Tea -
Australia
HEADLINES
- Tea achieves off-trade current value growth of 3% to
reach A$344 million in 2009
- Consumption rises as consumers perceive tea to contain
nutritional contents such as anti-oxidants
- Instant tea enjoys the most robust off-trade current
value growth of 25% in 2009
- Unit prices rise as more consumers choose healthier tea
products with health and wellness claims
- Unilever Australia Ltd continues to lead tea with a 38%
off-trade value share in 2009
- Tea is projected to achieve an off-trade constant value
CAGR of 1% over the forecast period
TRENDS
- In 2009, instant tea enjoyed the strongest off-trade
current value growth of 25%. It continues to be spurred by Lipton Chai
Latte and Jarrah Chai Latte by Unilever Australia Ltd and AB Food &
Beverages Australia Pty Ltd introduced in 2005 and 2006, respectively.
Still considered a relatively new addition to Australia’s hot drinks
environment, Chai Latte rose in popularity in 2005 and continued to draw
more consumers in 2009. As a result, instant tea experienced the most
rapid off-trade current value growth within tea in 2009.
- As consumers grow increasingly health conscious, tea
becomes a popular choice of hot drinks as it is generally perceived to be
healthy. Therefore, tea enjoyed a positive off-trade current value growth
of 3% in 2009. It was also boosted by new product developments such as
Australia Fruit Tea Company Pty Ltd’s range of green tea products, which
are enhanced and infused with natural fruit flavours introduced in 2009.
This represented a product that blended taste and health and wellness
benefits.
- Whilst green tea has slowed down as it has already
relatively penetrated Australia, it continued to register a positive
off-trade current value growth of 1% in 2009. Consumers still tend to
drink it on a regular basis for its beneficial anti-oxidants. Therefore,
it continued to demonstrate a steady and positive performance in 2009. As
it is continuing to be favoured amongst consumers, manufacturers have
begun to innovate and therefore, flavoured green tea was gradually
introduced over the span of 2008 and 2009. For example, Australia Fruit
Tea Company Pty Ltd blended natural fruit flavours with green tea to
enhance its flavour profile.
- The on-trade presence of tea continues to be much
weaker than that of the off-trade scene. Of the total volume of tea sold
in 2009, only 18% is contributed by on-trade sales while the remaining 72%
is made up of off-trade sales. However, tea shows room for potential in
the on-trade arena as more consumers become increasingly open to Asian
cuisine which tends to be accompanied by tea. As a result, on-trade volume
growth of tea stood at 2% in 2009, one percentage point higher than 2008.
Both channels are essentially supplied by the same manufacturers; however
on-trade green tea sales have, historically, had a bias towards Asian
restaurants and these are often supplied via importers of non-retail
brands.
- There was no significant shift in off-trade
distribution patterns during 2009. Vending sales of tea in Australia are
close to nonexistent. Due to the limited visibility and penetration of
vending machines that serve tea, vending retained a negligible off-trade
volume share of tea in 2009. Conversely, supermarkets/hypermarkets
remained the key channel from which consumers purchase tea and accounted
for a 91% off-trade volume share in 2009.
- There has been little change in consumers’ flavour
preferences in fruit/herbal and other tea. Flavours such as Chamomile,
Lemon and Peppermint continued to be the most popular flavours, accounting
for bulk of sales. Niche flavours such as Dimal Exceptional Berry
Sensation were observed to be introduced in 2009; however, these so far
have not proved to be widely popular.
- Unpackaged tea holds a minor presence in Australia.
Packaged tea continues to be the consumer preference due to the
convenience and ease of use it provides.
COMPETITIVE LANDSCAPE
- With a 38% off-trade current value share in 2009,
Unilever Australia Ltd held its leadership position, mainly due to the
strength of its well-established brands Lipton and Bushells. Its extensive
product portfolio spreading across black tea, green tea, fruit/herbal tea
as well as instant tea also helps it maximise its performance in tea.
- At the second position, AB Food & Beverages
Australia Pty Ltd gained more than half a percentage point over 2008 to
reach a 23% off-trade current value share of tea in 2009. In 2008,
Twinings expanded into black standard tea with the introduction of
Twinings Simply Tea. This expansion of product portfolio aided in its
strong performance in 2008 and 2009.
- In 2009, Tetley Australia Pty Ltd lost almost one
percentage point to reach a 9% off-trade current value share. This is
because numerous of its brands such as Highfield Tea, Kinkara and Robur
have a declining shelf space presence at the supermarkets because of
intensifying competition. With less visibility, the brands lost popularity
and thus the company continued to lose off-trade current value share in
2009 as compared to 2008.
- There are only two local tea manufacturers/suppliers of
any real consequence: Nerada Tea Pty Ltd and Madura Tea Estates Australia
Pty Ltd. Even Nerada Tea Pty Ltd is not truly a domestic manufacturer,
being a wholly owned subsidiary of Boh Plantations of Malaysia. Both these
manufacturers lost share in 2009 due to stronger representation by major
international brands in key growth areas.
- Unilever Australia Ltd remains the main user of
high-profile television advertising for its tea. This company uses
television to support both the Lipton brand and the Bushells brand. Lipton
brand advertising during 2009 promoted sustainable development and this
company claims that over 50% of its tea is sourced from Rainforest
Alliance certified farms.
- There was no significant packaging innovation seen
during 2009.
- Private label off-trade value share decreased slightly
in 2009.
PROSPECTS
- Overall, tea will continue to enjoy good growth over
the forecast years as consumers grow increasingly health conscious and opt
for tea, which appears to be a healthy option amongst hot drinks. As
consumers continue to seek convenience, instant tea is expected to enjoy
the most robust off-trade constant value CAGR of 6% over the forecast
period. Green tea is expected to see continued innovation such as the
launches of flavoured variants by manufacturers such as Australian Fruit
Tea Co Pty Ltd. Hence, green tea is projected to continue with a positive
1% constant value CAGR over the forecast period.
- Whilst consumers are open to trying new variants or
types of tea, most households will still continue to drink black tea, as
they are accustomed to doing. Therefore, black tea will continue to
dominate value share. In 2014, black tea is expected to dominate with 76%
off-trade value share of tea. This represents a decline of two percentage
points over 2009, caused by consumers’ rising preference for products such
as instant tea, fruit/herbal tea and green tea.
- Pertaining to the on-trade environment, tea
traditionally has a much weaker presence compared to that of coffee.
Whilst there are numerous specialist coffee shops nationwide in Australia,
there are few consumer foodservice outlets with a heavy focus on tea. Over
the forecast period, this is unlikely to change, as most consumers also
prefer to buy coffee over tea whilst on the go. Therefore, tea is more
commonly consumed at home and is projected to remain stronger in the off
trade compared to its strength in the on-trade arena.
- New product developments are expected to be
manufacturers’ key strategy to attract consumer interest over the forecast
period. These new products are likely to continue in the direction of
premiumised options that contain health and wellness benefits. However,
price points are unlikely to increase, as competition is especially intense
amongst the manufacturers. Therefore, unit prices are unlikely to
experience an increase over the forecast period and are expected to hold
steady.
