North America is evolving a retail model that will supercharge the $90 billion global tea market. Investments in tea retail quicken the pace of innovation with convenience foremost. Sales of bagged, bottled and single-serve broken leaf blends are quickly overtaking conventional. High expectations for taste, convenience and no-mess preparation make specialty tea fundamentally different than most consumer packaged goods. Innovation is paramount. Value-addition is invigorating a static supply chain that will cleft with mechanization at origin. High-margin artisan tea harvested by hand will make up 20% of volume and virtually all profits. Value-addition capabilities are aggregating in Dubai, Germany, China and Sri Lanka. “Specialty tea is in a constant innovation cycle that is attracting a lot of money, with acquisitions leading to expansion of existing lines and bold, new experiments in formulation, ingredients, packaging and retail outlets. The retail segment has attracted $1 billion investment in the past 18 months, clear evidence that investors see huge demand and huge growth opportunity.” Manjiv Jayakumar, President QTrade Tea & Herbs.
Text of Innovation in Tea: 5th Global Dubai Tea Forum by Dan Bolton
Innovation in Tea Rising Consumer Expectations Challenge North American and British Tea Brands to Innovate Dan Bolton STiR Tea & Coffee Industry International
Tea Lollypops (US) On a health lick. Bottled Bubble Tea (UK) AriZona Tea Flavored Water (US) Tea for Kids (US) Tea Innovations
Note: Download 24 examples of tea innovation at www.dmcc.ae Blending Innovations Black & Green (UK) Cocoa Cabernet (US) Tattle Tea Chai (US) QTrade Tea & Herbs (US) Kilogram Tea (Intelligentsia US) Watermelon Mint (US)
Note: Download 24 examples of tea innovation at www.dmcc.ae Packaging Innovations Practical Packaging Educational Message Clever Concepts Clean Design
Note: Download 24 examples of tea innovation at www.dmcc.ae Marketing Innovations Limited Yellow (US) Liptons 1st Global Campaign Small holder advocacy (Africa) Folk art favorite (US) TV Tie-ins (US-UK) Marketing to kids (US)
Note: Download 24 examples of tea innovation at www.dmcc.ae Tea Drink Innovations Coconut Mango Sakura (US) Slushies (US)Granita (US) Spiked tea 4% ABV (UK) Milk Tea (Taiwan) Green Tea Red Bean Frappe
Note: Download 24 examples of tea innovation at www.dmcc.ae Functional Tea Innovations Lose Weight Stop Smoking Keep Calm Boost Energy (75 mg/8 oz. caffeine) Build Immunity Aid Digestion
Take Aways Note: Download 24 examples of tea innovation at www.dmcc.ae $1 Billion Bet on Tea Retail Creative concepts are ready for rapid expansion Innovative tea drinks and food raise average ticket Convenience is Key to Growth Ready-to-drink accounts for 75% of U.S. tea segment Single-serve tea in capsules and pods is in its infancy Disloyalty Drives Tea Innovation Declining brand loyalty encourages experimentation Recession bolsters private label manufacturing
Multiple Ingredients C. Sinensis Herbals Nutraceuticals Fruit Blends Juice Fusions Flavored Teas Multiple Formats Loose Leaf Artisan Pyramid Sachets Single Serve Food Service Iced Tea Ready-to-Drink Innovation Where is innovation occurring? Multiple Channels Retail | Big Box Supermarket Specialty Beverage Food Service Convenience Stores Amazon.com Note: Download 24 examples of tea innovation at www.dmcc.ae
When sales of the worlds most valuable tea brand stalled stagnation was attributed to a lack of innovation. Lipton lost the top spot in U.S. convenience outlets to AriZona Tea. In Canada specialty sliced into Liptons traditional tea sales. New management made R&D a hot bed of activity, in 2013 Unilever acquired Australias T2 retail chain and teamed with Disney Pictures to launch its first global marketing campaign. Lesson Learned We will continue to accelerate our innovations, backed with competitive support, to build long term growth and value. Unilever CEO Paul Polman Lipton/Unilever
In a world filled with high- stress wild-in-the-street types like Animal, you have to take time to enjoy life and 'Be More Tea. '" Kermit Be More Tea Lipton is second only to Coke as the worlds most widely consumed prepared beverage. Global sales: $2.7 billion (2012) Lipton/Unilever 43 million Oscar night viewers; 5.5 million YouTube downloads. The global revamp will cost Unilever $40 million, double last years ad spend. The goal is to make Lipton into the global iconic brand it deserves to be. Wisdom of Kermit (Banjo Serenade) Wisdom of Kermit (Rainbow)
Take Away 1 Big Bet on Tea Retail Ready for rapid expansion 3,500 > 5,000 tea shops Tea increases avg. sale After hours food & drink We are going to elevate the tea experience in the same way we did for coffee, Starbucks CEO Howard Schultz told investors, We are going to reinvent and create an opportunity for a new source of revenue and profit. Bloomberg BusinessWeek , March 20, 2014
Innovation in Retail Concepts
Teavana Fine Tea + Tea Bar Founded:1997|366Stores|U.S.,CanadaandMexico This is a bold and inviting modern vision of tea retail. Success rests on three consumer desires: A desire for a third place away from home and office that evokes conversation and calm a respite amid urban congestion. A desire to learn more about tea, its history and health benefits. A desire to sample and explore tea beverages in a setting that encourages experiment, customization and service. Starbucks CEO Howard Shultz promised to bring breakthrough innovation to the tea category in the U.S. and Canada.
Teavana Fine Tea + Tea Bar 150 Teas | Tisanes Teavana operates 366 stores with plans to open 1,000 more in the U.S. and overseas within five years. Adding 5 stores a week is easy. Starbucks has 20,000 locations in 64 countries and opens 1,500 coffee shops a year.
DAVIDsTEA 150 Teas | Tisanes Tea-to-go hot or cold Clever, colorful packaging Teaware designed in-house A new tea every month Limited Edition Collections Updated Seasonally The cup has the infuser inside with a top on it. Thats why its the perfect tea mug. We were so excited. Oprah Winfrey
DAVIDsTEA Founded: 2008 | 107 Stores in the U.S. and Canada When it comes to blending we like to think outside the cup. Tea can be so much more than the leaves of a tea plant for us, its any plant, herb or spice that can be infused in water. Its all about discovery. We respect tradition but we like to have fun with it too, Co-Founder David Segal.
Love at First Sip: Cha2O A California nightclub marketed to kids aged 12-16 and open from 10 a.m. to 1 a.m. Boba Tea: To subdue those soft-balls cravings. Bakery: For your sweet-craving taste buds. Restaurant: Appease your grumbling tummy. Lounge: Relax, ease frustrated muscles. Drinks come in two sizes: Standard $3.15/16oz Greedy $5.99/32oz
New Tea Drinks Coconut Mango Sakura Allure $5.95/24oz. Blackberry Mojito Lime Cooler $3.95/24oz. Coco Caramel Sea Salt Latte $5.95/16oz. Milk Tea Laughing Budda Cold Shoulder Pom Pom Peach All $5.99/32oz. Green Tea Red Bean Frappe (Venti) $SGD7.70/$6 US Cha2O, Artesia, Calif. Teavana Fine Tea + Tea Bar, New York City, Starbucks Singapore. Teavana photos by Linnea Covington.
Trendy Tea Food Breakfast Rice Porridge, Scallions, Toasted Garlic Nori, Cilantro Sriracha, Tamari $12 Paleolithic Wild Salmon, Smoked Duck, Squash, Kale Salad, Steamed Beets $20 Lunch French ham and spinach over roasted tomato on store-baked four-cheese flatbread - $8.95 Samovar Tea Lounge, San Francisco. Teavana Fine Tea + Tea Bar, New York City. Teavana photos by Linnea Covington.
Take Away 2 Note: Download 24 additional slides with innovation examples at www.dmcc.ae Convenience is Key to Growth Ready-to-drink accounts for 75% of U.S. tea segment Single-serve tea is in its infancy Cold tea brings a huge amount of dynamism to this market, and opens up a new consumption occasion, and access to a much younger consumer. Winfried Hopf, Unilever Executive Vice President Beverages Chairman T2
Convenience America is a land where convenience counts. Making tea is messy, requires some precision and takes time to steep. This is why RTD teas make up nearly 75% of the entire U.S. tea market. RTDteasalesgrewto$5.1billionin2013,upfrom$4.8billionin2012. Convenienceoutletssold1.2billionRTDteaunitsearning$1.23billion. Consumptionhasrisento5gallonsperyearforeveryoneover18. Premiumbottledbrewedteasandspecialtyshowedthegreatestgrowth. Unsweetenedicedteain2012grewmorethan16%indollarsales. Sources: CSP 2013 Beverage Report SymphonyIRI Group Soft Drinks in the US, Euromonitor International, July 2013 AC Nielsen, 2012. Adult population: 240 million (2012) Thanks Colleen Norwine, BW Coopers.
Ready to Drink Tea Other companies now recognize the opportunity and are hopping on the iced tea bandwagon. Thats fine. Well be where weve always been -- out front, leading the way. Barry Cooper, founder of Cooper Tea Co., is a pioneer in the expansion of premium RTD tea in convenience stores. Coopers bottled teas and concentrates are unique in the market for their extensive certifications. He explains the 8.6% increase in unit sales in c- stores in 2012 is two-pronged: 1) a reflection of consumer demand for convenience 2) the incre