Consumers continue to reach for their cup of tea. Based on data from Chicago-based Circana, the overall bag and loose-leaf tea market saw dollar sales increase 2.6%, totaling $1.7 billion, for the 52 weeks ending April 20. Volume sales also increased slightly at 0.9% during that time.

In terms of segments, bags and loose-leaf tea fared better than single-cup tea with bags and loose-leaf tea sales up 3.6%, with more than $1.6 billion in sales, compared with single-cup tea sales down 17.2%, totaling $64 million.

The instant tea mixes category also has struggled with sales down 1.2%, totaling $514 million with volume sales down 5.1%.

For canned and bottled tea, dollar sales were flat totaling $4.8 billion, yet volume was down 3.3%.

One category that fared well, though, was refrigerated teas, which saw sales up 5.1%, totaling $1.7 billion with volume up slightly at 0.5%.

Paige Leyden, research manager of foodservice for the U.S. at Chicago-based Mintel, wrote in its 2024 report “Tea and RTD Tea – US” that tea’s sales gain has come while volume declines have persisted.

“Tea has posted steady dollar sales gains in recent years. However, a closer look reveals the gains are a result of price increases amid a climate in which consumers are drinking less tea,” Leyden noted in the report. “Brands must avoid alienating shoppers through continued price hikes, especially considering they’re lukewarm on their enjoyment of tea taste.”

The diversion of performance across the tea category could be attributed to consumers perceptions of health benefits.

In the Tea Association of the U.S.A. Inc.’s most recent Tea Fact Sheet, it notes this, among other product attributes that contributed to the category’s performance in 2024.

“Consumers drank tea to ease stress, relax, calm, and center themselves,” the Fact Sheet states. “Additionally, research validating tea’s ability to boost immune systems certainly helped, as did a recent peer-reviewed paper on bio-actives in tea highlighting tea as the best source of these important compounds.”

Roger Dilworth, senior analyst at Beverage Marketing Corporation (BMC), Wintersville, Ohio, noted in Beverage Industry’s June issue that the wellness aspects of tea have been well-documented, but the ready-to-drink (RTD) segment has other attributes that have counteracted those aspects.

“Some of the health-and-wellness attributes of tea seem to have been accounted for already, i.e., the focused energy of l-theanine and caffeine that tea brings to the table,” he said. “RTD teas are often sugar-laden, which counteracts some of the health message. And the ones that have less sugar are doing satisfactorily but have yet to ignite the RTD tea segment.”

However, Mintel’s Leyden noted that when it comes to tea’s attributes, manufacturers have an opportunity to expand the traditional aspects that consumers might associate with the category.

“Tea drinkers are more likely to associate tea with relaxation and comfort than as a source of energy,” she stated in the report. “While relaxation is important, given the prevalence of stress in modern times, there’s also opportunity to promote tea as a viable option for boosting productivity and clear focus.”

Leyden also wrote that among the top claims across the segment, environmental stewardship can be seen throughout.

“While this ethical approach is admirable, consumers are more apt to seek a personal benefit first,” she wrote in the report. “Especially amid times of price hikes, brands can more directly prove value through personal benefit.”

This all comes after the FDA released in December 2024 its final rule on the use of “healthy” on food labels. The foods and beverages that qualify to bear the claim meet limits on added sugar, sodium, and saturated fats, based on Daily Value recommendations within the Dietary Guidelines for Americans 2020-2025.

Certain tea products, including tea bags and bottled tea, can now display the “healthy” claim on packaging, provided they contain less than 5 calories in each 12-ounce ounce serving, according to the Tea Council of the USA Inc.

“We are thrilled that the FDA’s new ruling officially recognizes unsweetened tea as a ‘healthy’ choice,” said Peter Goggi, president of the Tea Council of the USA, in a statement at the time of the announcement. “For decades, we’ve known that tea delivers significant health benefits, and now consumers can more easily identify it as a ‘healthy’ choice right on the label. This designation not only validates tea’s role in a balanced diet, but will also encourage more Americans to reach for this naturally refreshing, calorie-free beverage.”

Flavor focus

As the tea market could benefit from the use of “healthy” for unsweetened products, analysts note that addressing flavor and sweetener usage plays a factor in the innovations for this category going forward.

In Beverage Industry’s June issue BMC’s Dilworth noted earlier, for RTD tea, sugar reduction trends have a had a negative impact on the segment.

“If anything, the sugar reduction trends have caused some consumers to exit the category altogether in favor of PET water, sparkling water and functional beverages,” he said.

Dilworth also highlighted the contributions of out-of-home and specialty teas.

“There is a glimmer of hope with tea cafés that have innovative tea drinks such as boba tea and ‘cheese’ tea,” he said. “Once confined to Asian enclaves, these cafés seem to have grown in number in white suburban areas, at least in some pockets of the country.”

Dilworth added that mate tea has shown a growing popularity, but has not established itself in the RTD space.

Embracing flavor also could be a strategy for tea manufacturers going forward.

“Fewer than 40% of tea drinkers rate the most common types of tea as a taste they enjoy,” Leyden wrote in Mintel’s report. “Given that flavor leads food/drink choice, the category must boost its taste perception in order to compete with other beverages. Tea introductions that score highest for ‘tasty’ promote bold flavors, sweetness, and familiar ingredient blends.”

Ready-to-drink tea brands though are addressing flavor and sweetness in creative ways.

Fair Hills Farm Organics announced the launch of its Organic Black Tea line, a ready-to-drink collection of teas naturally sweetened with cold-pressed apple juice made from the farm’s own fruit.

The new line includes five blends: Original Black Tea, Black Tea & Chamomile, Black Tea & Mint, Black Tea & Cinnamon, and Black Tea & Ginger. Each tea is crafted without added sugars or artificial ingredients, offering a gently sweet, fruit-forward profile that highlights the integrity of its ingredients, the company says.

Lipton also is leaning into the hybrid approach with its Lipton Fusions Lemonade Iced Tea, which combines crisp lemonade with Lipton Iced Tea and natural fruit flavors, with 50% less sugar than regular sodas, the company says. The new releases are available in Strawberry Lemonade and Pineapple Mango Lemonade in 16-ounce cans nationwide.

The Tea Association of the U.S.A. also points to flavor as among the attributes that the tea category can offer consumers to help it rebound following the impact experienced from COVID and supply chain issues in 2022-2023.

“Tea’s variety, convenience, health benefits, sustainability efforts, availability, continued innovation, and the discovery of unique, flavorful, and high-end specialty teas will continue to provide the fuel,” the Fact Sheet states. “Long-term success relies on the continued adoption of tea by new consumers who constantly seek healthy food and beverage choices. We are seeing this exact behavior, particularly from millennials, Gen Z’s, and baby boomers.”