“The different varieties of teas aid consumers on a health and well-being journey,” said Sally Lyons Wyatt, global executive vice president and chief advisor for consumer packaged goods and foodservice at Circana, Chicago. “The many different functional benefits align with consumer needs for mental, physical and emotional well-being.

“Whether it’s for relaxation, energy, digestion, etc., tea is a ‘go to’ for many consumers,” she continued.

Lyons Wyatt noted that, both in 2023 and year-to-date (YTD) 2024, the tea market grew in dollar sales, but declined in unit sales. She suggested that products with no/low/less sugar in canned/bottled tea are “winning.”

“Refrigerated tea products with 100% natural claims, prebiotic/probiotic claims, artificial sweetener claims, low calorie claims and no sugar added claims are resonating with consumers,” she said in Beverage Industry’s June 2024 issue. “Bags/loose tea products with claims like USDA/Certified Organic, Non-GMO Verified, unsweetened sugar claims are increasing in unit and dollar sales.”

Recent data from Circana in the 52 weeks ending May 19 shows that the top refrigerated tea brands were Milo’s, private label, Gold Peak, Turkey Hill and Red Diamond, respectively. The refrigerated tea segment saw $1.6 billion in sales during those 52 weeks, an increase of 6.3% compared with that time last year.

Siân Edwards, director of strategy and insights at London-based Finlays, said in Beverage Industry’s June 2024 issue that, overall, the tea market has performed well in the past year.

“Despite some concerns about consumer spending impacting the category growth, hot tea and infusions have increased 8% and RTD teas have increased 6% [year-over-year] (YoY) in North America,” Edwards shared, citing Euromonitor’s 2023 “Tea in US” report. “This is driven both by organic volume growth and price increases as the tea categories premiumize and consumers spend more on their tea products.”

Gary Hemphill, managing director of research at Beverage Marketing Corporation (BMC), Wintersville, Ohio, also shared insights regarding the tea market in Beverage Industry’s June 2024 issue. He considered the category’s 2023 growth to be muted.

“Overall tea category performance was soft in 2023,” he said. “Inflation-driven higher prices made for a soft volume environment, but better revenue performance.”

In its “Tea and RTD Tea, US – 2023” report, Chicago-based Mintel notes that, despite ups and downs in the past three years — and volume declines — the category could be primed for a “renaissance” in a very competitive non-alcohol drink market.

“Growth in 2021-22 was deceiving: volume sales in the category struggled to stay positive until 2023, driven mainly by uncharacteristically strong performance in the instant mix segment,” the report states. “Keeping in step with shifts unfolding in the U.S. packaged coffee market, the draw of refreshment beverages in cold or iced form, especially among younger adults, are likely catalysts of segment performance, especially in the instant tea segment.

“Versatility is another salient draw for the broader category, offering consumers ways to make trendy, colorful and flavorful hot or cold beverages in single or multi-serve sizes that can shake-up not only occasions, but the industry,” the report continues.

Beverage Industry’s June 2024 issue also explored how sugar reduction trends have influenced the RTD tea market, even as consumers focus on overall well-being.

“RTD tea is increasingly being positioned as a better-for-you alternative to traditional soft beverage categories such as carbonates, leaning on the positive consumer perceptions of tea as a natural, healthy ingredient,” Finlays’ Edwards said. “A key aspect of this is low/no/reduced sugar claims, which are now present on a third of RTD tea launches in the U.S. market. This is driving category growth and engagement from consumers seeking healthier alternatives.”

BMC’s Hemphill noted that tea has a fairly well-developed low and no sugar RTD segment.

“That’s because not only are there zero sugar products with diet sweeteners, but there’s also a robust market for unsweetened tea, especially among tea purists,” he said in Beverage Industry’s June 2024 issue.

Circana’s Lyons Wyatt expressed similar thoughts. She noted that the tea categories have a variety of options for consumers, including both sweetened and unsweetened.

“Unsweetened is a smaller share, but in some segments growing, while in others, sweetened is preferred,” Lyons Wyatt said Beverages Industry’s June 2024 issue. “It all comes down to consumer choice. When sugar content data is observed, there has been traction for unsweetened, real sugar, no sugar, cane sugar and Splenda.”

Finlays’ Edwards shared that, aside from sugar content impacting the U.S. tea market, treat and indulgence trends are driving consumer behavior as they seek affordable indulgences in a time of economic concern.

“This is manifested through category premiumization in the indulgent space (e.g. growth of bubble tea) and the health and well-being space (e.g. organic, single-origin premium teas),” he said in Beverage Industry’s June 2024 issue. “Bubble tea in particular is such an exciting development, with fast-growing chains and tea beverages costing upwards of $7, demonstrating that even in the mature tea category, there are high-opportunity pockets of growth and innovation.”

Circana’s Lyons Wyatt pointed to consumers seeking variety as well as affordability in tea purchases.

“The quest for the entry points and/or value-priced beverages will be a trend affecting all beverages,” she said in Beverage Industry’s June 2024 issue. “This means retailers need an assortment of sizes, from single-serve to large (e.g. gallon) size offerings.

“Consumers are also seeking excitement and unique flavors in their beverages,” she continued. “In teas, we do see some new flavor varieties, but the main shares are for the traditional tea flavors. Therefore, exciting and unique flavors should be used to refresh the shelf, aim for one extra product in the basket (increased buy rate) and/or gain new users.”

Because consumers keep exploring new occasions and motivations for drinking tea, experts highlighted which segments flourished and which floundered this past year.

In the June 2024 publication of Beverage Industry, Circana’s Lyons Wyatt shared her thoughts.

“In 2023, all segments lost unit and volume sales, but gained in dollar sales spurred by price,” she said. “Canned and bottled tea and refrigerated teas increased dollar sales the most. YTD 2024, bags/loose tea and refrigerated teas are realizing growth in both dollar and unit sales, as well as driving the most dollar sales gains.”

In recent data from Circana, the canned and bottled tea segment sales reached $4.6 billion in the 52 weeks ending on May 19. The top brands included Arizona, Pure Leaf, Gold Peak, Lipton and Brisk, respectively. Arizona saw the top sales in the segment at just over $1 billion.

As for loose/bagged tea, Circana’s data for the 52 weeks ending May 19 shows that the segment saw sales of $1.4 billion. Top brands in the segment included Bigelow, Lipton, Celestial, private label and Twinings, respectively. The segment’s growth was just 1.5% compared to that time period last year.

BMC’s Hemphill noted, in Beverage Industry’s June 2024 issue, that loose tea experienced modest volume increase, while all other segments declined in volume — the largest decline coming from the tea pod segment.

“It was a different story for sales with all segments growing with the exception of pods,” he explained.

In terms of which teas occupy the most share, Hemphill said black tea has dominated the U.S. market.

“About 86% of the tea imported into the United States last year was black, with the reminder green,” he noted.

Circana’s Lyons Wyatt, in Beverage Industry’s June 2024 issue, said that black tea tops across the subcategories, with the exception of tea bags, in which herbal is the largest share. She noted that top black tea dollar share is in refrigerated teas at 85%.

Finlays’ Edwards added that, in RTD, black tea accounted for over 50% of launches in 2023, and green tea 30% in the North American market.

“In the fruit and herbals category, this is slightly less with black tea and green tea accounting for a combined 40% of launches, as the presence of fruit and herbals is much higher,” he said in Beverage Industry’s June 2024 issue.

Despite green and black tea continuing to dominate the U.S. market, experts highlighted the potential of other teas gaining share.

“There’s really strong potential for ‘other teas’ such as white tea and oolong,” Finlays’ Edwards said in Beverage Industry’s June 2024 issue. “So far in 2024, 7.7% of RTD tea launches contain white tea — up from 4.2% in 2023 and 1% of 2022.

“Consumers are increasingly seeking new and elevated experiences, driving the interest in trying new products and types of tea,” he continued. “Botanicals, fruit and herbals are also demonstrating strong potential, particularly when blended with teas, linking to trends for health, indulgence and experimentation.”

Circana’s Lyons Wyatt noted in Beverage Industry’s June 2024 issue that other types of tea have gained share within segments across the United States.

“For example, in 2023, canned and bottled tea, matcha green tea, black and white, white and yerba mate gained unit and dollar sales,” she said. “In bag/loose tea, albeit small sales amounts, these types gained unit and dollar sales: organic green; black and herbal; red; Japanese green; red rooibos; matcha green; green with herb; and orange pekoe.”

Looking ahead, Finlays’ Edwards suggested that the U.S. tea market will continue to see growth in the next year.

“We’re looking forward to a really positive year for all tea categories, as consumer confidence returns, innovation drives excitement and brand owners look for ways to differentiate in an increasingly busy marketplace,” he said in Beverage Industry’s June 2024 issue.