Tea and Other Hot Drinks - UK - July 2016

OVERVIEW
What you need to know
Products covered in this report
EXECUTIVE SUMMARY
The market
Decline in total sales of tea and other hot drinks
Figure 1: UK retail value sales and forecast for the tea*, hot chocolate and hot malted drinks market, 2011-21
Green tea the biggest boost to tea market
Figure 2: UK retail value sales of tea, by segment, 2013-15
Companies and brands
PG Tips’ lead over Twinings narrows
Figure 3: Top brands’ sales and shares in the UK tea market, by value, 2015-16
The consumer
Half of people drink standard black tea daily
Room to encourage more drinking of hot chocolate
Strong brand loyalty in tea buying
Figure 4: Prompts that would encourage people to buy a different tea type/brand, May 2016
Low price and promotions exert a big influence
Figure 5: Most important factors influencing choice when buying one tea type/brand over another, May 2016
Strong interest in tea with added health benefits
Figure 6: Interest in trying different products, May 2016
Speciality teas can appeal as a treat and encourage trading up
Figure 7: Attitudes towards tea and other hot drinks, May 2016
What we think
ISSUES AND INSIGHTS
NPD needed to drive more tea drinking among younger generation
The facts
The implications
Adding value to tea market through wider repertoires and trading up
The facts
The implications
New features and formats needed in hot chocolate and malted drinks to develop new usage occasions
The facts
The implications
THE MARKET – WHAT YOU NEED TO KNOW
Decline in total sales of tea and other hot drinks
Long-term decline in tea consumption continues
Green tea the biggest boost to the tea market
Fall in sales of hot chocolate and hot malted drinks
Need for market to encourage more drinking by younger people
MARKET SIZE AND FORECAST
Declining sales of standard black tea hits total market
Figure 8: UK retail sales for the tea*, hot chocolate and hot malted drinks market, by volume and value, 2011-21
No immediate signs of recovery in total tea sales
Figure 9: UK retail value sales and forecast for the tea*, hot chocolate and hot malted drinks market, 2011-21
Forecast methodology
SEGMENT PERFORMANCE
Declining black tea sales continue to hit market
Figure 10: UK retail value and volume sales of tea*, 2011-21
Figure 11: UK retail value sales and forecast for tea*, 2011-21
Green tea provides the biggest boost to the market
Figure 12: UK retail value sales of tea, by segment, 2013-15
Figure 13: UK retail volume sales of tea, by segment, 2013-15
Decline in sales of hot chocolate and malted drinks
Figure 14: UK retail value and volume sales for the hot chocolate and hot malted drinks market, 2011-21
Figure 15: UK retail value sales and forecast for the hot chocolate and hot malted drinks market, 2011-21
Need for more marketing activity to encourage drinking
Figure 16: UK retail value sales of hot chocolate and hot malted drinks, by segment, 2013-15
Figure 17: UK retail volume sales of hot chocolate and hot malted drinks, by sector, 2013-15
MARKET DRIVERS
Long-term decline in tea but more drinking of coffee
Figure 18: UK household purchases of tea, coffee and cocoa, hot chocolate and malt drinks, 2001-14
Competition from soft drinks and waters
Figure 19: UK household purchases of mineral and spring waters and soft drinks, 2001-14
Younger people need encouraging to drink more tea
Figure 20: Trends in the age structure of the UK population, 2010-20
KEY PLAYERS – WHAT YOU NEED TO KNOW
PG Tips’ lead over Twinings narrows
Yorkshire Tea and Pukka see sales growth
Mondelēz has nearly half of hot chocolate sales
Big focus on flavour extensions in tea
Increasing choice of green and speciality teas
Confectionery brands extend hot chocolate offer
Darker or more indulgent hot drinks and different formats
Increase in 2015 advertising for teas
PG Tips the most trusted brand
Twinings stands out for innovation and high quality
Typhoo has more lapsed users
MARKET SHARE
PG Tips’ market lead over Twinings is narrowing
Yorkshire Tea and Pukka see sales growth
Figure 21: Top brands’ sales and shares in the UK tea market, by value and volume, 2014/15 and 2015/16
Mondelēz accounts for nearly half of hot chocolate sales
Tassimo benefits from popularity of pod machines
Figure 22: Leading brands’ sales and shares in the UK hot chocolate market, by value and volume, 2014/15 and 2015/16
Horlicks and Ovaltine dominate hot malted drinks
Figure 23: Leading brands’ sales and shares in the UK malted drinks market, by value and volume, 2014/15 and 2015/16
LAUNCH ACTIVITY AND INNOVATION
Tea bags dominate launch activity
Figure 24: New product launches in the UK tea market, by format type, 2011-16
Twinings leads launch activity with flavour extensions
Figure 25: Examples of new flavour launches in the UK tea market, 2015 and 2016
Figure 26: Further examples of new flavour launches in the UK tea market, 2015 and 2016
Tetley puts focus on added health benefits
Figure 27: Examples of Tetley’s super’ fruits and green tea launches in the UK tea market, 2015 and 2016
Figure 28: New product launches in the UK tea market (top 12*), by company, 2011-16
Increasing choice of green teas available
Packaging revamp for PG Tips and more blends to choose from
Ethical claims prominent in the tea market
Figure 29: New product launches in the UK tea market, by claims (top 15*), 2011-16
Chocolate confectionery brands extend hot chocolate offer
Options was the focus of launch activity for Ovaltine
Figure 30: Examples of launches in the UK hot chocolate market, 2015 and 2016
More indulgent hot chocolates and added flavours
Figure 31: Examples of launches in the UK hot chocolate market, 2015 and 2016
Figure 32: New product launches in the UK malt and other hot beverages market, by company, 2011-16
‘Light’ products prominent and low-sugar claims growing
Figure 33: New product launches in the UK malt and other hot beverages market, by claims (top 12*), 2011-16
BRAND COMMUNICATION AND PROMOTION
Big increase in 2015 advertising
Figure 34: Recorded above-the-line, online display and direct mail total advertising expenditure on tea and other hot drinks, 2012-16
Taylor’s Yorkshire Tea biggest spender
Figure 35: Recorded above-the-line, online display and direct mail total advertising expenditure on tea, by advertiser, 2012-16
Twinings benefits from encouraging everyday drinking
Unilever’s PG Tips launches ‘Keep It Tea’ campaign
Tetley looks to mix of new products and nostalgia
Clipper Teas pushes green tea range
Return to major advertising for Typhoo 
Nielsen Media Research coverage
BRAND RESEARCH
What you need to know
Brand map
Figure 36: Attitudes towards and usage of selected brands, May 2016
Key brand metrics
Figure 37: Key metrics for selected brands, May 2016
Brand attitudes – PG Tips the most trusted brand
Figure 38: Attitudes, by brand, May 2016
Brand personality – Pukka stands out for being vibrant and ethical
Figure 39: Brand personality – Macro image, May 2016
Authenticity – A key strength for Yorkshire Tea
Figure 40: Brand personality – Micro image, May 2016
Brand analysis
Twinings stands out for consistently high quality
Figure 41: User profile of Twinings, May 2016
Yorkshire Tea the most authentic brand
Figure 42: User profile of Yorkshire Tea, May 2016
Pukka has a vibrant, fun and ethical image
Figure 43: User profile of Pukka, May 2016
PG Tips the most refreshing and accessible brand
Figure 44: User profile of PG Tips, May 2016
Tetley among the most trusted and accessible brands
Figure 45: User profile of Tetley, May 2016
Typhoo lacks standout and brand commitment
Figure 46: User profile of Typhoo, May 2016
THE CONSUMER – WHAT YOU NEED TO KNOW
Half of people drink standard black tea daily
Younger, more affluent bias to drinking of other teas
Room to encourage more drinking of hot chocolate
Drinking standard black tea spread throughout most of day
Strong brand loyalty in tea buying
Low price and promotions exert a big influence
Strong interest in tea with added health benefits
A wider variety of flavours can increase the appeal of tea
Speciality teas can appeal as a treat and encourage trading up
Being unhealthy or too sweet limiting drinking of hot chocolate
DRINKING OF TEA AND OTHER HOT DRINKS
Half of people drink standard black tea daily
Figure 47: Frequency of drinking different types of hot drink, May 2016
Younger, urban and affluent bias to drinkers of other teas
Half of people drink hot chocolate but most do so no more than once a week
Half of people drink more than one type of tea
Figure 48: Number of different types of tea drunk in last month, May 2016
Number of cups of standard black tea drunk
Figure 49: Number of cups of standard black tea drunk per day by drinkers of standard black tea, May 2016
TIMES OF DAY FOR DRINKING HOT DRINKS
Drinking black tea spread throughout most of the day
Figure 50: Times of day people typically drink different types of hot drinks, May 2016
FACTORS INFLUENCING CHOICE OF TEA
Strong brand loyalty when shopping for tea
Figure 51: Sticking to one tea product vs buying different tea products, May 2016
Strong interest in free samples
Figure 52: Prompts that would encourage people to buy a different tea type/brand, May 2016
Price has a big influence on decision making
Regional British heritage more important to older tea drinkers
Figure 53: Most important factors influencing choice when buying one tea type/brand over another, May 2016
Being ethically sourced a significant consideration
INTEREST IN TRYING DIFFERENT PRODUCTS
Strong interest in tea with functional health benefits
Figure 54: Interest in trying different products, May 2016
Added flavours can increase interest in standard black tea
Tea capsules/pods have limited appeal
Room for added-value hot chocolates
ATTITUDES TOWARDS HOT DRINKS
Room for more indulgence in tea market
Figure 55: Attitudes towards tea and other hot drinks, May 2016
Caffeine content only a limited barrier to drinking tea
Healthy living limiting the drinking of hot chocolate
Flavour of hot malted drinks a barrier to purchasing
APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Abbreviations
Consumer research methodology
APPENDIX – THE MARKET
Figure 56: Best- and worst-case forecast of total UK retail volume sales of tea*, hot chocolate and hot malted drinks, 2011-21
Figure 57: Best- and worst-case forecast of total UK retail value sales of tea*, hot chocolate and hot malted drinks, 2011-21
Figure 58: Best- and worst-case forecast of total UK retail volume sales of tea*, hot chocolate and hot malted drinks, 2011-21
Figure 59: Best- and worst-case forecast of total UK retail volume sales of tea*, 2011-21
Figure 60: Best- and worst-case forecast of total UK retail value sales of tea*, 2011-21
Figure 61: Best- and worst-case forecast of total UK retail volume sales of tea*, 2011-21
Figure 62: Best- and worst-case forecast of total UK retail volume sales of hot chocolate and hot malted drinks, 2011-21
Figure 63: Best- and worst-case forecast of total UK retail value sales of hot chocolate and hot malted drinks, 2011-21
Figure 64: Best- and worst-case forecast of total UK retail volume sales of hot chocolate and hot malted drinks, 2011-21
Fan chart forecast
APPENDIX – KEY PLAYERS
Figure 65: Top manufacturers’ sales and shares in the UK tea market, by value and volume, 2014/15 and 2015/16
Figure 66: Top manufacturers’ sales and shares in the UK hot chocolate market, by value and volume, 2014/15 and 2015/16
Figure 67: Top manufacturers’ sales and shares in the UK malted drinks market, by value and volume, 2014/15 and 2015/16
Figure 68: New product launches in the UK tea market, by launch type, 2011-16
Figure 69: New product launches in the UK tea market, by branded vs private label, 2011-16
Figure 70: New product launches in the UK malt and other hot beverages market, by branded vs private label, 2011-16
Figure 71: New product launches in the UK malt and other hot beverages market, by launch type, 2011-16