Gary Hemphill, managing director of research at Wintersville, Ohio-based Beverage Marketing Corporation (BMC), noted in Beverage Industry’s June issue that the overall tea category is well positioned from a health and wellness perspective.

“That said, it hasn’t had a significant positive impact on performance in recent years,” he explained, noting that overall category performance was soft in 2025.

“Both RTD and the dry variety experienced volume declines,” Hemphill said. “RTD tea declined but still outperformed the overall market. RTD volume dipped 1.6% with the overall market declining 3%.”

Keychain’s Madoff felt that the overall tea market performance experienced steady growth in the past year and was fueled by rising consumer demand for beverages that deliver on health, functionality and convenience.

“RTD tea in particular has continued to gain momentum, since it resonates with shoppers who want refreshing, better-for-you (BFY) options that still fit seamlessly into their busy lifestyles,” he said in the June issue of Beverage Industry.

Image courtesy of Saint James Iced Tea

Data from Chicago-based Circana showed that the tea bags and loose tea segments reached sales of $1.8 billion in the 52 weeks ending on April 19 in total U.S. multi-outlets. This is 1.5% increase from that same period last year.

Within that timeframe, Circana also reported that the instant tea mixes category saw sales of nearly $524 million, up 0.9%. Canned and bottled tea experienced a 1.5% decline in the 52 weeks ending April 19, with sales at $4.8 billion. Top brands within the canned and bottled tea segment include AriZona, Pure Leaf, Gold Peak, Lipton and Brisk.

In Beverage Industry’s June issue, Keychain’s Madoff pointed to RTD teas as the clear standout, with both shelf-stable and refrigerated options continuing to gain traction, “especially as younger consumers gravitate toward beverages that are healthier alternatives to traditional soft drinks,” he noted.

Keychain is seeing that play out across both iconic brands and everyday staples, Madoff added.

“Products like AriZona Tea’s Ginseng & Honey Green Tea continue to perform well, combining strong sales with sustained growth,” he said. “At the same time, consumers are increasingly reaching for multi-packs of Pure Leaf Unsweetened Real Brew Tea, which are easy to grab on the way out the door.”

Pure Leaf, a brand of PepsiCo, Purchase, N.Y., recently introduced Pure Leaf Mental Focus, its first line of sparkling, real-brewed iced teas. The teas are made with naturally occurring caffeine from black tea and added l-theanine to help support both attention and focus. Available in Peach and Raspberry flavors, Mental Focus contains 69 mg of caffeine, zero grams of sugar and zero calories.

“Functional drinks are no longer niche. People want products that keep up with their lives,” said Zach Harris, vice president and general manager at Pepsi Lipton Tea Partnership North America, in a statement. “Pure Leaf Mental Focus delivers great flavor, plus added benefits. It’s a real brewed iced tea with naturally occurring caffeine from black tea and added l-theanine, making it a smart option for busy days, especially as packed schedules and constant distractions have become the norm.”

Image courtesy of The Hain Celestial Group Inc.

For bagged and loose-leaf teas, Keychain’s Madoff noted in Beverage Industry’s June issue that traditional segments are holding their own as well.

“Tea bags remain a pantry staple, with products like Lipton Yellow Label Black Tea seeing strong revenue,” he said. “The wellness wave has also given herbal teas a meaningful lift. Consumers prioritizing relaxation and self-care are reaching for options like Tazo Chamomile Herbal Tea bags, which Keychain’s platform shows posting notable growth.

“Matcha has also surged in this space, fueled by social media buzz and growing consumer interest in functional, wellness-forward drinks,” Madoff continued.

Meanwhile, BMC’s Hemphill noted in Beverage Industry’s June issue that of all the tea market’s segments, on a volume basis, only loose tea grew in 2025, all other segments experienced modest declines.

Aside from wellness trends, sugar reduction trends have impacted the tea market, especially when it comes to the RTD tea market.

“Tea has a well-developed diet segment along with significant sales of unsweetened products,”   Hemphill shared. “RTD is well positioned as a category for consumers seeking a refreshment beverage with less sugar.”

Keychain’s Madoff stated in Beverage Industry’s June issue that sugar reduction is a defining trend in RTD tea.

“Shoppers are paying closer attention to labels and opting for beverages with less sugar, fewer ingredients and a more natural positioning, pushing many brands to rethink their formulations,” he said. “This has led to increased demand for unsweetened and lightly sweetened teas, particularly in formats that can be easily consumed throughout the day.

At the same time, there’s still plenty of room for indulgence alongside better-for-you options: sweetened classics like AriZona’s Half Iced Tea Half Lemonade will likely always resonate with a broad consumer base due to its nostalgic and familiar flavor profile,” Madoff continued. “We’re also seeing a clear shift toward cleaner labels and lower sugar varieties.”

Madoff also noted that functional beverage trends in general have reinforced tea’s position as a naturally beneficial drink.

“Many consumers already associate tea with inherent health benefits, like supporting digestion and immune function, making it an easy fit for wellness-driven routines centered on energy, focus or relaxation,” he explained in Beverage Industry’s June edition. “Beverage like kombucha and matcha, both of which are associated with health benefits, have made a splash in the beverage industry over recent years.

“Herbal teas are greatly benefiting from this shift, as shoppers increasingly seek out products tied to specific benefits like stress relief and sleep improvement,” Madoff continued.

In terms of other trends impacting the U.S. tea market in the future, Madoff shared that social media would play a growing role in shaping how consumers connect with tea, “especially through daily vlogs and ‘day in the life’ content,” he said.

“Tea is often featured in these videos as a go-to option for winding down, reinforcing its ties to relaxation and self-care,” Madoff noted. “This is turning tea into more than just a drink. It’s becoming part of a daily ritual, especially for younger consumers looking to build moments of calm into their day.

“As a result, herbal and caffeine-free teas are gaining more visibility,” he continued. “More broadly, this trend is positioning tea as both functional and lifestyle-driven, making it an everyday staple rather than just an occasional choice.”

In the June issue of Beverage Industry, BMC’s Hemphill said that, in theory, consumer demand for healthier refreshments should boost the tea category, but so far, impact seems minimal.

“We’re projecting a continuation of soft performance for the category this year,” Hemphill shared. “Specifically, we’re projecting total category volume will decline about 1% while dollars will increase ever so slightly.”

Keychain’s Madoff, meanwhile,  anticipated the outlook for the U.S. tea market to remain positive.

“RTD tea should continue to lead the category, supported by strong demand for convenient, lower-sugar, functional beverages,” he concluded. “We also expect to see continued momentum across both innovative formats and legacy products, as consumers embrace new products while still revisiting their familiar favorites. Brands that can deliver great taste, clear wellness benefits and consistency will be best positioned to succeed as the category continues to evolve.”