Tea - France- Market Report
HEADLINES
- Tea sales increase by 1% in current value terms to
reach EUR433 million in 2010
- Fuelled by the health and wellness trend, green tea
gains ground on black tea in 2009/2010
- Green tea experiences the highest growth, increasing by
9% in value terms in 2010
- With the exception of black standard tea which is
decreasing, overall unit prices of tea remain stable in 2010
- With a 37% value share, Unilever retains its lead in
tea in 2010
- Over the forecast period, constant value tea sales are
expected to remain almost stable with a forecast CAGR of under 1%
TRENDS
- The key 2010 trend was the success of green tea at the
expense of black tea with sales increasing by 9%, which is higher than
previous years. Black tea, on the other hand, decreased by 2% in current
value terms in 2010, with all types of black tea declining. Tea players
put considerable effort into offering wellness products in 2010. Products
such as green tea and herbal tea are highly appreciated by consumers for
their antioxidants and other healthy qualities. As a result, manufacturers
introduced recipes based on these healthy plants.
- Up by 1% in current value on the previous year, the
growth in 2010 in overall tea sales was however slower than expected, as
green tea did not succeed in offsetting the drop of black tea. Specialists
quote two or three reasons. First, the maturity of the black tea category
is in evidence, and as such players only launched brand extensions in this
area. Furthermore, in spite of the announcement of the launch of the
Special T machine in 2010, the category did not benefit from a
revolutionary concept such as coffee pods during the majority of 2010.
Lastly, the coffee pods range was also an indirect competitor to tea,
mainly since the explosion of espresso pods such as Nespresso, Nescafé
Dolce Gusto and L’Or Espresso.
- Still fuelled by the health and wellness trend, green
tea and other teas were by far the most dynamic categories in 2010. These
two products are renowned for their health benefits and tea players
propose many varieties for wellbeing. In terms of flavours, mint green tea
is the most popular.
- Even so, due to the increased presence of private label
in the tea sector, the growth of unit prices in green tea in 2010 recorded
a slowdown in comparison with the review period. In addition, tea bags,
especially tea bags black standard, experienced a decrease in unit prices
in 2009-2010 due to the progression of private label, promotions, and
large packages: 50 or even 100 tea bags in a pack instead of 25.
- Regarding other category performance, fruit /herbal tea
progressed by 2% in current value terms owing to the persistence of the
health and wellness trend in 2010. On the contrary, instant teas tended to
lose consumers as they do not correspond to the image of natural
ingredients. Herbal/traditional medicinal tea became more popular as
consumers are more interested in the wellness properties of various plants
such as verbena and mint. At the end of 2009, Foods International launched
a new range of herbal tea named Soin et Nature under its La Tisanière
brand. This new range, based on the wellness properties of various plants
such as chicory and mint, aims at improving wellbeing. Marketed in early
2010, Soin et Nature is a seven-day wellness programme. The range has
three references, which reduce the impact of stress and tiredness and
favour the elimination of toxins.
- On-trade volumes represent only a small proportion of
total tea volumes in France accounting for 6% in 2010. While the off-trade
channel provides a large choice of tea in terms of tastes and quality, the
on-trade provides mostly standard tea such as breakfast tea and peppermint
tea. Tearooms are not common in France, consequently the on-trade
assortment suffers from a lack of variety in terms of flavours and brands.
Only a few companies seem to want to develop in this channel, such as
Malongo which launched a new range of eight teas with organic and
fair-trade label specifically for this channel in January 2010.
- In France, tea is sold through standard grocery stores
such as supermarkets and through independent specialised stores. The
latter usually sells premium tea such as Mariage Frères and Kusmi Tea. In
order to reach more consumers and increase tea consumption, premium brands
tended to expand their distribution network with Palais des Thés, for
example, expanding its network of branded stores in France. As a result,
premium tea is more accessible to a larger consumer base than it was a
decade ago.
- In 2010, tea remained the second most popular hot drink
sold in vending machines, far lower than the dominant instant coffee in
vending. In such a channel, tea suffers from a reputation of low quality
and the usual tea consumers rarely appreciate drinking tea from vending
machines. Consequently, the vending channel did not benefit from the
increased popularity of tea amongst consumers in 2009-2010.
- Unpackaged tea is available in France, but is mostly
sold in specialist stores and is more expensive than packaged tea. Due to
its history and the absence of tea plantations, France is not a
traditional tea drinking nation. As a result, unpackaged tea is not well
known and is perceived as a very exclusive product. Companies such as
Maisons de Thé Mariage Frères and Kusmi Tea have developed the tea culture
in France through a wide assortment of teas and accessories such as
teapots. However, packaged tea and tea bags particularly remained the most
common and popular type of tea in France thanks to their convenience.
COMPETITIVE LANDSCAPE
- With a 37% value share, Unilever continued to lead the
category in 2010 owing to its brands Lipton present in all tea product
categories, ranging from black tea to herbal tea, and Elephant. The
company has engaged in considerable promotional efforts, with volumes sold
via promotional flyers doubling to reach 13% of 100 bag packs. It heavily
and successfully promoted its Pyramid range in black tea in 2010 just as
it did for its Elephant brand in herbal tea. Promotions and innovations
were essential for Unilever and enabled the company to keep its share
intact in 2009 and limit its slight decline in 2010.
- The mixed result of Unilever France notably derived
from the impressive progression of Foods International, the NBO for
Associated British Foods (ABF) in France. The fortunes of its Twinings
brand grew on the back of its success in green tea in recent years. The
British brand was particularly aggressive in this area with promotions
such as 75 sachets + 25 free.
- International companies dominated the sector with
famous brands such as Lipton and Elephant for Unilever, Twinings and La
Tisanière for Foods International. Pagès, from Laurens Spethmann is the
only domestic brand to compete in this category at a notable level.
- While there were still some new brand variants in
traditional tea, no doubt the main innovation in tea and packaging was the
launch of Special T by Nestlé at the end of the year (not yet present in
Euromonitor shares). After the success of Nespresso and Nescafé Dolce
Gusto in coffee, Nestlé is trying the same sophisticated pod concept in
tea with a special machine and rigid pods available on its website. The
process is more accurate than in coffee because the machine identifies the
pod and adapts the temperature of water according to the speciality of
tea.
- One of the main ways to differentiate premium from
economy products are the channels through which they are sold. Pagès is a
good example of the strategic choice: Known as a supplier of private
label, this company has decided to launch a new range of premium teas from
all over the world, and to sell them through the historic channel of the
brand - independent specialised stores. Nonetheless, only 100% of Pagès
sales are branded while 90% is sold under private label. In 2010, private
label enlarged its range of organic tea as the organic origins are
synonymous with natural and quality for consumers.
PROSPECTS
- The success of green tea and fruit/herbal tea is likely
to be an indicator of the trend for 2011. The health and wellness trend is
expected to become even more important in the tea sector over the forecast
period. Manufacturers are likely to introduce various wellness programmes
based on tea and herbal tea qualities in grocery stores. Furthermore, an
increasing number of teas may become dietary supplements in order to
improve wellbeing or to help in weight loss, therefore blurring the
barriers between standard tea and medicinal tea.
- Value sales are expected to remain stable in constant
terms over the first three years of the forecast period and an increase
towards 2015. The forecast growth is likely to perform at a slower rate
than it did during the review period as the maturity of the market will
encourage companies to engage in promotions, and also to compete with
private label. The success of coffee pods will also be a threat to tea,
unless Special T succeeds in expanding in the category in 2011.
- However, the category will still face some threats.
Thanks to the current economic crisis, economy brands could expand as some
consumers will be eager to spend less money on food, and hot drinks in
particular. Combined with the growing promotional pressure on the
category, this could result in ongoing price erosion in the coming years.
After this the health and wellness trend that also developed in coffee
could be a threat to tea. Coffee manufacturers such as Nestlé introduced
coffee with antioxidants and other wellness properties in recent years. As
a result, coffee could challenge tea on healthy properties and temper its
growth performance over the forecast period. However, experts estimate
that the main growth drivers in coffee should be taste and convenience and
not health and wellness, at least not over the forecast period.
- Fruit/herbal tea is expected to increase with a CAGR of
1% over 2010-2015. Unilever has planned to keep on sustaining its Elephant
brand with TV advertisements during 2011. However, it is especially green
tea which is likely to perform better than any other product categories
within tea, mainly thanks to its healthy properties. As green tea
corresponds to the health and wellness needs of consumers, sales are
expected to increase by a CAGR of 4% in constant value terms over
2010-2015. Green tea may also see the development of private label, which
is currently not very active in the category. In order to attract
consumers, manufacturers such as Unilever may introduce a wide range of
green tea in pods.
- On the other hand, black tea and instant tea are
expected to wane in the coming years. Instant tea does not correspond to
the healthy trend and is synonymous with artificial ingredients. As a
result, its value sales are likely to continue to decline in the future,
with a possible 4% decrease in constant value CAGR over the forecast
period. Instant tea is not popular in France and failed to recruit new
consumers.
- The most focus on new products for 2011 will be the
performance of Special. T. It is clearly among the top premium products
thanks to the price of pods (EUR0.35) and the machine, which retails at
near EUR150. Some experts have doubts about the success of this test in
France based on the fact that French consumers very much prefer coffee and
the high price of the concept. However, Nestlé and its huge marketing
resources are behind the project. The process is even more accurate than
in coffee as the Special T machine identifies the pod and adapts the
temperature of water according to the speciality of tea. These particular
attributes will also make it easier to defend the patent from the
intrusion of copycats.
