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Tea and Herbal Tea - UK - February 2007

ISSUES IN THE MARKET
Definitions
Four major market themes
INSIGHTS AND OPPORTUNITIES
Moving it more into the emotional territory to add value
Reintroduce the ritual
 DEVELOPING NEW CHANNELS TO MARKET
Increase out of home consumption
Target children
MARKET IN BRIEF
A very English obsession
Consumers experimenting outside of the category
Standard tea still dominates but it is losing share…
… as new healthier teas emerge…
…that are marketed on an emotional platform
Tetley and PG Tips lead….
…. but Twinings is the big winner
Changes in the tea repertoire
New sectors will lead future growth
FAST FORWARD TRENDS
Trend 1: “X for eXtreme”
General observations
Market touchpoints/implications
Trend 2: Chips with everything
Definition
What it is – general observations
Market touchpoints/implications
INTERNAL MARKET ENVIRONMENT
Health is a key consumer concern
Figure 1: Agreement with selected lifestyle statements, 2002-06
More people want to be healthy
Caffeine – pros and cons
Herbal teas provide an option
Antioxidants and theanine
Lifestyle teas go one step further
Organics and Fairtrade
Figure 2: Attitudes to organics and Fairtrade, 2002-06
Growth in interest
Organic strong in herbal and green teas
Kenyan tea drought
BROADER MARKET ENVIRONMENT
AB socio-economic status growing
Figure 3: Changes in socio-economic status, 2001-06
Middle classification of the population
Complex changes in the age profile
Figure 4: Changes in the UK demographic profile, by age, 2001-06
Ageing population haven’t boosted standard tea sales…
…And, worse still, future sales may struggle more
25-34 are declining
A very English drink
Figure 5: Consumption of tea in the last 12 months, by country, 2006
Tea drinking is an obsession of the British
COMPETITIVE CONTEXT
Figure 6: Consumption of other non-alcoholic drinks in the last 12 months, 2002-06
Tea is Britain’s most popular hot drink
Other hot drinks in decline
Range of threats from cold drinks
STRENGTHS AND WEAKNESSES IN THE MARKET
Strengths
Weaknesses
WHO’S INNOVATING?
Most new products have been launched in the new areas
Small to medium sized companies have launched
From flavours to benefits
Own-label follows with ‘me too’ products
The world goes healthy
 NEW PRODUCT BRIEFS
MARKET VALUE OR SIZE AND FORECAST
Overall market value declining
Figure 7: UK retail sales of tea and herbal tea, at current and constant 2001 prices, 2001-06
Market decline halted
Smaller growth sectors influential
Volume continues to decline
Figure 8: UK retail sales of tea and herbal tea, by volume, 2001-06
 FORECAST AND THE FUTURE
Market growth set to rise
Figure 9: Market forecast of tea and herbal tea by current prices, 2006-11, prices and volume
A tale of two sectors
Older consumers will remain the more traditional
Growing number of females aged 25-34 will help augment the market
Factors incorporated in the forecast
SEGMENT PERFORMANCE
 TYPES OF TEA
Figure 10: UK retail sales of tea and herbal tea, by value, 2002-06
Standard tea losing share
A sense of adventure
Figure 11: UK retail sales of tea and herbal tea, by type and volume, 2002-06
Standard tea
Dominant but losing out
Some growth areas…
…but not in others
Loose tea
Fruit and herbal tea is the key growth sector
The retailers like it…
…because their consumers perceive it as healthy
Green tea has been the fastest growing sector
Healthy and flexible
Flavours
Speciality teas growing with connoisseurship
 TEABAGS – FORMAT
Figure 12: UK retail sales of standard tea bags*, by type and value, 2002-06
Little change in recent years
MARKET SHARE
Traditionally brand loyal
New sectors provide new opportunities…
…for new brands through alternative channels to market
Future revival for Typhoo
Figure 13: Estimated brand shares of the UK retail tea market, 2002-06
Own-label relatively weak in this market
New sectors = new opportunities
COMPANIES AND PRODUCTS
 COMPANY PROFILES
Associated British Foods/Twinings
Bettys & Taylors of Harrogate
Clipper Teas
Dragonfly
Dr Stuart’s/Only Natural Products
The Drury Tea & Coffee Company
Apeejay Surrendra Group/Typhoo
Tata Tea/Tetley
Unilever/PG Tips
Whittard of Chelsea
 OTHER COMPANIES
Birt & Tang
Celestial Seasonings
Hampstead Tea
The London Tea Company
Northern Tea Merchants
Pukka Herbs
Redbush Tea Company
Union Coffee Roasters
Yogi Tea
Traidcraft
Cafédirect
Oxfam Fairtrade Company
Punjana
BRAND ELEMENTS
Tetley
Figure 14: Words associated with Tetley
Brand qualities
Recommendations
Tailoring to a broad audience
Age before beauty
Not just builders tea
PG Tips
Figure 15: Words associated with PG Tips
Brand qualities
Recommendations
Cool it
Tea in the park
Healing beyond herbal
Twinings
Figure 16: Words associated with Twinings
Brand qualities
You are what you drink?
Recommendations
Just the tip of the iceberg
Anyone for tennis?
Clipper
Figure 17: Words associated with Clipper
Brand qualities
When feel good isn’t enough
Recommendations
Whiter than white
Usage of tea brands
Figure 18: Usage of tea brands
Attitudes towards brands
Figure 19: Attitudes towards brands
Brand satisfaction and performance
Figure 20: Brand satisfaction and performance
Figure 21: Brand commitment
BRAND COMMUNICATION AND PROMOTION
Figure 22: Main monitored media advertising expenditure on tea, 2002-06
Expenditure recovering
Figure 23: Main monitored media spend, by leading brands, 2003-06
Twining’s spending leaps
Brand identity
TV is important
Figure 24: Main monitored media spend, by media channel, 2005
CHANNELS TO MARKET
Changing distribution map
Figure 25: UK retail sales of tea and herbal tea, by type of outlet and value, 2002-06
Multiples grow in convenience
CONSUMER 1 – WHO: USAGE AND FREQUENCY?
Tea made from teabags including herbal/fruit tea
Figure 26: Consumption of tea made from teabags in the last 12 months, 2002-06
Slow decline in consumption
Brand loyalty
Figure 27: Solus users by gender, age and socio-economic status, 2006
Frequency of usage of standard tea declining
Older people drink more tea
Figure 28: Usage and heavy usage of standard bagged tea, 2006
Conservative older tea drinkers
Younger consumers are lighter/medium users
How to get younger people interested
Women having just given birth avoid tea
Figure 29: Weight of usage of standard bagged tea, by age of children in household, 2006
 HERBAL TEAS GETTING MORE POPULAR
Distinct consumer profile
Figure 30: Usage of bagged fruit and herbal tea, by age, 2006
Female bias
Youngish and affluent
Health concerns see consumption during/post-childbirth fall
Non-usage rises amongst mothers
Figure 31: Weight of usage of fruit and herbal tea, by age of children, 2006
New approach for further expansion
Internet users prefer fruit and herbal teas but DIY-ers drink standard
Figure 32: Teabags usage cross-tab, 2006
How ? – the wired kitchen
 PACKET TEA
Figure 33: Consumption of packet tea in the last 12 months, 2002-06
Packet tea is in decline
Older people are the heavy users
ABs drink it less frequently
Packet tea is prevalent in smaller households
Does the decline matter?
CONSUMER 2 – MOTIVATIONS FOR NON-USAGE
 WHY DRINK FRUIT AND HERBAL TEA?
Figure 34: Motivations for drinking fruit and herbal tea, October 2006
An alternative
And a healthy one
Broad backing for health
Women more specific
 REASONS GIVEN FOR DRINKING FRUIT AND HERBAL TEAS
Figure 35: Number of reasons given for drinking herbal/fruit tea
Mostly one reason
Women have more reasons
Motivations for not drinking
Figure 36: Motivations for not drinking fruit and herbal tea, October 2006
Fruit and herbal tea just do not appeal
Men and the elderly are the most anti herbal tea
Figure 37: Motivations for not drinking fruit and herbal tea, October 2006
CONSUMER 3 – FURTHER ANALYSIS
Figure 38: Tea repertoire, 2002-06
Herbal tea added to the repertoire
Increase in non-tea drinkers
Standard tea is male, old and downmarket
Upmarket women incorporate herbal tea into their repertoire
Young deserting tea?
APPENDIX
Introduction
Abbreviations
Internal market environment
Figure 39: Agreement with selected lifestyle statements by demographic sub-group, 2006
Figure 40: Agreement with selected lifestyle statements by demographic sub-group, 2006
Figure 41: Agreement with selected lifestyle statements by demographic sub-group, 2006
Brand communication and promotion
Figure 42: Main monitored media spend, 2003-06
 CONSUMER 1 – DETAILED DEMOGRAPHICS
Tea made from teabags
Figure 43: Consumption of tea made from teabags in the last 12 months, by demographic sub-group, 2006
Tea made from standard teabags
Figure 44: Consumption of standard tea made from teabags in the last 12 months, by demographic sub-group, 2006
Fruit and herbal tea made from teabags
Figure 45: Consumption of herbal/fruit tea made from teabags in the last 12 months, by demographic sub-group, 2006
Packet tea usage
Figure 46: Consumption of packet tea in the last 12 months, by demographic sub-group, 2006
 CONSUMER 2 – DETAILED DEMOGRAPHICS
Consumption
Figure 47: Consumption of fruit and herbal teas, October 2006
Why drink?
Figure 48: Motivations for drinking fruit and herbal teas, October 2006
Figure 49: Motivations for drinking fruit and herbal teas, October 2006
Number of reasons to buy
Figure 50: Q6 repertoire by demographics, October 2006
Why don’t drink nowadays
Figure 51: Motivations for not drinking fruit and herbal teas nowadays, October 2006
Figure 52: Motivations for not drinking fruit and herbal teas nowadays, October 2006
Consumer 3 – further analysis
Figure 53: Tea repertoire, by demographic sub-group, 2006

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