Table of Contents
Issues in the Market
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- Key themes
- Definition
- Excluded
Future Opportunities
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- Many Mes
- Brand USA
Market in Brief
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- Standard tea is in long-term decline
- Herbal tea is growing too slowly
- Rising commodity prices mean value of tea will outstrip volume sales
- A new younger generation of tea consumers with different tea needs
- The paradox of increasing hot chocolate consumption
Internal Market Environment
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- Key points
- Spiralling commodity costs
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- Figure 1: Trends for annual % change in price (measured in Retail Price Index) for tea and coffee/other hot drinks, 2000-10
- Consumers are still prepared to pay for small luxuries
- Eco also means ego
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- Figure 2: Estimated UK retail sales of fair trade-certified products, by value, 1998-2009
- Hot beverages can focus on a broader view of health
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- Figure 3: Trends in agreement with statements on health, 2006-10
- Calories need controlling
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- Figure 4: Trends in agreement with the statement ‘I always think of the calories in what I eat’, 2006-10
- The renaissance of Britishness
Broader Market Environment
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- Key points
- No end to financial woes in 2011
- Tea is failing to win over younger generations like hot chocolate is
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- Figure 5: Penetration of different hot drinks, by gender and age, 2009
- Legislation tightens up on proving claims
- More ABC1s behind the drive towards premiumisation
Competitive Context
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- Key points
- Colder beverages are outperforming hot drinks
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- Figure 6: Trends for in-home value sales of non-alcoholic drinks, at current prices, by category, 1999-2009
- Fizzy soft drinks are leading the way
- The rise of coffee shops takes share away from in-home hot beverages
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- Figure 7: Trends for spend in coffee shops compared to in-home spend on hot beverages, 2003-09
- Figure 8: Percentage point change in penetration of in-home hot beverages, by product, 2005-09*
- Decline in alcohol drinking provides a greater sales opportunity
Strengths and Weaknesses in the Market
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- Strengths
- Weaknesses
Who's Innovating?
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- Key points
- Herbal teas drive hot drinks innovation
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- Figure 9: Trends for flavour components in new tea, hot chocolate and malted beverage products, 2008-10
- Improving the taste of green tea
- Organic claims dominate new product development
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- Figure 10: Trends for main product claims of new tea, hot chocolate and malted beverages, 2008-10
- Targeting the kids
- Premiumisation in tea packaging
- Innovation in hot chocolate packaging and flavours
- The rise of chocolate pods
Market Size and Forecast
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- Key points
- Tea market rallies over past two years
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- Figure 11: Market size and forecast for volume and value sales of the total UK in-home tea market, 2005-15
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- Figure 12: Retail sales price per kg for the UK in-home tea market, 2005-15
- Forecast Methodology
- Volume sales likely to plateau over the next five years
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- Figure 13: Forecast of the volume sales for the UK in-home tea market, 2005-15
- Hot chocolate drinks market still has plenty of growth potential
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- Figure 14: Market size and forecast of volume and value sales in the UK in-home hot chocolate market, 2005-15
- Figure 15: Forecast of the volume sales for the UK in-home hot chocolate market, 2005-15
- Horlicks shows there is still life in the ‘other malted drinks’ market
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- Figure 16: Market size and forecast for volume and value sales of the UK in-home other malted drinks market, 2005-15
- Figure 17: Forecast of the volume sales for the UK in-home other malted drinks market, 2005-15
Market Segmentation
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- Key points
- Segmentation of the tea market
- Herbal tea is making only incremental gains
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- Figure 18: Trends for segmentation of the UK in-home tea market, by herbal and standard tea, 2009 and 2010
- Teabags account for 96% of value sales
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- Figure 19: Segmentation in value sales of the UK in-home tea market, by format, 2009 and 2010
- Segmentation of hot chocolate
- ‘Full fat’ hot chocolate continues to drive market growth
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- Figure 20: Segmentation in value sales of the hot chocolate market, by standard and diet, 2009 and 2010
Market Share
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- Key points
- Economic downturn allows PG Tips to consolidates its market dominance
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- Figure 21: Trends for value sales of tea brands, 2008-10
- Hot chocolate is dominated by Cadbury’s
- Horlicks grows sales on back of its TV campaign
Companies and Products
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- Key points
- Associated British Foods
- Cadbury/Kraft
- GlaxoSmithKline
- Nestlé
- Tetley
- Typhoo
- Unilever
Brand Communication and Promotion
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- Key points
- Tea brands drive increased investment
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- Figure 22: Topline adspend in the tea, hot chocolate and malted hot drinks markets, 2006-10*
- Unilever comfortably outspends its rivals…
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- Figure 23: Top five highest-spending advertisers in the tea and other hot drinks market, 2008-10
- …due to its huge investment in PG Tips
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- Figure 24: Top ten highest-spending brands in the tea and other hot drinks market, 2008-10
- Is Tetley regaining interest in the tea market?
Consumer Usage of Tea, Hot Chocolate and Other Malted Drinks
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- Key points
- Hot beverages are seeing a steadily declining pool of drinkers
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- Figure 25: Trends in usage of different hot drinks, 2005-09*
- Frequency is an issue for all but standard “English” breakfast tea
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- Figure 26: Drinkers of tea, hot chocolate and other malted drinks in the past 12 months, by frequency, December 2010
- Hot chocolate has a high penetration – and much potential still to grow
- Only half of malted drink users consume them once a week
- Standard “English” breakfast tea retains a stubborn user base
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- Figure 27: Crossover in drinking different types of tea in the past six months, December 2010
- Standard “English” breakfast tea has a strong resonance with C2DEs
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- Figure 28: Index (100=average) of solus drinkers of standard “English” breakfast tea compared to drinkers of “English” breakfast/speciality tea, by gender, age and socio-economic group, December 2010
- A new, more experimental generation of young professionals
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- Figure 29: Index (100=average) of drinkers of any tea compared to drinkers of all three tea types (ie standard “English” breakfast, speciality and herbal), by selected demographics, December 2010
- Speciality tea in particular is tapping into the younger generation
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- Figure 30: Index (100=average) of regular drinkers (ie at least once a week) of the three main tea types, by gender, age and socio-economic group, December 2010
- Hot chocolate is losing regular drinkers as they become older
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- Figure 31: Index (100=average) of regular drinkers (ie at least once a week) of hot chocolate and other hot malted drinks, by gender and age, December 2010
Attitudes towards “English” Breakfast Versus Speciality Tea
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- Key points
- Comfort and refreshment are universal requirements for standard tea
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- Figure 32: Attitudes towards standard tea, by solus standard “English” breakfast tea drinkers and drinkers of “English” breakfast and/or speciality tea, December 2010
- The new generation of tea drinkers are more open to premiumisation
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- Figure 33: Attitudes towards standard, by drinkers of “English” breakfast and/or speciality tea and drinkers of both speciality and standard “English” breakfast tea, December 2010
- New generation of tea drinkers use English breakfast as an energy booster
The Barriers and Benefits to Drinking Herbal Tea
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- Key points
- Taste is the main barrier to attracting more herbal tea drinkers…
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- Figure 34: Barriers to entry for tea drinkers who do not drink herbal/fruit tea, December 2010
- …but also cynicism about its merits
- Young men are desperate not to be seen with herbal tea…
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- Figure 35: Index (100 = average) of barriers to entry for tea drinkers who do not drink herbal/fruit tea, by age, December 2010
- …but are likely to be attracted to energy teas
- Variety of flavours is the key selling point for herbal/fruit tea drinkers
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- Figure 36: Benefits of drinking herbal tea, December 2010
Attitudes towards Hot Chocolate
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- Key points
- Hot chocolate is considered even more comforting than tea
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- Figure 37: Attitudes towards hot chocolate, December 2010
- A category that resonates with younger consumers
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- Figure 38: Net difference* between attitudes towards hot chocolate – under- and over-45s, December 2010
- The younger generation are attracted by innovation and premium cues
Appendix – Internal Market Environment
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- Figure 39: Trends for annual RPI % change for tea and coffee/other hot drinks, 2000-10
- Figure 40: Trends in agreement with selected lifestyle statements, 2006-10
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- Figure 41: Agreement with statements on diet/health, by gender, 2010
- Figure 42: Trends in agreement with the statement “I buy good in my own country whenever I can”, 2006-10
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Appendix – Broader Market Environment
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- Figure 43: GDP, PDI, consumer expenditure and savings, at constant 2010 prices, 2005-15
- Figure 44: GDP quarterly percentage change, Q1 2004-Q4 2010
- Figure 45: Trends in how respondents would describe their financial situation, February 2009-December 2010
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- Figure 46: Trends in the age structure of the UK population, 2005-15
- Figure 47: Trends and projections in the UK population (‘000s), by age group, 2005-15
- Figure 48: Forecast adult population trends, by socio-economic group, 2005-15
- Figure 49: Forecast adult population trends, by lifestage, 2005-15
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Appendix – Competitive Context
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- Figure 50: Usage of different hot drinks, by demographics, 2010
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Appendix – Who’s Innovating?
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- Figure 51: Trends in agreement with the statement ‘It's worth paying more for organic food’, 2006-10
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Appendix – Brand Communication and Promotion
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- Figure 52: Top ten highest-spending advertisers in the tea and other hot drinks market, 2008-10
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Appendix – Consumer Usage of Tea, Hot Chocolate and Other Malted Drinks
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- Figure 53: Consumption of tea, hot chocolate and other malted drinks in the past 12 months, December 2010
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- Figure 54: Consumption of tea, hot chocolate and other malted drinks in the past 12 months, December 2010
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- Figure 55: Consumption of tea, hot chocolate and other malted drinks in the past 12 months, by demographics, December 2010
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- Figure 56: Consumption of tea, hot chocolate and other malted drinks in the past 12 months, by demographics (continued), December 2010
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Appendix – Attitudes towards “English” Breakfast Versus Speciality Tea
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- Figure 57: Statements about tea in general, December 2010
- Figure 58: Statements about standard “English” breakfast tea (ie PG Tips, Tetley), by demographics, December 2010
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- Figure 59: Statements about standard “English” breakfast tea (ie PG Tips, Tetley), by demographics (continued), December 2010
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Appendix – The Barriers and Benefits to Drinking Herbal Tea
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- Figure 60: Benefits of drinking herbal tea, December 2010
- Figure 61: Barriers to entry for tea drinkers who do not drink herbal/fruit tea, December 2010
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- Figure 62: Benefits of drinking herbal tea in general, by demographics, December 2010
- Figure 63: Benefits of drinking herbal tea, by demographics (continued), December 2010
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- Figure 64: Barriers to entry to herbal tea, by demographics, December 2010
- Figure 65: Barriers to entry to herbal tea, by demographics (continued), December 2010
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Appendix – Attitudes towards Hot Chocolate
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- Figure 66: Attitudes towards hot chocolate, by demographics, December 2010
- Figure 67: Attitudes towards hot chocolate, by demographics (continued), December 2010
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- Figure 68: Attitudes towards hot chocolate, by demographics (continued), December 2010
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