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Tea moves towards the 90's.

Tea moves towards the 90's

Conventional wisdom backed by marketing reports show that in retail figures the tea market is declining, albeit slowly, every year, while customs figures for imports show that the tea market has increased steadily. Concerning import figures, the U.S. Tea Council explained, "Because tea is in a continuous importing pipeline, an arbitrary January through December average would not be valid. Import figures are therefore based on a three-year average in an effort to flatten out peaks and valleys which naturally occur with figures that represent such a commodity." As we move into 1991 we are ending one of these three year periods, and the statistics show that total import figures (these includes both leaf and soluble teas) have increased from 182.5 million pounds in the early eighties to the current average of 199.5 million pounds. Divide this increase over the last decade and what you see is a slow steady growth pattern throughout the tea industry. There is good reason to believe the optimistic viewpoint expressed in these increasing import numbers as opposed to any statistics on consumption. Don Wiederecht, executive director for the U.S. Tea Council remarked that, while it has been hard to get accurate and complete figures on tea consumption, the figures for pounds imported was easily verifiable. The U.S. Tea Council is, in fact, in the process of gaining accurate consumption figures with the help of Price Waterhouse, but these figures will not be available until October.

According to Wiederecht the steady growth we see in import figures reflects an increase in all kinds of teas, but two areas in particular are showing a lot of strength. "The gourmet teas are doing very, very well, packing on 5-7% increases each year. Decaffeinated teas which are relatively new to the market have also been experiencing similar growth over the past three years, approximately 5-7%." While this is a modest percentage it represents approximately 7-8% of the total imports for each of these categories, making declining retail figures seem less alarming.

The increasing importance of both decaf and gourmet teas to the growth of the industry is confirmed by Mike Spillane of G.S. Haly, who feels that the growth of these two segments will continue. Decaffeinated tea sales should experience even greater growth due to technological advances. "The big news in decaf is the movement towards the carbon dioxide ([CO.sub.2]) decaffeination process which should be available some time next year. Packers are now showing an interest in a product that is 100% naturally decaffeinated. And loose teas and fancy decaf teas will also go with this method." While the consumer demand has been there a long time, the technology has not. With the new [CO.sub.2] process, the technology has finally reached a point where it can fulfill that need. The [CO.sub.2] process works on this basic premise. Leaves are put into a tank with some degree of heat added, and the tank is pressurized with [CO.sub.2]. Caffeine turns into a gas and bonds with the [CO.sub.2] and is then vacuumed out. Although the method is more expensive, for a market that has consistently demanded 100% natural products the expense should not be prove a barrier to increased sales. A wise note to retailers who carry these new [CO.sub.2] products is to explain the process to consumers as the "pressure process" or "pressure treatment," since [CO.sub.2] may carry unwanted chemical connotations to unknowing customers.

Concerning the high-end specialty tea market, Spillane noted, "Loose teas are gaining market share and have been for the past 20 years. But it's such a small market that the gains are not registered with larger institutions." Mike's estimation puts gourmet teas at 3-4% of the entire market. While there is this small growth in the specialty segment of the market, at the other end institutional teas are losing sales, this year substantially. This doesn't mean however, that loose tea is going to fill the void. "The demand for loose tea is slowly coming into its own, but the growth is accomplished by word of mouth," and more importantly, Spillane said, " as good products become available and are being discovered." While there are those with substantial capital who see this void in the market and have interest in promoting specialty bulk teas, these companies are not destined to take over the large niche occupied by commercial brands. Altough, with proper marketing there is certainly the potential to develop a nice market and do well.

The U.S. is now a cold beverage market, a phenomenon which has proved a mixed blessing for the tea trade. Media advertising is consistently

focused on beer and soft drinks, all with visuals depicting iced coldness as one of the desired traits. This may sound like doomsday for a traditional hot beverage, but it has worked to the overall advantage of the tea market by boosting iced tea sales considerably. Ten to fifteen years ago, if you asked for tea in a restaurant during the colder months, you'd automatically be served hot tea, whereas now you have to specify hot or iced regardless of the time of year. Not only has iced tea become a year-round beverage, but it is now a fairly well accepted number that 80% of the tea market is iced.

Taking full advantage of this market is Alan Chemtob of Paradise Tropical Teas, who has made a big splash in foodservice with high-quality flavored iced teas. One large consumer trend which is aiding the advance of his product is the movement towards healthier food. Consumers are steering away from syrup based beverages and alcohol, but demanding higher quality in the beverages they do consume. Most teas found in the States are low quality Argentinian teas. "Our success has come about because we use higher quality teas with not only a specific tropical flavor, but with flavors that come from the tea's origin," Chemtob explained. "It is a product whose time has come. People are more conscious and more dicerning on how they spend their dollar." Like the specialty coffee trade in its infancy much of the battle is educating consumers about differences in teas. As Chemtob explained, "We're trying to establish that there is a difference. Iced tea is not just an enjoyable and healthy beverage, or a thirst quencher."

An increased consumer interest like that expressed in iced tea might herald a potential cross-over into specialty tea in general, but most sources agree that flavored iced tea is not going to turn non-tea drinkers into tea drinkers. What it does accomplish is the attraction of new consumers. As Mike Spillane explained, "This is a product that is catching on quite fast, and has the advantage of moving through the medium of foodservice where enormous exposure can be gained in a short time." While high-quality products like Paradise Tropical Teas are doing something for the tea industry, such as possibly encouraging a better grade of straight tea and an upgrade of the institutional iced tea market, they aren't bringing people into gourmet shops and therefore they aren't introducing consumers to the wider range of high-quality teas.

Chemtob, however, has noticed that some cross-over does occur in going into retail with his iced tea products. "We've had a tremendous response from both foodservice and consumers asking for the product in retail. To answer that demand and maintain the integrity of the product we've come out with pre-measured filter bags in retail packaging that allows the consumer to brew high-quality tea consistently." While Chemtob recognizes the need for higher quality hot teas, he agrees there is no cross-over interest in that segment of the market that can be associated with the iced tea segment.

Two foodservice trends buoy hopes for an increased market for hot tea beverages: the profusiosn of afternoon tea services, most at finer hotels, and the increasing number of coffeehouses. Afternoon tea is something which European countries brought back into fashion very quickly. Travel has become a standard for our society, and an increasingly large number of travelers find it very nice around 4:00 to have something to tide them over until the dinner hour. In the States we have followed the lead, and afternoon teas can be found almost anywhere. Mehdi Estekari at Four Seasons Hotel in Los Angeles, which offers a full English-style tea, has noticed an increased attendance at their afternoon tee, with parties ranging from the lone business traveler to large groups. Especially apparent, Estekari noticed, is the fact that "Afternoon tea has become a special occasion event. One of the fastest growing markets is teenagers who are coming in to celebrate birthdays, and using it as an occasion to dress and act elegantly." Estekari has also notice that afternoon tead is increasingly a family-oriented affair, which young children can enjoy taking part in. Finally, because of the declining interest in alcoholic beverage consumption, afternoon tea has the advantage of filling in for the "power lunch," offering business people as sophisticated atmosphere along with high-quality refreshment.

The tea industry is also finding a natural arena in coffeehouses. The coffee roaster-retailer is dealing with increased competition for customers and is beginning to find it necessary to diversify his offerings. This is an especially viable market for better grades of tea. The trend in these new retailers is that they want to offer a product that they won't worry about. As Mike Spillane has notice, this generally means starting with the best sellers and offering approximately a half dozen of the better grades. One reason to offer high-quality teas is that they are easy to market. For retailers who don't have the time to research every product, or who are not well-versed in tea knowledge, it is simple to say, "I've got the best, here it is." They are able to sell their products on taste. Spillane finds his encouraging.

Lifestyle changes such as consumer movements towards health and value consciousness have further increased the potential for tea in the 90's. Tea has tremendous capabilities for being marketed through these avenues. Tea has no calories, it is non-carbonated and non-alcoholic. For the food service tea translate into astronomical profit margins. Tea also compares favorably to any other beverage on the market in terms of volume cost. (In the foodservice industry a highquality serving of tea can often cost as little as five cents and demand a $2.00 charge.) These are high-inducements for not only foodservice, but for the family as well.

Finally, while not really teas, tisanes or herbal beverages were a factor of increasing competition in the mid-80's and have therefore become an area of interest in analyzing the tea market. The concern over supermarket shelfs giving space to herbal has let up, as it seems that retailers and consumers alike have expanded their beverage category to include herbals, and not at the expense of tea. While many still consider herbals as tea, herbals seem to have served the purpose of bringing more awareness to the tea market as an alternative to coffee and cocoa. Furthermore, the herbal market has maintained a health food connotation, often offering some medicinal purpose as inducement for drinking. This tends to sharply differentiate it from true tea products. While there are no figures for how much herbal tea is imported or produced, this segment of the beverage market seems to have leveled off.

Overall, the 90's seem a hopeful period for both the tea market and tea consumers. The segments of the market which are experiencing slow but steady growth, specialty teas, iced teas, and decaffeinated teas, are those segments which should provide a firm foundation for growth in the future.
COPYRIGHT 1990 Lockwood Trade Journal Co., Inc.
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Copyright 1990 Gale, Cengage Learning. All rights reserved.

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Author:Moore, Wendy Rasmussen
Publication:Tea & Coffee Trade Journal
Date:Oct 1, 1990
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