Hot or cold, bottled or bagged, tea is one of the most recognizable, widely consumed beverages in the world due to its healthy halo, premium options and flavor innovations.

On any given day, more than 158 million Americans are drinking tea, stated the New York-based Tea Association of the U.S.A. Inc. in the December 2017 issue of Beverage Industry. In 2016, ready-to-drink (RTD) tea made up 80 percent of the tea category, a 4 percent increase from 2015, the association said.

Driving the category, refrigerated ready-to-drink (RTD) teas generated dollar sales of more than $1.36 billion in U.S. multi-outlets for the 52 weeks ending May 20, an 8.3 percent increase compared with the prior-year period, according to data from Chicago-based Information Resources Inc. (IRI).

In its April report titled “U.S. Beverage Market Outlook 2018,” Rockville, Md.-based Packaged Facts estimates that total retail dollar sales of the U.S. tea and RTD tea category had a compound annual growth rate (CAGR) of 4.5 percent between 2012-2017. “Retail sales totaled $7.8 billion in 2017, up almost 4 percent compared to the previous year,” it stated in Beverage Industry’s June issue. Refrigerated RTD teas accounted for about 75 percent of category sales, it added.

Kevin Weissheier, consumer insights executive at New York-based Kantar Worldpanel US, also pointed to the success of RTD teas in Beverage Industry’s June issue. “With many companies opting to reformulate their offerings to align with health needs, the category has seen a turnaround (some of which can be attributed to overall convenience store growth),” he said. “Loose-leaf tea has performed relatively well, as it wins in the premium market, but bagged tea has suffered along with declines in iced tea.

“Reformulation and ingredient clarity has been a major driver as to why RTD has rebounded so strongly,” Weissheier continued. “Consumers see health and hydration values with RTD, which nicely complements the taste.”

Despite a “somewhat sluggish performance” for the overall U.S. tea market, Gary Hemphill, managing director of research at Beverage Marketing Corporation (BMC), New York, noted that the RTD segment is the only segment experiencing growth. “On a dollar basis, performance was better in 2017 with total retail dollars up nearly 2 percent,” he said in Beverage Industry’s June issue. “Consumers want convenience, which has made RTD tea a big winner. Most of the other segments have experienced lackluster performance.”

For example, RTD tea, bagged teas, iced tea mixes, loose-leaf tea and single-serve tea pods had total unit volume of 3.71 billion gallons in fiscal year 2014, while in fiscal year 2017, the category experienced contraction to 3.68 billion gallons, BMC data reported. Broken down by segment, in fiscal year 2017, RTD tea had a unit volume of 1.72 billion gallons; bagged teas (1.58 billion gallons), iced tea mixes (312 million gallons); loose-leaf tea (27 million gallons) and single-serve tea pods (37 million gallons).

Relating to grocery store sales, New York-based Nielsen’s Dec. 20, 2017 Insights titled “Top of 2017 Packaged Groceries,” highlights that for the second year in a row, liquid tea, at 18.9 percent, led sales growth in the United States. Also making the Top 10 list of growing categories were liquid coffee (7.6 percent), bottled water (3.5 percent) and new age beverages (2.3 percent).

“This could be due to the plethora of flavors and ingredients often found in these drinks that appeal to consumers who crave a variety of drinks for in-home consumption or on-the-go,” the Insights stated.

In Beverage Industry’s June issue, Packaged Facts’ April report predicted growth for the tea and RTD tea category, which it estimated will reach $19.5 billion in 2022, increasing by a CAGR of 4 percent between 2017 and 2022. “Growth will continue to be below peak gains in 2014 and 2015,” the report stated. “Consumer concerns about sugar will challenge growth in the category, although [will be] partially offset by the health halo of black and (especially) green teas. The refrigerated RTD tea category will slow down as the category begins to mature, but the segment will remain the fastest grower.” BI