The downward trajectory within the overall tea market continues. Overall volume sales dropped by 15% between 2010 and 2014, with an annual decline of 7% forecast for 2015. Despite a rise in average selling price, the value of the market has also been steadily slipping over the 2010-15 period, with an overall decline of 6% to £654 million.

This poor performance, however, masks very contrasting performances from the different segments within the tea market. The downfall is almost completely attributable to diminishing sales of ordinary teabags, which dominate the market. Meanwhile, fruit/herbal tea, speciality tea and green tea continue to enjoy strong growth. As such, these segments have become hotbeds of innovation activity.

This report analyses the retail market for tea. Therefore, the report focuses only on products bought through retail outlets and excludes products bought through foodservice outlets.

The tea market is segmented – and defined – as follows:

Ordinary teabags, which contain black tea, account for the majority of standard black teas in the UK market and are the main product for brand leaders such as PG Tips and Tetley. Black tea usually has a rich taste, which means it is suited to being served with milk and sugar.

Decaffeinated tea is used to refer to black tea that has been through a process to remove most of the caffeine content.

Speciality tea is used to refer to tea which, although similar in appearance to standard tea and also often drunk with milk, is usually sourced from specific high-quality tea plantations and has a distinctive taste. Examples include Earl or Lady Grey, Chai and Darjeeling, Ceylon, Assam and Kenyan blends.

Fruit and herbal teas are typically infusions which contain pieces of fruit, herbs (eg peppermint), spices or flowers (eg camomile). Tending not to contain black or green tea, they are generally caffeine-free. The segment also includes Redbush tea.

Green tea is a tea which is a light green colour when brewed and is generally drunk without milk. In contrast to black tea which is oxidised, green tea is un-oxidised and has a more bitter flavour.

Instant tea comes in powder or granule form and contains soluble tea solids, sometimes with the addition of sweetener, milk powder and/or flavourings.