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Speciality driving out-of-home tea growth

27/06/2018
Speciality driving out-of-home tea growth

Healthy and speciality teas are driving growth in the out-of-home tea sector, but operators have work to do if they’re to convince consumers that drinking tea away from home is good value for money, says Allegra World Coffee Portal’s market-leading report into the out-of-home tea market.

Allegra’s latest report, Project Tea Out-of-Home UK 2018, reports that at-home consumption is still the most preferred option for consumers. However, rewards had been seen by operators investing in their tea offering.

It found that where operators had 'refreshed' their tea offering in the last three years, 90% reported increased sales, indicating “menu diversification is a key route to sales growth”.

UK tea operators are forecasting sales of £313m for 2018, a year-on-year increase of 10.3%. This builds on out-of-home tea consumption figures for 2017, which saw total tea sales of £283m within the £6.4bn specialised coffee shop sector (made up of independent and branded coffee shops), up from £256m in 2016.

Continued growth is expected over the next five years, Allegra forecasts, with total sector value expected to reach £439m by 2022, representing 9.2% CAGR growth for the period.

Speciality teas take share from black

There has been significant growth in fruit, herbal and green tea compared to black tea, with 58% of operators adding more speciality teas to their menus in the last three years. Health-focused products, such as matcha, kombucha and a “burgeoning function tea segment” represent significant opportunities for operators.

It continues: “45% of industry leaders agree that healthier and speciality tea offerings represent the two most significant product opportunities for tea out-of-home. Allegra observes that successful operators are broadening their tea out-of-home offer to include alternative brewing methods and more diverse product offerings.”

Poor consumer value perception

Allegra said operators must work to reverse the “negative consumer perceptions” that existed, with only 29% of consumers believing tea out-of-home represented good value for money.

However, it continues, 41% would be more inclined to drink tea-out-home if quality was improved, indicating that operators should seize the opportunity to offer more premium products. In particular, loose leaf products show potential to both increase profit margins and satisfy quality expectations.

  • At this year’s European Coffee Expo, renowned tea specialist Jane Pettigrew BEM, predicted nitro tea was set to come to the UK, following trends in US and Berlin. (CBW, May 30)

 

 

 

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