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Tea and Herbal Tea - UK - February 2009

ISSUES IN THE MARKET
Key themes
Definition
Abbreviations
FUTURE OPPORTUNITIES
Standing out from competition
Do not overcrowd the fixture
Fighting commodisation
MARKET IN BRIEF
Brits’ love of tea remains
Health trend shapes demand
A brand-led, concentrated market
Tea for two... different consumer groups
What the future holds
INTERNAL MARKET ENVIRONMENT
Key points
Healthy does it
Figure 1: Trends in attitudes towards health and diet, 2004-08
Recent scientific research into tea’s health benefits
Is noni the next big thing?
Let’s get ethical
Figure 2: Trends in attitudes towards ethical issues, 2004-08
Britain is still a tea-drinking nation
Figure 3: Comparison of consumption and frequency of drinking tea (standard and herbal) across Europe, 2007
Trendy yogurt drinks gain ground in soft drink choices
Figure 4: Trends in consumption of soft drinks, 2004-08
A shift upmarket
Emotional approach remains, but the ‘ritual’ of tea drinking is waning
BROADER MARKET ENVIRONMENT
Key points
Standard tea little affected by demographic changes
Figure 5: Structure of the UK population, by age. 2003-13
Will deteriorating economy hit premium products?
Figure 6: UK workforce and employment, by gender, 2003-13
Rising raw material costs
COMPETITIVE CONTEXT
Key points
Tea vs coffee
Figure 7: UK retail value sales of selected hot drinks, 2003-12
Is tea a premium or a commodity product?
Hot chocolate gains, but other malted hot drinks decline
STRENGTHS AND WEAKNESSES IN THE MARKET
Strengths
Weaknesses
WHO’S INNOVATING?
Key points
New product launches
Organic and natural products appeal
Figure 8: New product activity, by positioning, 2007-08
Safety concerns
Figure 9: New product activity, by type, 2008
 MANUFACTURERS AND BRANDS
Cheeky Teapigs
Herbal and specialities
Own-label in tune with trends
Product innovation elsewhere
MARKET SIZE AND FORECAST
Key points
Herbal tea keeps market in the black
Figure 10: UK volume and value sales of tea and herbal tea, 2003-13
Health matters
Pressure on prices
 THE FUTURE OF THE MARKET
Wellness trend here to stay
Expanding herbal tea beyond core consumers
Economic downturn may have a mixed impact
Market to plateau in next five years
Factors used in the forecast
SEGMENT PERFORMANCE
Key points
Green tea and Redbush outperform
Figure 11: UK retail value sales of tea and herbal tea, by type, 2006-08
Figure 12: UK retail volume sales of tea and herbal tea, by type, 2006-08
 STANDARD TEA
Departure from the ordinary
Product bonding
Decaffeinated tea gaining ground
 INSTANT TEA
Not so hot
 SPECIALITY TEA
The gourmet choice
 LOOSE TEA
In need of a marketing boost
 HERBAL/FRUIT TEA
Appealing on healthiness and functionality
Lacking a ritual
A philosophical approach
 GREEN TEA
Going for gold
Adding flavour
Promotions give a boost
 REDBUSH TEA
From South Africa with love
The best of both worlds – black and herbal tea
 TEA BAG SALES BY FORMAT
Hip to be square
Figure 13: UK retail value sales of standard tea bags*, by type, 2006-08
Tea in a stick
Sustainable packaging
MARKET SHARE
Key points
A concentrated market with high brand loyalty
Figure 14: Estimated retail value brand shares of the UK tea and herbal tea market, 2006-08
Standard tea suppliers move into herbal
Own-label to benefit from economic slowdown?
Market leader Tetley also number-one in decaf
Clipper takes top spot in green tea
Big players eye up competition
Small independent premium suppliers – will they make it?
COMPANIES AND PRODUCTS
Bettys & Taylors of Harrogate
Cafédirect
Clipper Teas
Spicers Ltd
Teapigs
Tetley (Tata Group)
Twinings (Associated British Foods)
Typhoo (Apeejay Surrendra Group)
Unilever
BRAND COMMUNICATION AND PROMOTION
Key points
Declining adspend
Figure 15: Main monitored media advertising spend on tea, 2003-08
Adspend by advertiser
Figure 16: Main monitored media advertising spend on tea, by advertiser, 2003-08
Trading up
A repertoire of teas
Marketing themes
CHANNELS TO MARKET
Key points
Multiple dominance
Figure 17: UK retail value sales of tea and herbal tea, by outlet type, 2006-08
Co-op’s Fairtrade commitment
Online and mail order sales still limited, but posting steady growth
THE CONSUMER – CONSUMPTION AND FREQUENCY OF USE
Key points
A slowly contracting user base, but tea remains popular
Figure 18: Trends in tea consumption (both standard and herbal tea made in bags), 2004-08
Standard tea still very much part of daily routine
Figure 19: Trends in frequency of drinking standard tea, 2004-08
Herbal tea lightweights
Figure 20: Trends in frequency of drinking herbal tea, 2004-08
Branded herbal tea makes gains
Figure 21: Trends in consumption of own-label versus branded standard and herbal tea, 2004-08
Who drinks what?
Figure 22: Most valuable consumers for standard tea (VII) by age, 2008
Figure 23: Most valuable consumers for herbal tea (VII) by age, 2008
THE CONSUMER – TEA PERCEPTIONS
Key points
Seeking solace in a cuppa
Figure 24: Words and phrases associated with standard and herbal tea, November 2008
Herbal tea classified through functionality
Attributes by demographics
THE CONSUMER – TARGETING OPPORTUNITIES
Key points
Standard tea scores high on tradition and taste
Figure 25: Perception of five most important qualities of standard tea and how they compare with herbal tea, November 2008
Herbal tea scores high on health benefits
Figure 26: Perception of five most important qualities of herbal tea and how they compare with standard tea, November 2008
Herbal tea lacks an obvious occasion to drink
Figure 27: How people perceive occasions to drink standard and herbal tea, November 2008
 IDENTIFYING TARGETS FOR STANDARD TEA
Figure 28: Size of standard tea attitudinal groups, November 2008
Figure 29: How standard tea attitudinal groups differ on key dimensions, November 2008
Tea Lovers (10%)
Tea Traditionalists (20%)
Morning Drinkers (26%)
Disinterested (45%)
A family affair
 IDENTIFYING TARGETS FOR HERBAL TEA
Figure 30: Size of herbal tea attitudinal groups, November 2008
Figure 31: How herbal tea attitudinal groups differ on key dimensions, November 2008
Hardcore Herbals (8%)
Health Heeders (19%)
Refreshed (15%)
Disinterested (58%)
Taste a barrier for those seeking health benefits from herbal tea
A generation gap
APPENDIX
Consumer research
ACORN
Advertising data
APPENDIX – INTERNAL MARKET ENVIRONMENT
Figure 32: Attitudes towards ethical issues, by demographics, 2008
Figure 33: Further attitudes towards ethical issues, by demographics, 2008
APPENDIX – BROADER MARKET ENVIRONMENT
Figure 34: Structure of the UK population, by age and gender, 2003-13
APPENDIX – CONSUMER CONSUMPTION AND FREQUENCY OF USE
Figure 35: Trends in tea consumption (both herbal and standard, tea made in bags), by demographics, 2008
Figure 36: Penetration and frequency of drinking standard tea, by demographics, 2008
Figure 37: Penetration and frequency of drinking herbal tea, by demographics, 2008
APPENDIX – THE CONSUMER: TEA PERCEPTIONS
Figure 38: Words and phrases associated with standard tea, by demographics, 2008
Figure 39: Words and phrases associated with standard tea, by demographics, 2008
Figure 40: Words and phrases associated with standard tea, by demographics, 2008
Figure 41: Words and phrases associated with herbal tea, by demographics, 2008
Figure 42: Words and phrases associated with herbal tea, by demographics, 2008
Figure 43: Words and phrases associated with herbal tea, by demographics, 2008
APPENDIX – THE CONSUMER: TARGETING OPPORTUNITIES
Figure 44: Standard tea attitudinal groups, 2008
Figure 45: Standard tea attitudinal groups, by demographics, 2008
Figure 46: Herbal tea attitudinal groups, 2008
Figure 47: Herbal tea attitudinal groups, by demographics, 2008

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