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Global Tea Industry

Global Tea Industry. Lenore Weich. 8. 13. 16. 3. 21. 24. Table of Contents. What is Tea? Tea Market Overview Tea Consumers Tea Producers A World of Tea Bibliography. WHAT IS TEA?. Tea Definition. Tea….

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Global Tea Industry

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  1. Global Tea Industry Lenore Weich

  2. 8 13 16 3 21 24 Table of Contents • What is Tea? • Tea Market Overview • Tea Consumers • Tea Producers • A World of Tea • Bibliography

  3. WHAT IS TEA?

  4. Tea Definition Tea… …a beverage produced by steeping in freshly boiled water the young leaves and leaf buds of the tea plant, Camellia sinensis. Two principal varieties are used, the small-leaved China plant (C. sinensis sinensis) and the large-leaved Assam plant (C. sinensis assamica)1 Major Tea Categories2 Preparation Methods • Infused (Hot) • Iced (Cold) • Instant* • “Ready to Drink”* *Manufactured

  5. Processing Tea Leaves3 all tea leaves PLUCKING WITHERING ROLLING Black, Oolong, Pouchong Green Tea Fermentation is the critical stage—except for green tea FERMENTATION Processing Time Oolong Black Pouchong DRYING PACKAGING, etc Source: Encyclopedia Britannica

  6. Alternatives to Tea4 • While total per capita beverage consumption remained flat, per capita tea consumption declined 8% from 1995-2000 • In contrast, Bottled water consumption grew 50% over the same period Equitable global data not uncovered Source: Food Processing

  7. 2001 World Tea Production5 Data in thousands of metric tons USSR: 10 China: 670 Turkey: 130 Japan: 100 Bangladesh: 60 Vietnam: 30 India: 840 Indonesia: 180 Kenya: 290 Sri Lanka: 290 South America: 70 Others: 240 Total: 2.9 million metric Tons! Source: Tea Basics

  8. TEA MARKET

  9. Global Tea Sales, by region, 1993-19976 • 14% Growth Rate of Global Tea Market Size from 1993-1997 • 17% Growth Rate of the North American Tea Market Market Size Source: Euromonitor

  10. Global Tea Consumption, by Type Volume Growth Rates1993/1997 * Growth rate 1995-97 Volume consumed growing faster than Value of market “The green tea market has been growing more slowly than the black tea market in recent years, with the result that green tea represents a declining proportion of demand for leaf tea as a whole.” Source: Euromonitor

  11. Top Tea Consuming Countries, 19978 India consumes the most black tea by volume; China consumes the most green tea Source: Euromonitor

  12. Market Growth Projections (US)9 1997 – 2001 Growth: 19% 2001 – 2006 Projected Growth 18% US Market growth stagnant, perhaps declining—mature market Global growth data not found Source: Euromonitor

  13. TEA CONSUMERS

  14. Tea - Global Consumer Profile10 United Kingdom Japan United States • A drink for any time of day • Black, with milk/sugar • Tea bag predominant • Loose leaf considered “old” • Tradition-driven • Green • Ready-to-drink emerging • Second to Coffee • Black, Sugar/Lemon • Ready to Drink popular • Pockets of Specialty/Organic China India Latin America • Staple Beverage • Green Predominant • Staple Beverage • Loose leaf predominant • Black, with Sugar/Lemon • A drink for the ill Source: Euromonitor

  15. Tea Consumer Facts11,12 • On an average day, 62% of US women drank tea, compared with 59.5% for ground coffee and just 24.2% for instant coffee. • Consumption of all hot drinks is lowest in the West, due partly to the increased popularity of healthy diets in the region and warmer climates for most of the population. • Tea tends to be perceived as a premium beverage, with consumption highest among the wealthiest consumers with an income of above US$75,000. • Tea has been gaining increasing acceptance among US consumers, who have turned to the sector as a lower caffeine alternative to coffee. The proliferation of herbal and medicinal teas has also played a major role in tea sale increases recently. A continuation of these trends is expected to drive volume growth 12. Source: HOT DRINKS IN THE USA (JULY 2002), Euromonitor • …Tea is increasingly acquiring a more sophisticated image in Europe and North America. 13. Source: INTERNATIONAL MARKET REVIEW: WORLD MARKET FOR TEA (NOVEMBER 1998), Euromonitor

  16. TEA PRODUCERS

  17. Tea Supply Chain—Macro View Cultivate,Process Growers Distributors Import/ Export Manufacturers Package, Market, Retail Distribution Retailers Sell Consumers Drink

  18. Tea Competitive Landscape13 • The tea market is fragmented and region-specific, with multiple companies comprising 49% market share • Unilever is the largest manufacturer of tea world-wide with 26% market share Tea Global Market Share, 1997 Source: Euromonitor

  19. 52-week low: $28.82 (Jul 02) 52-week high: $39.64 (Nov 02) Unilever Profile14,15 Unilever Global Presence2001 Revenue Distribution General • One of the top global consumer product companies in the world • Dually operated by two holding companies (for tax reasons): Unilever PLC (UK) and Unilever N.V. (the Netherlands) • 2001 Revenue: $45.9B • 279,000 Employees • Besides Lipton (tea), manufactures Dove, Sunlight, Country Crock, Hellman’s, Lever 2000, Degree, Surf, others • Organized Geographically, then by food and non-food • Currently working to consolidate brands Source: Hoovers, Yahoo Finance

  20. Unilever—Tea Facts17 • Global tea brands include Lipton, PG Tips (UK) Brooke Bond (India) • Small portion of Unilever’s brand portfolio (between 5-9%) • Overall Lipton brand grew 6% in 2001 • Japan market for ready-to-drink tea grew strongly • Lipton Cold Brew rolled out in the US • Central Asia market declined due to competition with Indian tea • Ready-to-drink product expansion to Europe quoted successful • Green tea launch continues in North America and Europe • Recent marketing campaign “Paint the World Yellow” continues to raise awareness of Lipton Brand Source: Unilever 2001 Annual Report

  21. A WORLD OF TEA

  22. Recent Facts • Industry “Alliances” – both in the “ready to drink” sub sector of tea • Unilever joint venture with Pepsico to market/distribute Brisk in the Americas17 • Coke and Nestle joined forces to market “Nestea”18 Current Marketing Strategies:20 • Tetley—market tea as healthy, to attract younger drinkers • PG Tips (Unilever) responds with “Slice of Life” and “Tea Moments” to consolidate tea’s role in our lives “The tea tradition is sustaining the established markets, but there is increasing competition from soft drinks…”16 Euromonitor Ready-to- Drink Teas Gaining Momentum in the US: According to Beverage Digest, the category’s volume increased 1.8%, year to year, to 637 million gallons. Retail sales of ready-to-drink teas advanced 3.8% to $3.31 billion in 2001 from $3.19 billion in 2000.19 --Standard and Poor • Tea linked to many health benefits • Rehydration • less caffeine • powerful antioxidants

  23. Future Trends Tea is predicted to be the fastest growing sector in volume terms over the forecast period, gaining 11.1% between 2002 and 2006, to reach a level of 41 thousand metric tons in 2006.21 Euromonitor Products like iced chai and bubble tea in the US promise to add further variety and vitality to tea selling.22 --Restaurant Business Bubble tea is tea with Tapioca “bubbles” and optional flavoring added

  24. BIBLIOGRAPHY

  25. Bibliography (1/2) • Encyclopedia Britannica, “Tea.” • Tea Basics; Rasmussen, Rhinehart; 1999. • Encyclopedia Britannica, “Tea Production” • "Beverages Were Healthier in 2001," Food Processing, August 2002 • Tea Basics; Rasmussen, Rhinehart; 1999. • INTERNATIONAL MARKET REVIEW: WORLD MARKET FOR TEA (NOVEMBER 1998) Euromonitor • Ibid. • Ibid. • HOT DRINKS IN THE USA (JULY 2002), Euromonitor • INTERNATIONAL MARKET REVIEW: WORLD MARKET FOR TEA (NOVEMBER 1998) Euromonitor • HOT DRINKS IN THE USA (JULY 2002), Euromonitor

  26. Bibliography (2/2) • INTERNATIONAL MARKET REVIEW: WORLD MARKET FOR TEA (NOVEMBER 1998) Euromonitor • Ibid. • Hoover’s Online Profile: Unilever, accessed Jan 2003 • Yahoo Finance Online Profile, accessed January 2003 • INTERNATIONAL MARKET REVIEW: WORLD MARKET FOR TEA (NOVEMBER 1998) Euromonitor • Unilever 2001 Annual Report • European Report, Sept 29, 2001 p344 “COCA-COLA-NESTL? DEAL PRODUCES NO STORM IN COMMISSION'S ICED TEA CUP” • Standard and Poor, Food and Non-Alcoholic Beverages Industry Survey, Dec 2002 • Marketing, Oct 31, 2002 p13 “BRAND HEALTH CHECK: Tetley - How can Tetley sell the virtues of drinking tea?” • INTERNATIONAL MARKET REVIEW: WORLD MARKET FOR TEA (NOVEMBER 1998) Euromonitor • Restaurant Business, “SPECIAL-TEAS,” Feb 15, 1999, JAMES SCARPA.

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