Reading the Tea Leaves: Growing Sales & Profits with Tea A Panel Discussion & Presentation by: Joe Simrany – Moderator, Tea Assoc. of the USA William Bowron Jr- Red Diamond Inc. Eliot Jordon- Peet’s Coffee & Tea George Vukasin Jr.- Peerless Coffee & Tea
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Reading the Tea Leaves: Growing Sales & Profits with Tea
Reading the Tea Leaves: Growing Sales & Profits with Tea. A Panel Discussion & Presentation by: Joe Simrany – Moderator, Tea Assoc. of the USA William Bowron Jr- Red Diamond Inc. Eliot Jordon- Peet’s Coffee & Tea George Vukasin Jr.- Peerless Coffee & Tea. Objectives of this Session. - PowerPoint PPT Presentation
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Reading the Tea Leaves:Growing Sales & Profits with Tea
A Panel Discussion & Presentation by:Joe Simrany – Moderator, Tea Assoc. of the USA
William Bowron Jr- Red Diamond Inc.Eliot Jordon- Peet’s Coffee & Tea
George Vukasin Jr.- Peerless Coffee & Tea
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Objectives of this Session
• Brief update on the State of the Tea Industry
• Current consumer trends
• Future trends & forecasts
• Integrating tea into a coffee environment
• Questions from the audience
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Tea Imports into the USA in 2008
• The USA imported nearly 240 million pounds of tea in 2007
• Full year 2008 figures are just in and indicate over 257 million pounds or nearly 117 million Kg were imported in 2008
• This makes the USA the seventh largest consumer of tea after China, India, Russian Federation, Turkey, Japan, and the United Kingdom
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Tea Imports – USA Kg(000)YEAR BLACK GREEN TOTAL % CHG.
2002 84,156 9,295 93,451
2003 82,132 12,054 94,186 +1.0
2004 87,717 11,767 99,484 +5.6
2005 85,927 14,139 100,065 +1.0
2006 89,098 18,474 107,572 +7.5
2007 91,154 18,237 108,733 +1.1
2008 99,905 16,845 116,607 +7.4
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Tea Imports into the USA (Kilos)Three Year Rolling Average
2005-2007 2006-2008 % Inc/ dec
Black Tea 88,727,800 93,387,100 5.2
Green Tea 16,950,400 17,852,300 5.3
Total Tea 105,678,200 111,239,400 5.3
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Size of the Tea Market in U.S.
• 1990 $Value by Type• Trad. $0.87 Billion• RTD 0.20 “• Fd Srv 0.50 “• Special 0.27• Total $1.84 Billion
– Green $20 Million
• 2008 $Value by Type• Trad. $2.00 Billion• RTD 2.95• Fd Srv 1.02• Special 1.16• Total $7.13 Billion
– Green $1.5 Billion
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Change in Tea Consumption by Revenue & Segment
0.00
1.00
2.00
3.00
1990 2008
Traditional
RTD
Foodservice
Specialty
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Tea Sales ($) Forecast to Double over Next 5 Years
• A reputable market research firm (Packaged Facts) has forecast that the Dollar value of tea in the United States will move from over $7 Billion in 2008 to nearly $15 billion by the end of 2012!
• Green Tea is growing at a much higher rate than Black Tea; up over 200% in Kgs. Over the last ten years
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Traditional Tea Trends
• Historically this has been the largest tea segment at $2 billion
• Price points have been stagnant for years & typically sell for under $3 per package which is a significant consumer appeal in a tough economy
• Tendency has been to smaller packages (under 100 count) to overcome price issue
• Packers are beginning to use a health message to sell.
• Advertising effort is minimal but increasing
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Consumer Issues Driving Traditional Tea
• Growing number of scientific studies suggesting tea plays a role in the inhibition of many chronic human diseases
• Widespread acceptance by the scientific and medical communities that tea is a healthy beverage
• Widespread awareness by the media that tea is proven to be a healthy beverage
• Tea enjoys positive imagery regarding its contributions to health versus other beverages
• Traditional tea pricing is very appealing
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Developments to Watch
• Traditional Tea– Smaller pack sizes– Packaging & process
innovation– Health claims– Increased consumer
marketing– Blending of traditional
tea with specialty tea
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RTD Tea Trends
• RTD within a span of 10 years has gone from virtually nothing to the single largest tea segment
• It is responsible for appealing to a much wider audience than traditional tea
• Many powerful marketing alliances have been formed with soft drink & water companies
• Prospects for future growth are excellent
TEATEA
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Consumer Issues Driving RTD Tea
• RTD tea appeals to the individuality of consumers
• RTD teas continue to appeal to the demand for convenience and availability
• Other beverage options are seen as being less healthy than tea
• Concern with obesity is driving many consumers to tea
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Developments to Watch
• RTD Tea– Continued flavor
exploration from existing & new suppliers
– Functional teas linked to health
– Specialty Tea entries– Marketing directed
against bottled water
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Foodservice Trends
• Tea is more difficult to prepare than coffee & is often served incorrectly
• Equipment manufacturers are beginning to address the issue by developing faster processing methods
• Operators are starting to do a better job with tea because of the profit potential & consumer demand
• Some high end restaurants are employing Tea Sommeliers
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Consumer & Trade Issues Driving Foodservice Tea
• High profitability potential attracts entrepreneurs