Tea in the United Kingdom
Dissertation Writing Help in Tea Market in UK
Dissertation Writing Help in Tea Market in UK
Headlines
·
Retail tea volume sales fall
marginally in 2008 to reach 120,000 tonnes; while value sales stabilise at £720
million in current terms
·
Tea continues to fail to
reinvent itself in the same way as coffee with long term stagnation in the
sector
·
Other tea shows the most
dynamic performance in 2008 driven forward by the sales of Redbush tea with
growth of 12% from a very small base
·
Average unit prices rise
marginally, largely driven by the increased cost of raw materials
·
Unilever Bestfoods UK has the
largest share of sector value sales of 24%, closely followed by Tetley GB Ltd
with a share of almost 23%
·
Over the forecast period, tea
is predicted to see declines in volume and constant value terms of 4% and 5%,
respectively
Trends
·
Tea continues to be a fairly
flat sector and has failed to reinvent itself in the same way as coffee has.
Fledgling subsectors such as fruit/herbal, green tea, or the other tea that
comprises rooibos tea have all, at various times, hinted at breaking through
and driving premium growth in the tea sector. However, the sector as a whole
continues to be heavily reliant on black tea which constitutes 87% of the
sector’s total value sales and it is here that the major brands unsurprisingly
continue to focus their investment.
·
Ethical consumption has been a
key area of focus for the leading brands in tea in 2008. This is an area with
which perceived “ethical” brands such as Clipper and Cafe Direct have
traditionally established a loyal consumer base. However, the leading tea
suppliers such as Unilever and Tetley have since embraced the ethical agenda.
Both PG Tips and Tetley have signed up to the Ethical Tea Partnership and PG
Tips has also signed up to the Rainforest Alliance. This multitude of “ethical”
tags has led to the traditional “ethical” brands being crowded out, and they
are losing sales.
·
The most successful brands in
2008 have been those steeped in “heritage” of tea making. The trend of
authenticity cuts across different markets and is important in the tea sector.
The Twinings and Yorkshire brands have played up their provenance to good
effect. The importance of authenticity has also contributed to the growth of
speciality tea, which aside from “other tea” was the fastest growing subsector
in 2008. This is a positive development for the tea sector, as people start to
experiment with premium speciality alternatives in the major black tea
subsector.
·
The tea sector has sought to
tap into the growing demand for all things “healthy”. This has manifested itself
in two ways. First in the marketing communication for black tea, emphasising
the antioxidants in tea and also theanine, an amino acid that it is claimed can
bring about a relaxed but alert state of mind; second, innovation has focused
on categories such as redbush tea and green tea that are claimed to have
specific health properties.
·
Other tea, consisting
predominantly of rooibos (or red bush tea), showed the fastest growth in retail
volume and current value terms of any sector in 2008. While this was partly due
to its emergence from a very low base, its impressive performance was also
attributable to rising awareness of the health benefits of rooibos tea,
particularly among more affluent females aged 25-45-years-old. High in
antioxidants, low in tannins and naturally decaffeinated, rooibos tea also
became more popular with elderly consumers, often on the advice of their
doctors.
·
The performance of green tea
was disappointing in 2008. Green tea is particularly high in antioxidants and
caffeine-free and has benefitted as a result. Green tea is particularly
valuable to the tea sector as a whole as it attracts consumers to the market
who would not otherwise drink tea. Not only does it increase the consumer reach
of the tea market but it is also significantly more expensive than black tea
and thus helps to increase average unit prices. Having averaged growth of 15%
over the review period, value sales in fact declined, albeit marginally, in
2008. This was partly due to the increased competition in green tea which saw
unit prices decline 5%. Nevertheless, volume sales growth was also
significantly lower than in recent years, reaching just 4% in 2008, compared
with 11% the previous year. This performance calls into question whether the
growth of green tea has now plateaued. Its appeal is quite niche, appealing
largely to young ABC females, but it is not consumed in great quantities in the
same way that people will drink four or five cups of black tea a day.
·
The trend for fruit/herbal tea
shares many of the same features as that for green tea. It is free from
caffeine and is particularly popular amongst ABC females. It is a more
significant part of the overall tea sector, holding 2% of the total sector
(compared to green tea’s even lower share) and it has been growing in recent
times. In 2008, volume growth stalled somewhat at just 5%, but value sales grew
only slightly. This again reflects an increase in the promotional activity in
this sector, causing average unit prices to fall.
·
Loose tea continues its long
term decline as consumers opt for the more convenient alternative of tea bags.
That said, despite the convenience of the format, instant tea has also failed
to make an impact in the tea sector and declined even quicker than loose tea
(18% in value sales).
·
While the standard unit prices
of tea did rise over the review period, an increase in promotional activity
meant that average unit prices were broadly flat in 2008.
Competitive Landscape
·
Unilever’s PG Tips was the
leading brand in 2008 with a 24% share of value sales while Tetley from Tata
Tea Ltd had a share of 22%. There were three key thrusts to PG Tips’ marketing
communication with respect to black tea. First, Unilever has been emphasising
the ethical credentials of the PG Tips brand by signing up to the Rainforest
Alliance. Second, the company has aimed to draw attention to the health
properties of tea, citing theanine, antioxidants and hydration as all providing
benefits. Finally, the “monkey” has provided an irreverent figure with which to
communicate the benefits of PG Tips. Tata Tea’s strategy for Tetley has been
similar: an alliance has been forged with the British Heart Foundation and the
company has also signed up to the Ethical Tea Partnership.
·
Twining’s share of sector value
sales was stable at 12% in 2008. Having established dominance in speciality
tea, with its launch of Twining’s Everyday, the brand now competes directly
against the likes of PG Tips and Tetley in by far the biggest subsector, black
standard tea bags. The brand also continues to lead in fruit/herbal and green
teas. 2008 saw a repackaging of this range that also highlighted that the
ingredients are 100% natural.
·
The fastest growing brand in
2008 was Yorkshire Tea, where the focus of communication has been on the
quality of the cup of tea and its provenance. Much is made of it being blended
by Taylor’s of Harrogate and to this day, visitors to Harrogate can visit
Betty’s Tea Rooms which form part of the family business and of course, serve
up Yorkshire Tea. This sense of history and local association strikes a chord
with consumers in a time when many people are opting to buy “local” produce.
·
Typhoo Tea now makes up a lowly
fifth position with a share of just 6%. Despite its relaunch, sales of the
brand continue to fall and a large part of the volume sold is on promotional
deals.
·
Clipper Teas Ltd and Cafédirect
Ltd saw their shares slip back as the major brands moved into an area that had
previously been their own – ethical consumption. This led to poor sales of
black tea products in particular.
·
The promotional strategies of
the leading tea brands differ. Tetley tends to favour an aggressive promotional
strategy using regular price cuts and “extra free” offerings. Unilever’s PG
Tips continues to favour value added promotions where free gifts such as a
cuddly toy monkey will come with the box of tea, but charged at the standard
retail price. The idea behind these promotions is that they do not reduce the
value sales of the tea sector as a whole.
·
The innovation that was most
heavily supported in 2008 was Unilever’s launch of PG Tips Green. With green
tea deemed to be a potential avenue of high growth, a range of three green teas
was launched: traditional, lemon and mint variants. PG Tips’ standing in black
tea makes the brand a good vehicle for widening the appeal of green tea; sales
have however been disappointing. This is partially a reflection of the lateness
with which PG Tips has entered the category, but it also underlines that green
tea continues to be a niche offering in the UK. Tetley has continued to put a
large amount of support behind Tetley Redbush Tea, and this has been rewarded
with significant growth.
Prospects
·
Tea is a sector that
potentially stands to benefit from a worsening economy: firstly because it is a
much cheaper alternative to other soft drinks, including coffee, and secondly,
if consumers are going out less and cutting back on their Starbucks coffee,
at-home tea consumption may benefit. Nevertheless, over the forecast period,
tea volume sales are predicted to decline 4%, in keeping with the long term
trend of overall decline. The UK consumer is a very different animal from that
of 20 years ago, and while black standard tea is still the nation’s favourite
drink, a more mobile, time-poor, cash rich, health conscious society will
continue to divert consumption away from black tea to more convenient
alternatives like juice, squash and mineral water.
·
Tea has failed to establish
itself in the on-trade in the same way as coffee. However, a sense of nostalgia
and patriotism that is seeing brands such as Yorkshire Tea flourishing may also
signal the rise of the “tea room” as an alternative to the ubiquitous coffee
chain and this presents a potential opportunity for tea suppliers and
particularly those that offer speciality teas.
·
While the outlook for green
teas and fruit/herbal infusions does continue to hold promise given the broader
trends for health and wellness, these subsectors seem unlikely to be able to
compensate for lost sales of black tea. These smaller subsectors face
challenges in both broadening their appeal but also increasing consumption.
While many drinkers of black standard tea will have 4-6 cups a day, these more
niche products tend to be more occasion based, for example just before going to
bed.
·
Although ethical consumption
has played a less prominent role in the media since the global financial crisis
began in 2007, certainly in the tea sector it looks set to stay, with all of
the leading brands now signed up to one ethical agreement or another.
·
Unit prices are expected to be
flat over the forecast period. While there may be some increase in raw material
costs, the intense competition in this sector and the power of the major
retailers mean that increased costs are likely to be absorbed by suppliers.
