Tea and Herbal Tea - UK - February 2007

Table of Contents

• Issues in the Market
• Definitions
• Four major market themes
• 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
• 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
• 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 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
• 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