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Global Tea Industry

Lenore Weich

January 11, 2003

Table of Contents
What is Tea? Tea Market Overview 3

8
13 16 21 24

Tea Consumers
Tea Producers

A World of Tea
Bibliography

WHAT IS TEA? .

Mint Earl Grey Preparation Methods • • • • Infused (Hot) Iced (Cold) Instant* “Ready to Drink”* Specialty Digestive/Medical *Manufactured . Gyokuru. Ceylon Bancha. the small-leaved China plant (C. sinensis sinensis) and the large-leaved Assam plant (C. Two principal varieties are used. Camellia sinensis. Oolong Granulated Black Tea Chamomile.Tea Definition Tea… …a beverage produced by steeping in freshly boiled water the young leaves and leaf buds of the tea plant. sinensis assamica)1 Major Tea Categories2 …for example Black: Green: Instant: Herbal: Flavored Assam. Darjeeling.

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

Beverage Per Capita Consumption (gal) 250 Others 200 150 100 50 0 1995 1996 1997 1998 1999 2000 Distilled Spirits Wine Tea Fruit Beverages Bottled Water Coffee Beer Milk Carbonated Soft Drinks • While total per capita beverage consumption remained flat.S.Alternatives to Tea4 U. 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 .

2001 World Tea Production5 Data in thousands of metric tons USSR: 10 Turkey: 130 China: 670 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 .

TEA MARKET .

000 0 1993 1994 1995 1996 1997 Latin America Australasia Africa Middle East Eastern Europe North America Japan Asia Western Europe •14% Growth Rate of Global Tea Market Size from 1993-1997 •17% Growth Rate of the North American Tea Market Market Size Source: Euromonitor .000 4.Global Tea Sales. 1993-19976 Global Tea Sales.000 $USD (Millions) 10.000 6. by region.000 8.000 2. 1993-1997 12.

” Source: Euromonitor . by Type Volume Growth Rates 1993/1997 Black Green 32% 18% Green Tea 20% Black Tea 73% Instant Tea 1% Herbal 5% Specialty 1% Flavored 0% World Tea Consumption by Type. 1997 Herbal Instant Flavored* Specialty* GLOBAL 51% 24% 16% 26% 32% * 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.Global Tea Consumption.

8 134.2 245 42.1 23.7 Other Herbal Green Tea Black Tea India consumes the most black tea by volume.4 0.02 146.26 1.7 UK 0 1.5 17.1 9.7 Japan 21 0 38. China consumes the most green tea Source: Euromonitor .04 127.6 5.9 0.7 10.6 0.7 Russia 0 9.2 Turkey 12.7 30 US 0 7.1 Indonesia 44.3 115.Top Tea Consuming Countries.1 Egypt 0 4. 19978 900 800 700 Metric Tons (000) 600 500 400 300 200 100 0 India 0 14 50 713 China 21.3 43.93 81.

Market Growth Projections (US)9 800 Market Size (000 Metric Tons) 700 600 500 400 300 200 100 0 1997 2001 29.9 41 Other hot beverages Tea Coffee 2002 2006 1997 – 2001 Growth: 2001 – 2006 Projected Growth Source: Euromonitor 19% 18% US Market growth stagnant. perhaps declining—mature market Global growth data not found .2 34.7 36.

TEA CONSUMERS .

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

Source: HOT DRINKS IN THE USA (JULY 2002). A continuation of these trends is expected to drive volume growth 12. Euromonitor . 62% of US women drank tea.12 • On an average day. compared with 59. 13. with consumption highest among the wealthiest consumers with an income of above US$75. Euromonitor • …Tea is increasingly acquiring a more sophisticated image in Europe and North America.2% for instant coffee. Source: INTERNATIONAL MARKET REVIEW: WORLD MARKET FOR TEA (NOVEMBER 1998).000.Tea Consumer Facts11. • 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 has been gaining increasing acceptance among US consumers. The proliferation of herbal and medicinal teas has also played a major role in tea sale increases recently. who have turned to the sector as a lower caffeine alternative to coffee.5% for ground coffee and just 24. • Tea tends to be perceived as a premium beverage.

TEA PRODUCERS .

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

1997 Company Country of Origin Unilever Tata Tea Cay-Kur Shemto Tetley Beijing Tea Administration Sara Lee Netherlands/ UK India Turkey Egypt UK China US Mai 2% Beijing Tea Sara Lee Admin 2% 2% Others 49% Unilever 26% Tata Tea 9% Cay-Kur 4% Shemto 3% Tetley 3% Mai Source: Euromonitor Russia .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.

Sunlight.8% 1.Unilever Profile14.61 3. then by food and non-food • Currently working to consolidate brands 52-week low: $28.V. Lever 2000.64 (Nov 02) $27B 49%/4. (the Netherlands) • 2001 Revenue: $45. Degree.82 (Jul 02) Market Cap Gross/Net Margins Current Ratio Debt/Equity 52-week high: $39. manufactures Dove.15 General • One of the top global consumer product companies in the world Unilever Global Presence 2001 Revenue Distribution North America 21% Asia/ Pacific 17% Latin America 6% Africa & Middle East 4% • Dually operated by two holding companies (for tax reasons): Unilever PLC (UK) and Unilever N. Yahoo Finance . Surf.58 Source: Hoovers. Hellman’s.9B Europe 52% • 279.000 Employees • Besides Lipton (tea). Country Crock. others • Organized Geographically.

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 .

A WORLD OF TEA .

but there is increasing competition from soft drinks…‖16 Euromonitor 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 Ready-to.8% to $3. to 637 million gallons.31 billion in 2001 from $3. to attract younger drinkers • PG Tips (Unilever) responds with ―Slice of Life‖ and ―Tea Moments‖ to consolidate tea’s role in our lives . Retail sales of ready-to-drink teas advanced 3. year to year.Recent Facts ―The tea tradition is sustaining the established markets.Drink Teas Gaining Momentum in the US: According to Beverage Digest. the category’s volume increased 1.19 --Standard and Poor Tea linked to many health benefits • Rehydration • less caffeine • powerful antioxidants Current Marketing Strategies:20 • Tetley—market tea as healthy.8%.19 billion in 2000.

22 --Restaurant Business Bubble tea is tea with Tapioca ―bubbles‖ and optional flavoring added .1% between 2002 and 2006.21 Euromonitor Products like iced chai and bubble tea in the US promise to add further variety and vitality to tea selling. gaining 11.Future Trends Tea is predicted to be the fastest growing sector in volume terms over the forecast period. to reach a level of 41 thousand metric tons in 2006.

BIBLIOGRAPHY .

Encyclopedia Britannica. INTERNATIONAL MARKET REVIEW: WORLD MARKET FOR TEA (NOVEMBER 1998) Euromonitor 11. 3. . INTERNATIONAL MARKET REVIEW: WORLD MARKET FOR TEA (NOVEMBER 1998) Euromonitor 7. 5. Ibid. Rasmussen. Ibid." Food Processing. 1999. 8. Rhinehart.Bibliography (1/2) Encyclopedia Britannica. HOT DRINKS IN THE USA (JULY 2002). 4. 9.‖ Tea Basics. August 2002 Tea Basics. Rhinehart. Euromonitor 1. 6. ―Tea. 1999. Euromonitor 10. HOT DRINKS IN THE USA (JULY 2002). Rasmussen. ―Tea Production‖ "Beverages Were Healthier in 2001. 2.

Standard and Poor. . Ibid. JAMES SCARPA. 14. Dec 2002 20.Bibliography (2/2) 12. INTERNATIONAL MARKET REVIEW: WORLD MARKET FOR TEA (NOVEMBER 1998) Euromonitor 13. INTERNATIONAL MARKET REVIEW: WORLD MARKET FOR TEA (NOVEMBER 1998) Euromonitor 22.‖ Feb 15.How can Tetley sell the virtues of drinking tea?‖ 21. accessed January 2003 16. Sept 29. Hoover’s Online Profile: Unilever. Marketing. INTERNATIONAL MARKET REVIEW: WORLD MARKET FOR TEA (NOVEMBER 1998) Euromonitor 17. 2002 p13 ―BRAND HEALTH CHECK: Tetley . Food and Non-Alcoholic Beverages Industry Survey. Unilever 2001 Annual Report 18. accessed Jan 2003 15. Oct 31. 1999. ―SPECIAL-TEAS. European Report. Yahoo Finance Online Profile. 2001 p344 ―COCA-COLA-NESTL? DEAL PRODUCES NO STORM IN COMMISSION'S ICED TEA CUP‖ 19. Restaurant Business.