Who drinks the most packaged tea — China or India?

Although the United Kingdom has gained a reputation for housing avid tea drinkers, research has revealed that the competition for the world’s biggest packaged tea market is actually between India and China.

According to market intelligence agency Mintel, India claimed the title in 2017, consuming a total volume of 678,200 tonnes, with China coming in second place with 576,800 tonnes. This was followed by Turkey (173,400 tonnes), Russia (134,200 tonnes) and Japan (92,900 tonnes).

Turkey and Britain did rank higher in terms of per capita consumption though, with the average Turkish consumer drinking 2.15 kg of packaged tea last year and British consumers 1.15 kg.

Mintel Associate Director Food and Drink Loris Li explained the reason for China not topping the packaged tea market. “Traditionally, Chinese consumers prefer fresh tea in loose formats, so it makes sense that our research shows that India is ahead of China as the world’s leading retail packaged tea market.”

Last year, only 45% of Chinese consumers frequently used tea bags. Instead, 78% frequently drank freshly brewed loose tea, and almost half often enjoyed ready-to-drink (RTD) tea.

Li highlighted that Asia–Pacific is diving innovation in loose-format packaged teas, but still has “growth potential” for tea bag innovations.

Tea is beginning to take a number of different forms, with hot tea, RTD tea, loose-leaf tea and even energy-drink associated teas receiving consumer interest.

Mintel Global New Products Database (GNPD) found that Europe is leading the way in hot tea innovation, responsible for 30% of all tea launches, while Asia–Pacific takes the lead in RTD tea launches, accounting for 13% of all global new tea product launches. Hot tea and tea bags continue to be the most popular, but this research suggests RTD tea is transitioning into a more desirable consumer product.

“The RTD tea landscape is changing dramatically; having suffered for years from a ‘cheap’ and unhealthy image, the category is now undergoing a lifestyle makeover. Artisanal production attributes, such as cold brew, are helping create a new premium tier in the segment. Our research shows that cold brew is just emerging as an upscale taste and quality descriptor in RTD tea,” said Julia Buech, Global Food & Drink Analyst at Mintel. “Better-for-you innovations from major beverage companies are further boosting the development of the RTD tea category.”

RTD teas described as ‘cold brew’ featured in just 1% of global RTD tea launches in 2017, with Asia–Pacific accounting for 55% of these introductions, followed by Europe with 25%.

Similar to coffee, consumers like the idea of energy-boosting drinks, which explains how this has become a focus of innovation. Mintel GNPD found that teas described as ‘energy-boosting’ increased from 9% of all functional tea introductions globally in 2015 to 11% in 2017.

This may even pave the way for tea to be seen as an energy drink itself, as 65% of Chinese consumers drink RTD tea when doing outdoor sports such as jogging, while 58% drink RTD tea when doing exercise at the gym.

“In a world that is becoming more health-conscious, naturally functional drinks are ever more relevant. Tea consumers continue to show interest in products that can target specific ailments and provide diverse functions, from energy-boosting and anti-inflammatory to slimming and relaxing benefits. In this saturated field, ‘energy’ has grown in significance as a focus of innovation activity among tea companies and will continue to be a market with potential in the near future,” Buech concluded.

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