In 2012, the US tea market decreased by 4% in off-trade volume terms, but increased by 4% in off-trade current value terms, reaching 36,151 tonnes and US$2.1 billion respectively.
The increase in dollar spend demonstrated the continued ability of manufacturers to increase prices on healthy items. Health-oriented consumers are often drawn to tea, since it is naturally laden with antioxidants, catechins and epigallocatechin gallate (EGCG), all of which are positively linked with health and disease prevention.
Despite this, retail volume sales dropped. This can be attributed to consumers switching to RTD teas for their health benefits, or embracing customisation and new formats in coffee.
The accelerated value growth and volume decline in 2012 is indicative of consumers seeking premium products in tea, whilst overall consumption declined. The decline of value brands in favour of fewer consumers switching to premium brands demonstrates the effectiveness of a premium and functional positioning.
The disparity of volume and value growth is also indicative of tea moving beyond the perception of a commodity product in the US. Manufacturers have effectively differentiated from the competition by adding value to brands through taste or packaging. Formats such as pods, pyramid bags and sachets carry higher prices and drive up average unit prices, because they use more full-leaf tea instead of cut leaves and other ingredients.
Tea in the US is traditionally seen as a hot drink, to be brewed and drunk when the weather is cooler. Summer is a low point for tea sales, as consumers reach for RTD teas for the health benefits of tea served in a quick and cool format. For this reason, freshly brewed iced tea at home is an area recognised by manufacturers as having room for growth in the US, and new products are always being tested to see how to best position brewed iced tea.
In 2012 Unilever's sales of tea increased by 2%, reaching US$385 million. Despite this growth, Unilever saw half a percentage point decline in share, but still led with an 18% share of off-trade value sales of tea. The company's Lipton brand was the top-selling tea brand in the country in 2012, and is well-established, found in most supermarkets, hypermarkets and convenience stores.
As Unilever is one of the largest consumer packaged goods companies in the world, Lipton is able to benefit from its strong distribution and bargaining power with retailers.
For more information on the US tea market, see the latest research: US Tea Market
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