Tea and Other Hot Drinks - UK - July 2019

OVERVIEW
What you need to know
Products covered in this Report
EXECUTIVE SUMMARY
The market
Tea sales continue long-term volume decline
Figure 1: UK retail value sales of tea, 2014-24
Sales of ordinary tea bags continue to decline
Green tea stagnates, fruit and herbal grows
Sales of hot chocolate and malted drinks depressed
Companies and brands
Twinings and Yorkshire Tea make gains
Figure 2: Leading brands’ value shares in the tea market, 2018/19*
Mars grows sales of chocolate-branded hot chocolate
Figure 3: Leading brands’ value shares in the hot chocolate market, 2018/19*
Horlicks and Ovaltine dominate malted drinks
Cold infusions tap interest in drinks with less sugar
New and novel flavours are a continuing focus of NPD
Brands tapping into growth of pods in coffee
Functional benefits remain a big focus in tea
The consumer
Eight in 10 UK adults drink tea
Figure 4: Frequency of drinking tea, by tea type, May 2019
Hot chocolate is more of a rare treat
Tea buyers are becoming more experimental
Free samples would encourage four in 10 to buy different tea
Figure 5: Prompts that would encourage people to buy a different tea type/brand, May 2019
Price and promotions have biggest influence on choice
Figure 6: Most important factors influencing choice when buying one tea type/brand over another, May 2019
Natural benefits valued more than added vitamins/minerals
Figure 7: Attributes worth paying more for when buying tea, May 2019
Strong interest in tea offering health and wellness benefits
Figure 8: Interest in health/functional benefits provided by tea, May 2019
More room to market teas for different times of day
Interest in cold teas will help add sales for tea brands
Pods offer a way of boosting hot chocolate and malt drinks
Figure 9: Attitudes towards tea and other hot drinks, May 2019
What we think
ISSUES AND INSIGHTS
Focus on health and wellbeing benefits will encourage trading up
The facts
The implications
New formats and more variety will help hot drink brands grow sales
The facts
The implications
Ethical considerations warrant continuing attention
The facts
The implications
THE MARKET – WHAT YOU NEED TO KNOW
Tea sales continue long-term volume decline
Flat value sales, but falling volumes predicted for tea
Sales of hot chocolate and malted drinks depressed
Sales of ordinary tea bags continue to decline
Green tea stagnates, fruit and herbal grows
Competition to tea from coffee and soft drinks
Brexit uncertainties make price trends difficult to predict
Strong interest in health and wellbeing
Few younger people will limit growth in tea sales
Tastes of growing number of over-55s likely to gradually change
MARKET SIZE AND FORECAST
Tea sales continue long-term volume decline
Figure 10: UK retail value and volume sales of tea, 2014-24
Flat value sales, but falling volumes predicted
Figure 11: UK retail value sales of tea, 2014-24
Sales of hot chocolate and malted drinks depressed
Figure 12: UK retail value and volume sales of hot chocolate and malted drinks, 2014-24
Further decline in value and volume sales predicted
Figure 13: UK retail value sales of hot chocolate and malted drinks, 2013-23
Forecast methodology
MARKET SEGMENTATION
Sales of ordinary tea bags continue to decline
Green tea stagnates, fruit and herbal in strong growth
Figure 14: UK retail value and volume sales of tea, by segment, 2016-18
Further decline for hot chocolate and malted drinks
Figure 15: UK retail value and volume sales of hot chocolate and hot malted drinks, by segment, 2016-18
Big increase in sales of RTD iced teas from a modest base
Figure 16: UK retail value and volume sales of iced tea, 2016-18
MARKET DRIVERS
Competition to tea from coffee and soft drinks
Cold tea infusions offer healthy hydration
Blurring of boundaries between tea and soft drinks
Brexit uncertainties make price trends difficult to predict
Strong interest in health and wellbeing
Sustainable practices from growing to waste disposal warrant attention
Few younger people will limit growth in tea sales
Figure 17: Trends in the age structure of the UK population, 2013-23
COMPANIES AND BRANDS – WHAT YOU NEED TO KNOW
Twinings and Yorkshire Tea make gains
Mars grows sales of chocolate-branded hot chocolate
Horlicks and Ovaltine dominate malted drinks
Cold infusions tap interest in drinks with less sugar
New and novel flavours are a continuing focus of NPD
Few examples of added flavours in hot chocolate
Brands tapping into growth of pods in coffee
Maximising the appeal of tea drinking throughout the day
Functional benefits remain a big focus in tea
New launches of vitamin teas in 2019
MARKET SHARE
Twinings and Yorkshire Tea make gains
Figure 18: Leading brands’ value sales and shares in the tea market, 2017/18 and 2018/19
Figure 19: Leading brands’ volume sales and shares in the tea market, 2017/18 and 2018/19
Mars grows sales of its chocolate-branded hot chocolate
Figure 20: Leading brands’ value and volume sales and shares in the hot chocolate market, 2017/18 and 2018/19
Horlicks and Ovaltine dominate malted drinks
Figure 21: Leading brands’ value and volume sales and shares in the malted drinks market, 2017/18 and 2018/19
START-UPS AND DISRUPTORS CASE STUDY – OMGTEA
Company Overview
Website
What is it?
Figure 22: OMGTea, June 2019
Company mission statement
Founder’s story
Sources of funding and support
Mintel analyst view
Mintel Trends
Why it could succeed
Why it could fail
The verdict
Product information
Figure 23: Examples of OMGTea product listing, June 2019
Figure 24: OMGTea product launches, 2014-19
Purchase Intelligence
OMGTea Iced Matcha Citrus
Figure 25: Perception of OMGTea Iced Matcha Citrus compared to similar Matcha tea launches, April 2018-June 2019
OMGTea Organic Matcha
Figure 26: Perception of OMGTea Organic Matcha AAA Grade Single Serve 14-Pack compared to similar selected Matcha tea launches, April 2018-June 2019
Product stockists
Media profile
Social media metrics
Figure 27: Social media metrics for OMGTea as of June 2019
START-UPS AND DISRUPTORS CASE STUDY – TEA+
Company overview
Website
What is it?
Figure 28: Example of Tea+ product, February 2019
Founded:
Company mission statement:
Founder’s Story:
Sources of funding and support
Mintel analyst view
Mintel Trends
Why it could succeed
Why it could fail
The verdict
Product information
Figure 29: Selected examples of Tea+ products, May 2019
Figure 30: Samples of Tea+ launches, November 2018
Purchase Intelligence
Figure 31: Perception map of attribute performance of Tea+ in comparison to 41 other herbal and fruit tea bags, April 2018-May 2019
Product stockists
Media profile
Social media metrics
Figure 32: Social media metrics for Tea+ as of May 2019
LAUNCH ACTIVITY AND INNOVATION
More products launch for making cold tea
Cold infusions tap interest in drinks with less sugar
Figure 33: Examples of cold tea infusions launches, 2018/19
Cold tea infusions beat other teas on instant reaction
Figure 34: Perception map of attribute performance of cold tea infusions in comparison to other tea launches in the UK tea market, April 2018-June 2019
Twinings has the two most appealing cold tea infusions
New and novel flavours are a continuing focus of NPD
Figure 35: Examples of seasonal launches in tea, 2018/19
Few examples of added flavours in hot chocolate
Figure 36: Examples of added flavours and dark chocolate in new launches of hot chocolate, 2018/19
Turmeric and other spices are a theme in hot drinks launches
Figure 37: Examples of launches in malted and other beverages with turmeric and other spices, 2018/19
Brands tapping into growth of pods in coffee
Figure 38: Examples of new pod launches in hot chocolate, 2018/19
Maximising the appeal of tea drinking throughout the day
Figure 39: Examples new tea launches for different times of the day, 2018/19
Variety packs continue to target those drinking a repertoire of teas
Figure 40: Examples of new tea launches offering variety packs, 2018/19
Functional benefits remain a big focus in tea
Figure 41: New product launches in the UK tea market, by claim category, 2014-19
Figure 42: Examples of new tea launches assigned stress and sleep functional claim and focused on mood and the senses, 2018/19
New launches of vitamin teas in 2019
Figure 43: Examples of new tea launches making vitamin claims, 2018/19
ADVERTISING AND MARKETING ACTIVITY
Steep decline in main media advertising spending
Figure 44: Total above-the-line, online display and direct mail advertising expenditure on tea and other hot drinks, 2015-19
Taylors of Harrogate the biggest advertiser
Figure 45: Total above-the-line, online display and direct mail advertising expenditure on tea and other hot drinks, by advertiser, 2015-19
Twinings appoints M&C Saatchi
PG Tips launches ‘Cuppas Taste Better Together’ campaign
Horlicks pushes relaxation and nutrition message
Nielsen Ad Intel coverage
THE CONSUMER – WHAT YOU NEED TO KNOW
Eight in 10 UK adults drink tea
Drinking of speciality, green and herbal/fruit shows younger bias
Hot chocolate is more of a rare treat
Tea buyers are becoming more experimental
Free samples would encourage four in 10 to buy different tea
Natural benefits valued more than added vitamins/minerals
Strong interest in tea offering health and wellness benefits
More room to market teas for different times of day
Interest in cold teas will help add sales for tea brands
Pods offer a way of boosting hot chocolate and malt drinks
DRINKING HABITS – TEA AND OTHER HOT DRINKS
Eight in 10 UK adults drink tea
Figure 46: Frequency of drinking tea, by tea type, May 2019
Speciality, green and fruit/herbal teas drinkers are younger and more affluent
Figure 47: Usage of speciality, green or fruit/herbal teas, by age, May 2019
Young people drink a wider range of teas
Figure 48: Number of different types of tea drunk in the last month, May 2019
Hot chocolate is more of a rare treat
Figure 49: Frequency of drinking hot chocolate and malted drinks, May 2019
FACTORS INFLUENCING CHOICE OF TEA
Tea buyers are becoming more experimental
Figure 50: Sticking to one tea product vs buying different tea products, May 2019
Free samples would encourage four in 10 to buy different tea
Free samples have more sway with women, younger age groups are most open to trial
Figure 51: Prompts that would encourage people to buy a different tea type/brand, May 2019
Price and promotions have biggest influence on choice
Strong flavour and health benefits have notable sway
Figure 52: Most important factors influencing choice when buying one tea type/brand over another, May 2019
ATTRIBUTES WORTH PAYING MORE FOR WHEN BUYING TEA
Natural benefits valued more than added vitamins/minerals
Figure 53: Attributes worth paying more for when buying tea, May 2019
A third of buyers are willing to pay more for plastic-free tea bags
Tea brands also need to tap wider ethical concerns, with sustainable farming first
INTEREST IN FUNCTIONAL BENEFITS IN TEA
Strong interest in teas offering health and wellness benefits
Figure 54: Interest in health/functional benefits provided by tea, May 2019
Nearly three in 10 interested in de-stressing/calming benefits
Digestive health benefits interest more than a quarter of tea drinkers
ATTITUDES TOWARDS TEA AND OTHER HOT DRINKS
More room to market teas for different times of day
Gifting opportunities
Figure 55: Attitudes towards tea and other hot drinks, May 2019
Interest in cold teas will help add sales for tea brands
Cold tea infusions tap interest in healthier hydration
Cold-brew tea currently niche but offers different flavour profiles
Innovation is needed in hot chocolate and malted drinks
More extra dark chocolate and added flavours are in demand
Malted drinks need to push their source of nutrition credentials to stake a claim for starting the day
Pods offer a way of boosting hot chocolate and malt drinks
USAGE OF RTD COLD TEA
A fifth of people drink RTD cold teas
Figure 56: Drinking of ready-to-drink cold tea in the last month, May 2019
APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Abbreviations
Consumer research methodology
APPENDIX – MARKET SIZE AND FORECAST
Figure 57: UK retail volume sales of tea, 2014-24
Figure 58: Best- and worst-case forecast of total UK retail value sales of tea, 2019-24
Figure 59: Best- and worst-case forecast of total UK retail volume sales of tea, 2019-24
Figure 60: UK retail volume sales of hot chocolate and malted drinks, 2014-24
Figure 61: Best- and worst-case forecast of total UK retail value sales of hot chocolate and malted drinks, 2019-24
Figure 62: Best- and worst-case forecast of total UK retail volume sales of hot chocolate and malted drinks, 2019-24
Forecast methodology
APPENDIX – MARKET SHARE
Figure 63: Leading manufacturers’ value and volume sales and shares in the tea market, 2017/18 and 2018/19
Figure 64: Leading manufacturers’ value and volume sales and shares in the hot chocolate market, 2017/18 and 2018/19
Figure 65: Leading manufacturers’ value and volume sales and shares in the malted drinks market, 2017/18 and 2018/19
APPENDIX – LAUNCH ACTIVITY AND INNOVATION
Figure 66: New product launches in the UK tea market, by claim (sorted by 2018), 2014-19
Figure 67: New product launches in the UK tea market, by company (top 20 sorted by 2018), 2014-19
Figure 68: New product launches in the UK tea market, by branded and private label, 2014-19
Figure 69: New product launches in the UK malted and other hot beverages market, by branded and private label, 2014-19
Figure 70: New product launches in the UK malted and other hot beverages market, by company (top 10 sorted by 2018), 2014-19
Figure 71: New product launches in the UK malted and other hot beverages market, by claim (top 20 sorted by 2018), 2014-19
Figure 72: New product launches in the UK malted and other hot beverages market, by claim category, 2014-19
Figure 73: Attribute performance of cold tea infusions in comparison to other tea in the UK tea market, April 2018-June 2019