USA: Study Finds Popular New Products Fueling Tea Industry Growth

Between 1994 and 1998, dollar sales of tea in the U.S. grew an estimated 31%, according to a study published by Kalorama Information, a leading New York-based market research. The overall market for coffee and tea is expected to continue to grow, increasing another 22% by 2003. Coffee sales, which account for two-thirds of the industry, have experienced only modest growth during the nineties due to increased competition from other beverages such as soft drinks. However, this trend is not expected to affect future growth of the coffee and tea industry as a whole.Sales of coffee and tea are expected to rise 4.2% annually within the next two years and another 5.5% in 2003, with the overall market reaching $12.8 billion. A primary factor contributing to the market's expansion is the increase of the coffee/tea demographic population. Approximately 80% of U.S. adults drink coffee, women accounting for 53% of the consumers. The majority of coffee and tea drinkers are between the ages of 45-64, and this population is increasing as baby boomers get older. However, according to the study, in order for the coffee market to boom, marketers will need to more aggressively target twentysomethings, whose coffee intake has decreased dramatically from 1985 to 1996.One segment of the coffee/tea market that has experienced spectacular growth within the past few years is the ready-to-drink tea segment, with sales increasing 73% during the four-year period 1994-1998. Also, "growing in popularity are natural teas, those that are minimally processed such as green, natural black, and organic teas. Consumers find them appealing because they are perceived as healthier, more relaxing, and less processed," said Claire Madden, VP of Sales and Marketing at Kalorama Information. "As a result of positive health endorsements, green tea already accounts for up to 15% of tea sales in the US."