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Tea's Time

You’ve heard it before, but it bears repeating: Tea is HOT.

Just a decade ago, the specialty tea industry struggled to shed its somewhat staid image and gain ground in a beverage category dominated by soft drinks, water and coffee. Now, according to NASFT’s 2006 State of the Specialty Food Industry report, specialty tea sales have reached $822 million. Specialty tea accounts for 29.2 percent of sales in the overall tea category, which was a $2.8-billion market last year.

From health to convenience, the specialty tea industry is vibrant with offerings that run the gamut from hot to cold, black to white, and bulk to bagged—an array that provides retailers with numerous opportunities to build sales and boost customer loyalty.

The Drivers
One of the biggest drivers of tea’s growth has been its healthful properties (See sidebar, p. 24). “Many of our customers are being told by their doctors to cut down on sugar and caffeine and switch to tea, says Jaime Kubik, buyer for Cardullo’s Gourmet Shop, a Cambridge, Mass., specialty food store that boasts 600 types of tea. Consumers are also traveling more, experiencing flavor profiles of varied cuisines. Their sophisticated palates demand high-quality foods and beverages—tea included. “Many of our customers are familiar with the Mariage Freres line of teas from France, having tasted it during their travels, notes Sara Feinberg, buyer and manager of the Berkeley, Calif. location of The Pasta Shop, a European-style specialty market.

Consumers desire teas flavored with interesting combinations. According to Michael Harney of Harney & Sons Fine Teas, a Millerton, N.Y., producer, savory flavors such as lemongrass, ginger or coconut, as well as a pomegranate oolong are booming.

Bill Waddington, who runs two Tea Source stores in the St. Paul, Minn. area, observes that shoppers are increasingly requesting high-end teas. “They know the region the tea is from, he says. “That was not happening five years ago.

Consumers have become more socially conscious about how the products they choose affect the environment, tea growers and workers. As a result, organic and Fair Trade teas are finding a growing niche in the U.S. and establishing themselves as a segment of the worldwide tea industry with more plantations undergoing certification. “Organic is a mainstay and a growing part of our business, reports Benjamin Harrison of Rishi Tea, Milwaukee, Wisc.

Devan Shah, owner of two Chado Tea Shops in the Los Angeles area and Pico River, Calif.’s International Tea Importers, which brings in more than 500 varieties of tea, says, “Fair Trade teas have become popular in certain pockets, often university areas where the college students are more aware of these issues.

Green, White and Black
Seattle’s Sage Group International, a specialty tea industry think tank that provides product development, strategic consulting, and business support services to tea and natural product markets, predicts that green tea will outsell black by 2010. According to its current Specialty Tea is ‘Hot’ Report, “Green tea sales increases remain in the double digits for many distribution channels and research dollars targeted at green outweigh those for black inordinately.

“The demand for green tea continues to accelerate, says Tea Source’s Waddington, who notes that green teas with flavors or scents are serving a valuable introductory role to stronger varieties. “They’re more accessible to the palate and then consumers can explore traditional green tea from there.

“We have hard-core green tea drinkers, but for the most part our customers still want a green tea that is blended with flavors familiar to them, such as tropical fruits or even mint, says Denise Steinbock, spokesperson for the two-store Tempest Tea chain in Dallas.

White tea’s takeoff has been one of the biggest surprises for James Norwood Pratt, a leading tea authority and author of the New Tea Lover’s Treasury. “There has been enormous interest, even from companies such as Snapple® who have introduced a bottled white tea beverage, he says. Helping propel the buzz is white tea’s antioxidant properties, reportedly higher than those of green tea.

Yet industry professionals remind retailers to not count out black teas. “Even with all the ‘new’ teas, black teas continue to have a consistent clientele. English Breakfast is tried and true, and many black teas will always be a staple of the business, notes Feinberg.

The Rarest of All
Slowly emerging as a new tea category is one of the rarest of all varieties—yellow tea. A tea that has a long, but not well-known, history, yellow is one of six families of tea in China and is believed to have the most antioxidants due to its production process, which contains no fermenting or oxidation. Shah has recently started to roll out yellow tea. “I have had so many inquiries since I brought it in—even from the ready-to-drink market, he says.

Additionally, Pu-erh, a strong Chinese black tea that, according to Pratt, is considered “one of the most prized possessions in the tea world, is entering shoppers’ consciousness and is anticipated to boom.

“I think Pu-erh will be the next hot thing, but it can be a big education leap for customers, says Waddington, who adds that the flavor, which ranges from light to intensely earthy, can be “quite startling to a customer the first time they drink it. At Tea Source, Pu-erh tea is popular with ex-coffee drinkers. “A strongly brewed Pu-erh has no bitterness or acidity, but a strength that is more closely related to coffee than other teas, he adds.

Harney cites growth among what he calls ‘connoisseur’ teas. “People have experienced Earl Grey, and they’re moving on to teas such as Lung Ching (Dragon Well) or other single-garden teas.

Oolong teas are enjoying a resurgence. “We’ve been selling them for years, but recently there has been interest in this tea’s distinctive aroma, flavor and color, Harney continues. Rishi’s Harrison agrees, “Oolong is a category that people should look at again, both at the mainstream and top-tier level.

An Expanded Definition
Following the success of chai, the popular Indian drink with a base of strong black tea flavored with spices such as cinnamon and cardamom, there is growth in many periphery segments of the tea category. For instance, South African Rooibos, known as red tea, is a member of a plant family used to make tisane, an herbal infusion not made from the leaves of the tea bush. It has found a foothold with many consumers.

Matcha, a powdered green tea used in Japanese tea ceremonies, is renown for a high concentration of vitamins and antioxidants. Lately it has become a popular ingredient in lattes, iced drinks and smoothies, helping it gain cache among younger consumers. “Young shoppers are driving the demand, but it isn’t necessarily because of its great health benefits, explains Steinbock, who offers matcha lemonade as well as traditional matcha. “Many get matcha in their hot teas or bubble teas because it is a hip thing to do.

Mate, an ancient South American drink, has also seen growing interest. While not a true tea, mate is a highly caffeinated infusion prepared by steeping yerba mate leaves that have been dried, chopped and ground into a powdery mixture in hot water. “Mate continues to be a strong leader in sales, mainly because of its high levels of antioxidants, says Kubik.

The Tea Wave
The specialty tea industry is expected to grow well beyond past expectations. According to the Specialty Tea is “Hot Report, green, ready-to-drink and flavored specialty teas will drive most of this ‘tea wave’ followed closely by better quality offerings in tea bags, organics, chai and herbal “teas of every type.

With the help of media attention, a bit of marketing creativity, and continued consumer education, tea is destined to become a category that strikes a chord with even more consumers.

Laura Everage is a freelance writer specializing in food and beverages and was former managing editor of The Gourmet Retailer.