only organic but also approved by the U.S. Department of Agriculture for use in School Nutrition Programs. The teas contain organic acerola juice, a tropical cousin of the cherry. The lightly carbonated teas are available in four flavors: Raspberry, Orange, Root Beer and Green Tea with Lemon.
Bagging it in
Another organic tea company, Choice Organic Teas, Seattle, announced the launch of Whole Leaf Organics, a collection of organic, Fair Trade certified tea pyramids. All of the teas are packed in eco-friendly, biodegradable tea pyramids in a 100 percent recyclable box. The eight flavors include traditional flavors such as English Breakfast and Earl Grey as well as unique ones such as Sweet Liquorice Mint and Lychee White.
Quality of tea is gaining importance, according to Ineeka, Chicago, and Numi Organic, Oakland, Calif.
“People are really getting on tea for health benefits,” says Ahmed Rahim, chief executive officer of Numi Organic Tea. “Quality is increasing, so is the demand for tea.
“We don’t use any oils or natural flavorings,” he continues. “We use real freeze-dried fruit, real vanilla bean, real jasmine flowers, real oranges and spices. Numi Organic Tea is really about a lifestyle and an experience.”
Numi Organic Tea comes in 22 flavors in tea bags, 60 varieties of loose tea, six iced teas as well as 20 flowering teas. Flowering teas are hand-sewn tea bundles, which when submerged in hot water, blossom like flowers.
Ineeka, a tea company with family-owned tea farms in the Himalayas, also has numerous tea varieties. Just don’t call them flavors.
“We don’t use the term flavor because we don’t flavor any of our teas,” says Shashank Goel, owner of Ineeka. The company launched in 2005 with seven varieties of loose-leaf tea: Himalayan Green, Himalayan Black, Green Limon, Ma-Chai, Darjeeling, Mint and Chamomile.
Iced teas also are on the way for Ineeka. The seven new iced compositions are packed in biodegradable infusers. Also, this summer Ineeka is launching the 7 Jewels, the “best-of-the-best” combination of teas offered by the company. According to Goel, the 7 Jewels are “going to take the industry up to 10 times the level of what people have seen in the marketplace … the best of the best of what we produce.”
Some tea companies are opting for teas that can be enjoyed either hot or iced. S&D Coffee Inc., Concord, N.C., expanded its Mangrove Bay tea line to include green tea. The company is moving from strictly flavored teas to premium, upscale teas. S&D also upgraded its facility and now blends 22 million pounds of year in its 44,000-square-foot space.
A new tea company TeaZen, American Fork, Utah, created a liquid tea concentrate instead of bags or boxes, with the tagline “drink outside the box.” The liquid comes in glass bottles and is supposed to be added to hot or cold water, the company says. TeaZen comes in six flavors: an-TEA-ox, nite-TEA-nite, an-TEA-stress, vi-TEA-min C, zippa-TEA-doodah and be-u-TEA-licious. Each flavor contains EGCG antioxidants.
RTD tea has steadily grown during the past decade and it does not appear to be slowing down anytime soon. Some in the industry feel consumers’ growing awareness of quality and variety will put further emphasis on quality and innovation going forward.
“[The tea category is] growing at a phenomenal rate, and I think that what’s going to happen is there is going to be a shake out over time because of so many brands coming in,” Goel, owner of Ineeka, says. “It’s great what is happening, but the people who are going to survive are the people who have quality and not just hype or marketing or packaging. At the end of the day, consumers are getting smarter … about what real tea is.”