Changing Consumer Needs and Opportunities

for Tea in Asia Pacific

August 2023

© Euromonitor
© Euromonitor International
International 2021.
2023. All rights
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reserved.
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Contents

Introduction

Tea in Asia Pacific

RTD tea in Asia Pacific

Conclusion

© Euromonitor International
 Introduction

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 INTRODUCTION 55

Scope
Amidst the cost of living crisis and an
Tea in Asia Pacific inflationary environment, tea in Asia Pacific
remains a resilient category, owing to its
inelastic demand. Nevertheless, stiff
competition from other beverages remains,
and this report seeks to analyse the various
innovation strategies adopted by tea players
to thrive in the long term. This includes
Retail Tea Retail RTD Tea responding to consumers’ health concerns,
USD24.2 bn USD33.6 bn such as stress relief, mental wellbeing and
boosting the immune system.

This strategy report focuses on tea and RTD tea retail/off-trade value sales.
Unless otherwise noted, all values expressed in this report are retail/off-trade in US dollar
(USD) terms using a fixed exchange rate (2022). Disclaimer
Much of the information in this briefing is of a
2022 figures are based on part-year estimates. statistical nature and, while every attempt has
been made to ensure accuracy and reliability,
All forecast data are expressed in constant 2022 price terms; inflationary effects are discounted. Euromonitor International cannot be held
Conversely, all historic data are expressed in current price terms unless otherwise noted; responsible for omissions or errors.
inflationary effects are taken into account. Figures in tables and analyses are calculated
from unrounded data and may not sum. Analyses
Euromonitor International’s Hot Drinks research publication pre-dates the war in Ukraine, and found in the briefings may not totally reflect the
therefore all estimates should be understood not to include the impact of the conflict. companies’ opinions, reader discretion is advised.

© Euromonitor International
 INTRODUCTION 66

Key findings

While the cost of living crisis has posed challenges to the prices of fast-moving consumer
Commodity prices and
goods, the price of tea has not experience many of the shocks, with price rises typically below
labour costs remain a
the overall rate of inflation. Nevertheless, the surge in commodity prices and labour costs,
challenge for tea players
owing in part to ageing populations, has resulted in an increase in production costs.

While tea has traditionally been a volume-driven category compared to coffee, rising
Tea players opt for disposable incomes across Asia Pacific are set to provide opportunities for premiumisation in
premiumisation to drive tea. Furthermore, with the effects of inflation softening, global tea players have the
value sales opportunity to seek value growth in Asian markets, while local brands can expand their
footprint.

Wellbeing and its evolving As consumers prioritise wellbeing, such as lower stress levels, better sleep, a good immune
meaning for consumers in system and physical wellbeing, this provides tea players in Asia with an opportunity to respond
Asia Pacific provides to consumers’ health concerns by tapping into health functionalities in their products, such as
opportunities for tea players stress relief, aiding sleep and boosting the immune system.

RTD milk tea remains Milk tea is widely popular in Asia Pacific, especially among young consumers, and its presence
popular despite concerns has spilled over into retail, where ready-to-drink milk tea is widely available. Despite growing
over sugar content and concerns over sugar content and obesity, consumers continue to indulge in milk tea, due to its
obesity taste, and it is typically consumed after a meal.
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 Tea in Asia Pacific

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 TEA IN ASIA PACIFIC 88

Tea records the second largest growth in Asia Pacific between 2017 and 2022
In 2022, sales of tea in Asia Pacific amounted to Off-Trade RTD Volume Sales Growth in Asia Pacific, Top Beverage Categories 2017-2022
USD24.2 billion. Between 2017 and 2022, tea recorded Billion litres
growth in off-trade brewed volume sales of 19 billion 25
litres in Asia Pacific. This placed it second in terms of
absolute growth, behind bottled water. Tea has
traditionally been perceived as a refreshment beverage 20
in Asia Pacific, drunk at any time of day, and providing
health benefits and calming effects. Moreover, the
strong tea culture, affordable price points and local
production have fuelled strong demand for tea. 15

Following the COVID-19 pandemic in 2020, tea sales

rebounded quickly, which was attributable to its strong
health positioning, along with a wide variety of 10
flavours as well as an affordable price positioning,
appealing to consumers seeking to boost their
immunity.
5
China, India, Japan and Indonesia are the leading tea
markets in Asia, owing to their strong tea cultures and
production, coupled with large populations. Moreover,
0
there has been increasing consumer interest in new Bottled Water Tea Carbonates Beer Other Hot Drinks
flavours, origins and sustainability.
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 TEA IN ASIA PACIFIC 99

Black tea remains dominant in Asia Pacific, but innovations observed in other types of tea
In 2022, black tea sales in Asia Pacific amounted to USD7.2 billion, of which 80% was accounted for by loose Asia Pacific: Tea Categories
black tea leaves. The dominance of black tea highlights that consumers still prefer black loose tea leaves. by Off-Trade Value 2022
Black tea continues to grow much faster compared to green tea and fruit/herbal tea due to wide availability,
marketing and affordable price positioning of black tea have driven volume sales. For instance, black tea
brand Tianfu in China launched its tea app and online client engagement channel in 2022.
Moreover, there is growing interest in the brewing of tea, due to the pandemic, with more consumers
staying at home. Consumers are enjoying the experience of brewing tea at home as part of an enjoyable
ritual, benefiting sales of loose tea leaves.
Green tea and fruit/herbal tea have seen strong growth, as companies highlight their health benefits to
cater to consumer health consciousness.
Within green tea, in Japan, Ito En continued to expand its range of Oi Ocha green tea with Food with
Functional Claim (FFC) elements. In India, green tea was the fastest growing category over the review
period, albeit from a low base, as companies launched green tea variants and strengthened consumer
awareness about its health benefits. For example, Tata Consumer Products launched a new Tulsi variant Black tea
under its Tetley Green Tea brand, in addition to the existing variants.
Fruit/herbal tea
While fruit/herbal tea has a strong health positioning, its premium price point has deterred budget- Green tea
conscious consumers. Nevertheless, the growing interest in health and wellness has helped to justify its
Instant tea
premium price to some extent. In Indonesia, Elif Tea & Tisane, which sells its product via e-commerce,
rejuvenated its packaging to appeal to Millennials and Gen Z, who are becoming more health conscious Other tea
owing to the pandemic.
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 TEA IN ASIA PACIFIC 10
10

Tea has tended to trail the overall inflation rate

Asia Pacific: Tea Retail Prices and Inflation 2020-2027
% growth
5
4
3
2
1
0
-1
-2
-3
-4
2020 2021 2022 2023 2024 2025 2026 2027

Inflation Tea prices

Source: Euromonitor International Hot Drinks 2023ed, Consumers and Economies Data

Inflation hit global economies very hard in 2022; however, inflation rates did not rise as significantly in Asia Pacific. This was despite the
common challenges faced in the consumer goods space: rising costs of energy, transport, labour and packaging. These pressures began to
moderate in 2023, thanks to global increases in interest rates, declining consumer spending as pandemic-era savings were reduced, and the
resolution of pandemic-era supply chain bottlenecks.
Price rises in tea have generally stayed at or below the overall rate of inflation. This is mainly because the war in Ukraine had little impact.
Russia and Ukraine are major net importers of tea and produce very little themselves. Furthermore, tea is perceived by consumers due to
its strong health positioning such as boosting immunity, as well as its affordable price positioning.
Nevertheless, labour issues and commodity prices will continue to pose challenges for the tea industry in the long term.
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 TEA IN ASIA PACIFIC 11
11

Commodity prices and labour costs remain challenges for tea players
Commodity prices
Besides labour costs, the surge in commodity prices has resulted in an increase in production costs. For instance, for Dilmah, rising energy
prices increased the costs of fuel and fertilisers used for agricultural production. This resulted in a 18% decline in production of tea for
Dilmah in Sri Lanka in 2022. In India, Tata Tea has increased prices in response to input cost inflation. At the same time, the company has
expanded and diversified sourcing points, as well as invested in technology in order to reduce overall costs.
Nevertheless, demand for tea continues to be strong due to its naturally healthy positioning amidst the rise in commodity prices. price of
tea has not experienced many of the shocks that other commodities have over the last few years and has remained stable. There have
certainly been supply chain challenges that have affected tea production (COVID-19 lockdowns, shipping shortages, etc) but few of these
were unique to tea. Tea has therefore generally stayed at or below the overall rate of inflation.
Labour costs
Rises in labour costs have been attributable in part to the pandemic, but producing countries are also facing major demographic challenges
from decades of low fertility rates.
In Japan, the ageing of tea farmers, coupled with a lack of interest among the younger population, has resulted in a reduction in local
production. While the government has offered grants to incentivise younger workers, technological obstacles still remain in the hilly parts of
Japan. Shizuoka – a key production region – has seen production fall by 40% over the last decade.
Similarly, in China, labour costs have continued to climb, further complicated by high shipping rates. For instance, Chinese tea enterprises
which import tea have reduced their imports due to the increase in port terminal fees.

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 TEA IN ASIA PACIFIC 12
12

Case study: The crisis in Darjeeling threatens one of the world’s premier teas
Tea production in India’s Darjeeling region has been struggling since a Growth in Darjeeling Tea Price vs Tea Price Overall in
prolonged labour dispute shut down production in 2017. More recently, a Online Retail Channels 2019-2023
changing climate, COVID-19 lockdowns, high rates of labour absenteeism and % growth
competition from Nepali production under a new India-Nepal trade deal have
France
put additional pressure on one of the world’s best-known tea producing areas.
The Indian Tea Exporters Association estimated in 2022 that production had
fallen from 10,000 tonnes to 6,500 tonnes over the previous decade, and half Japan
of the tea estates in the region are reportedly up for sale.
South Korea
Even with reduced production, prices have still been falling for Darjeeling tea.
One major issue is a dispute over labelling requirements. Darjeeling has a US
Geographical Indicator (GI), which has long been a point of pride for the
region. In an effort to protect the value of the GI, the Tea Board of India
Canada
introduced new restrictions on blending teas with GI’s with other teas. This led
some buyers, notably Tata Consumer Products, to stop buying Darjeeling and
Germany
substitute it with alternatives with no blending restrictions. The Tea Board has
updated its regulations, but other threats, such as low-cost Nepali teas and
UK
demand declines stemming from the war in Ukraine, continue to pose a
challenge. At the consumer level, Darjeeling prices have risen against tea
India
overall in the last few years, likely suggesting that a significant amount of non-
Darjeeling tea is being sold under the label “Darjeeling”. According to some
-20 0 20 40 60 80
industry estimates, as much as half of “Darjeeling” tea products sold globally
are either blended or not from the region at all. Tea overall Darjeeling

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 TEA IN ASIA PACIFIC 13
13

Rising disposable incomes offer opportunities for premiumisation in tea

While tea has traditionally been a more volume-driven category Per Capita Expenditure on Tea 2022/2027
than coffee, rising disposable incomes across most regions are Per capita expenditure (USD)
16
set to provide opportunities for premiumisation in tea. 14
Furthermore, with the effects of inflation softening, there is an 12
opportunity for global tea players to seek value growth in Asian 10
markets, and for Asian brands to expand their footprint. 8
6
In Asia Pacific, per capita expenditure on tea is set to increase 4
from USD5.6 in 2022 to USD6.1 in 2027. This will be attributable 2
0
to increasing consumer awareness of the health benefits of tea, Australasia Western Eastern North Asia Pacific Middle East Latin
coupled with higher disposable incomes. At the same time, tea Europe Europe America and Africa America
players are focusing on premium packaging and local sourcing of 2022 2027
loose tea leaves to attract consumers. Source: Euromonitor International Hot Drinks data
For instance, TWG tea in Singapore launched a limited edition
Darjeeling Nouveau, which is hailed as the “king of black teas”.
The loose black tea leaves are grown in the Himalayas area and
packaged in gold packaging to convey a premium image.
Similarly, Tata Tea launched Premium Street Chais of India,
which seeks to reflect local culture, while scaling up its premium
offering. In South Korea, the Osulloc premium tea brand uses TWG Darjeeling Tata Premium Street Osulloc premium tea,
Nouveau Chais of India South Korea
tea cultivated in Jeju, and offers a gift set of eight tea flavours.
Source: Company websites
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 TEA IN ASIA PACIFIC 14
14

Tea brands use retail e-commerce to promote their premium products

With the pandemic, e-commerce penetration accelerated within Asia Pacific, and it Retail E-Commerce Share in Asia Pacific Markets
continued to grow in 2022, due to its convenience and infrastructure. South Korea, 2020/2022
China and Indonesia are the top three markets for e-commerce penetration in Asia % of retail value sales
Pacific, and this highlights the opportunity for tea players to step into. South Korea
In China, black tea brand Tianfu launched a tea app and an online client
China
engagement channel in 2022. The emergence of the mobile e-commerce platform
Tianfu Tea Industry means that the tea industry has begun to move into mobile e- Indonesia
commerce, and improvements in interactions between enterprises and customers
will be seen through mobile channels. Also, China Tea Marketing Association and Asia Pacific
JD have a five-year partnership agreement to encourage consumers to upgrade to Thailand
higher quality tea and push digitalisation in the tea category by maximising e-
commerce. Hong Kong, China

Similarly, in Indonesia, Unilever’s Sariwangi tea is sold online as part of a bundle Singapore
promotion, along with other food and beverage items. The player’s strength lies in
part in its ability to maintain its product quality. Japan

While developing markets like India and the Philippines have low penetration of e- Philippines
commerce, there have also been developments, especially through the D2C model,
India
as part of an e-commerce strategy. Initially, it was start-ups that adopted this
model, but prominent players such as Unilever and Tata Consumer Products have 0% 10% 20% 30% 40% 50%
also now ensured that most of their premium products are sold through D2C 2020 2022
platforms – UShop and Tata Nutrikorner, respectively. Source: Euromonitor International Retail E-Commerce 2023ed
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 TEA IN ASIA PACIFIC 15
15

Wellbeing and its evolving meaning for Asia Pacific consumers provides opportunities for tea
According to Euromonitor International’s Voice Definition of being healthy in APAC 2021/2022
of the Consumer: Health and Nutrition Survey, % of respondents
70
consumers in Asia Pacific put a high value on
emotional, mental and holistic wellbeing. 60
Lower stress levels and better sleep are 50
indicators of being healthy, along with a good 40
immune system and general physical wellbeing. 30
There is an ongoing shift in attitudes in Asia
20
Pacific, as consumers focus on themselves and
increasingly ignore societal pressures in both 10

work and play. This offers tea players an 0

opportunity to address consumers’ health Avoiding Avoiding illness Emotional Feeling “good” Getting enough Low stress Mental
alcohol wellbeing sleep wellbeing
concerns, tapping into health functionalities
2021 2022
such as stress relief, aiding sleep and boosting
the immune system in their products. Source: Euromonitor Voice of the Consumer: Health and Nutrition Survey, fielded January to February 2022

Following the COVID-19 pandemic, consumers in Asia Pacific faced increased burnout due to a lack of separation between work and
personal lives, as Asian lifestyles have become more hybrid. With changes to traditional workplace routines and educational structures
following the pandemic, the impact of stress levels on the younger population is becoming more pronounced, as boundaries between work
and personal life are increasingly blurred. The pandemic has also encouraged consumers to reconsider their values and take proactive steps
to redefine wellbeing. As such, consumers are more inclined to look after themselves and their mental and physical wellbeing. This can
involve setting clear boundaries, taking time for self-care and rest, and being compassionate towards oneself.
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 TEA IN ASIA PACIFIC 16
16

Inflation further pushes demand towards calming and sleep-promoting functionalities in tea
Inflation has an impact on consumers’ health concerns “Our research in Australia shows that 35% of all tea is consumed to unwind
in terms of stress. and take time out. Its growing popularity is demonstrated by the Sleep tea
category growing by 35% in the last year. In the US, the total Sleep aid
In Euromonitor International’s Health and Nutrition
category has grown more than 15% in the last two years and the Sleep tea
Survey in 2023, 27% of consumers in Asia Pacific stated
category by over 28% in the same period.”
that stress and anxiety have a severe impact on their
lives. This is much higher among Gen Z consumers, at – Associated British Foods 2022 Annual Report
37%. This highlights an often underappreciated effect of
inflation – its psychological damage. Constantly rising Growth in Tea SKUs in Asia Pacific with Selected Claims in Online Channels
prices for essential goods like food and drinks place Globally 2021-2022
additional stress on consumers who are already dealing Percentage points increase

with a rising incidence of mental health conditions, Stress Relief

owing to the nature of modern life.
This further heightens the importance of mental health- Nootropic

related functionalities, particularly in tea. Product

Aids sleep
claims related to stress relief, sleep and calming are
rising significantly, and will continue to do so. High rates Mental wellbeing
of sleeplessness also spur demand for energy to get
through the day after a poor night’s sleep. Increasingly, Energy
consumers find themselves locked in a cycle of rising
demand both for energy and for calming functionalities 0 10 20 30 40 50 60 70
to counteract the caffeine intake. Source: Euromonitor International Product Positioning and Claims
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 TEA IN ASIA PACIFIC 17
17

Stress relief teas are part of a wider “anxiety economy”

Methods of Stress Relief Practiced by Consumers Globally 2022
% of consumers
See a doctor/healthcare provider
Take perscription medication
Take vitamins or supplements
Exercise/physical activity
Rest/avoid activity
Natural or traditional solutions
See a therapist/counsellor
Cannabis
Take OTC medicine

0% 5% 10% 15% 20% 25% 30% 35% 40%

Source: Euromonitor International Voice of the Consumer: Health and Nutrition Survey

In Euromonitor International’s Voice of the Consumer: Health and Nutrition Survey, 2022,
27% of consumers mentioned that they relieve stress through natural or traditional
solutions. This highlights the growing importance of tea as a natural solution.
An example is Sancha Tea Boutique from India, which offers a stress relief-orientated
caffeine-free herbal tea. The camomile and lavender flowers, using Ayurveda traditions,
serve to aid in relieving stress. Similarly, Dilmah’s Arana Relief Tea, which is inspired by Sri Sancha Stress Dilmah Arana
Lankan Ayurvedic tradition, also serves to relieve stress with its content of ginger, pepper Relief Tea Relief Tea

and ayurvedic herbs. Source: Company websites

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 TEA IN ASIA PACIFIC 18
18

Relaxation and sleep aids are top health claims in tea in Asia Pacific
According to Euromonitor International’s Via tracking between January Top Health Claims in Tea, Asia Pacific, Jan-Jun 2023
and June 2023, tea brands that carry health claims of relaxation and No. of SKUs
aiding sleep are the second and third most prevalent, behind antioxidant 7,000
claims. This is dominated by international brands Twinings, T2 and Lipton,
as well as local brands such as Phuc Long (Vietnam) and Ito En (Japan).
6,000
The high number of SKUs with these mood modulation claims across all
tea types highlights the natural health positioning of tea brands appealing 5,000
to consumers seeking to relax and sleep. This is evident in e-commerce in
Vietnam and Japan, where many brands are positioning themselves with
such health claims. 4,000

3,000

2,000

1,000

Phuc Long and Ito En tea brands which have health claims 0
of relaxing and aiding sleep Antioxidant Relaxing Aids sleep Weight loss

Source: Phuc Long website, eBay Source: Euromonitor Via daily online tracking
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 TEA IN ASIA PACIFIC 19
19

Health functionalities such as mood, detox and beauty are also addressed by fruit/herbal tea

Teapigs Happy with Lemon Balm, BOH Herba Ratus Tea, TH True Herbal tea, Whitetree Detox Blend,
Hong Kong Malaysia Vietnam Singapore
Source: Company websites

Besides relaxation and aiding sleep, other health and wellness demands are addressed by fruit/herbal tea, with strong marketing of its
functional benefits on the packaging. For instance, UK tea player Teapigs offers a wide range of fruit/herbal teas in Hong Kong, such as Calm
with Valerian, and Happy with Lemon Balm, which serve to contribute to a positive mood and good cognitive function.
Local players are also venturing into this space. In Malaysia, local brand player Boh has launched its new Malay Spa Infusion series, which
includes Herba Ratus and Sirih Purut tea blends. These were developed according to an ancient Malaysian recipe for detox and
nourishment. Vietnam’s TH group also launched herbal tea products, sourcing them locally, which serve to tackle various health issues. The
variants include ginger herbal tea and chrysanthemum herbal tea. In Singapore, leading tea brands include Whitetree, which is produced in
Japan, and is claimed to be recommended by local medical practitioners. It offers specific physiological benefits in its Detox and Beauty tea
blends. Detox is claimed to improve liver function, while Beauty is claimed to enhance skin tone, especially for women.
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 TEA IN ASIA PACIFIC 20
20

Immunity-boosting tea continues to remain relevant post-pandemic

Lipton Herbal Infusions Sariwangi Teh Hitam

Ranong Kombucha tea, Thailand After Meal, Malaysia Kurma & Madu, Indonesia
Source: Company websites

Post-pandemic, consumers are seeking to boost their immunity by taking vitamins, botanicals like ginger, as well as live cultures, such as
kombucha. Immunity is one of top concerns of consumers, especially with many previously unknown diseases appearing.
Both international and local tea players are responding to consumers’ desire for immune boosting to strengthen their health positioning.
For instance, local tea player Ranong Tea in Thailand launched a number of variants of kombucha tea in instant format, offering greater
convenience, as well as affordability.
Other ingredients, such as ginger and dates, also serve to boost immunity and aid digestion. In Malaysia, Lipton launched a new wellness
range in November 2022. Its After Meal variant, for example, has ginger to aid digestion and immune support. Similarly, in Indonesia,
Sariwangi, owned by Unilever, has offered a limited edition black tea variant with kurma (dates) and honey. The purported benefits of
kurma include protection from infections and boosting immunity.
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21

Cold brew tea set to gain prominence as tea players expand offering for young consumers

Dongsuh Foods’ One Cup Barley Tea, South Korea Raming Tea’s cold brew tea, Thailand
Source: Company websites
Besides health functionalities, convenience remains important for consumers. With stiff competition posed by ready-to-drink tea, due to its
convenience and cold brew offerings, tea players face a challenge, given that preparation of hot tea is considered a chore. In order to
provide convenience for consumers, tea players have entered the cold brew space, where tea bags are brewed with cold water and left in
the refrigerator. The presence of more brands has contributed to this trend becoming more popular.
In South Korea, consuming iced drinks during winter is a growing habit. Leading company Dongsuh Foods launched One Cup Barley Tea as
an extension of its signature Dongsuh Barley Tea. Over the review period, barley tea was one of the teas to benefit most from the at-home
consumption trend. Thanks to barley tea’s positioning as a traditionally home-made drink, more consumers have put barley tea on their
shopping lists, and consume it daily as a substitute for water.
In Thailand, domestic brand Raming Tea has invested in developing cold brew versions of its tea products. Variants include Earl Grey, Peach
Echo and Flamingo Rose. This aims to appeal to consumers seeking a cold refreshing drink to be enjoyed at any time of day.
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 TEA IN ASIA PACIFIC 22
22

Targeting young consumers is key to sustaining growth in tea

“In today’s market, it is crucial to provide novelty and

innovation, and infuse the fun element into
innovation, especially if the aim is to connect with
and attract younger consumers.”

– YATE Co Founder and CEO Eric Hoang in an interview with

Beverage Daily, March 2023

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 RTD tea in Asia Pacific

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 RTD TEA IN ASIA PACIFIC 24
24

RTD tea remains popular in Asia Pacific, due to consumers’ taste preferences
In 2022, RTD tea remained popular in Asia Pacific, with the Top Asia Pacific Markets: Off-trade Value Sales of RTD Tea 2022
region’s value sales, at USD33.6 billion, accounting for two Off-trade value sales (USD million)
thirds of the global total. China, Japan, Indonesia and 16,000 5%
Vietnam are the leading RTD tea markets, with wide product 5%
variety and constant innovations driving growth. Ready-to- 14,000

drink tea is popular because it is convenient, comes in a wide 4%

12,000
variety of flavours, and is readily available in convenience 4%
stores and supermarkets. It is typically consumed alongside a

2022-27 CAGR %
10,000
meal, or at large at-home parties and events. 3%

The stiff competition amongst international and local players 8,000 3%

in RTD tea has led to innovation in areas such as cold brew
2%
tea, novel tastes and flavours appealing to young consumers, 6,000
as well as healthy ingredients that appeal to health- 2%
conscious consumers. Consequently, consumers are still 4,000
1%
excited about the category.
2,000
1%
Over 2022-2027, strong growth is expected to be seen in
Vietnam and South Korea, due to the strong appeal of tea to 0 0%
young consumers, while consumption in larger markets such China Japan Indonesia Vietnam Hong Kong, South Korea
China
as China and Japan is set to grow more slowly, due to
growing market maturity and ageing populations. 2022 2022-27 CAGR%
Source: Euromonitor International Soft Drinks 2023ed
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 RTD TEA IN ASIA PACIFIC 25
25

Tea prices at retail have risen but by less than the average grocery basket
Still RTD Tea Online Prices in Selected Asia Pacific Markets 2022-2023
80
60
40
20
0
-20
Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023
China India Japan Singapore South Korea
Source: Euromonitor International Via online tracking Q1 2022 – Q1 2023

Prices of still RTD tea have kept pace fairly closely with overall inflation rates across Asia Pacific, with prices maintaining stability amidst the
cost of living crisis and rising prices of raw materials. This is attributable mainly to the popularity and saturation of the category, with many
RTD tea brands in Asia Pacific, where competition remains stiff through price competition, product innovation and active marketing.
Within e-commerce, still RTD tea is purchased for home consumption, with many product innovations in flavours and health positioning.
The exception is India, which saw rises in prices in both 2022 and 2023. This was mainly attributable to the availability online of premium
RTD tea brands, such as Jade Forest and Tea Fit. This reflects the rising disposable incomes of consumers in India, as well as brands’ strategy
to drive value sales through premiumisation.
Similarly, in other markets, there has been a rise in sales of premium ice cold RTD tea, which has strong health benefits and is positioned
differently from the mass RTD tea brands, such as Lipton.

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 RTD TEA IN ASIA PACIFIC 26
26

Cold brew and sparkling RTD tea set to gain momentum in Asia Pacific
Cold brew tea continues to appeal to consumers, and this has
spilled over into the RTD tea category. Dilmah, for example, has
launched premium iced tea in RTD format in Singapore, Malaysia
and Australia.
Similarly, in Thailand, PTT Retail and Oil Public Company Ltd and
Boonrawd have launched a new RTD green tea – Haru Cold Brew
Tea – to attract consumers. This cold brew tea is brewed from
premium tea leaves and seeks to appeal to health-focused
consumers.
Dilmah premium iced tea in Singapore, Malaysia and Australia
Sparkling tea is also set to boom in Asia Pacific. First popular in
China and Hong Kong, it appeals to consumers seeking low- or
zero-alcohol drinks. For example, Chako Tea in Hong Kong is
marketed as a social drink, leveraging the trend for tea cocktails.
Chako has a base foundation of fruit extracts which are low in
sugar, and can be complemented with a spirit of the consumer’s
choice, such as vodka or gin.
In Malaysia, local company The Original Beverage Sdn Bhd has
entered into the RTD tea space by introducing its new Honey B
sparkling honey black tea, with tea extract from leading player Haru Cold Brew Tea, Chako Tea, Hong Honey B Sparkling
Thailand Kong honey black tea,
Boh tea. It remains to be seen if such products will become
Malaysia
popular amongst local consumers. Source: Company websites
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 RTD TEA IN ASIA PACIFIC 27

Saicho’s sparkling tea appeals to mindful drinking while catering to indulgence

Characteristic
▪ The cold brew tea brand Saicho, established in
2019, entered Singapore in 2022. With its use of tea
flavours from various parts of Asia, such as black
tea from India, it seeks to provide refreshment and USD110 mn
cater to health-conscious consumers to enhance Retail sales of RTD
drinking and pairing experiences. tea in Singapore

Context
▪ In the competitive world of non-alcoholic
alternatives, consumer goods are increasingly
required to distinguish themselves through the
4%
2022-2027 CAGR of
retail value sales of
quality and provenance of their ingredients, with tea in Singapore
local flavours most likely to attract broad support
from local consumers.
Consequence 49%
▪ While local flavours might appeal to local Of consumers look
consumers, these products risk commoditisation if for healthy
ingredients in food
there is nothing else to distinguish them, especially and beverages in
with more brands entering the category. Further 2022
developments should include strengthened Source: Euromonitor International Voice of the
Image source: Sg.saichodrinks.com transparency and education platforms. Consumer: Lifestyles Survey, 2023
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Healthy ingredients in RTD tea still hold strong appeal to health-conscious consumers

Ichitan’s Shizuoka Genmaicha with Matcha Green tea Kojima RTD tea, Indonesia

Source: Company websites

With consumers’ growing health consciousness, the health positioning of RTD tea continues to remain a key factor in brands’ innovation
strategies. This is especially important in a category which is fragmented and where there is stiff competition.
For instance, in Thailand, Ichitan has launched a new sugar-free RTD tea under the Shizuoka brand, which emphasises its sourcing. Shizuoka
is known for its tea leaves. Similarly, Tea+ Oolong has launched a new variant with honey and lemon, which uses Setouchi lemon from
Japan.
In Indonesia, Kojima RTD tea contains herbal ingredients, such as tamarind, with honey, dates and black cumin. In providing a herbal
supplement in a ready-to-drink format, this offers greater convenience and makes it easier to consume.
By constantly strengthening RTD tea’s health positioning through the sourcing of ingredients and widening the variety of natural
ingredients, players are able to differentiate themselves from one another in a saturated category.
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Fruit flavours in RTD tea continue to shape product variants in Asia Pacific
In order to attract consumers, RTD tea players have Top Flavours for RTD tea in China, Jan-Jun 2023
constantly widened their ranges of product flavours. %
The leading flavours for RTD tea brands are defined by Lemon Orange
consumer taste preferences, seasonal factors and Jasmine Grapefruit
price. By understanding these factors, this will allow
Peach Tea
for a competitive balance between traditional flavours,
exotic flavours and established consumer favourites. Strawberry Fruit

On China’s e-commerce platforms, lemon remains the Ginger Lime

leading RTD tea flavour, accounting for 53% of all SKUs. Others
Nongfu Spring Cha Pai
This is largely driven by Nongfu Spring, Uni-President Lemon Black Tea
and Master Kong. Other flavours, such as orange and
jasmine, are also popular, highlighting consumers’ Top Flavours for RTD tea in Thailand, Jan-Jun 2023
preference for a sweet taste and for local flavours. %

In Thailand’s e-commerce platforms, where RTD tea Honey Lemon

has seen a lot of product innovations, honey flavour Jasmine Orange

(34%) is the leading flavour, followed closely by lemon
Strawberry Watermelon
(26%). This highlights that the sweet taste of RTD tea
appeals to consumers as it is also refreshing. Honey Grape Barley
flavour is predominantly found in leading brands like Ichitan Green Tea
Peach Others Honey Lemon
Ichitan and Oishi, while lemon is mainly led by Oishi.
Source: Euromonitor International Via online tracking, Jan – Jun 2023 Source: Company websites
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30

RTD milk tea dominated by Japanese and Chinese brands in Asia Pacific
Milk tea is widely popular in Asia Pacific, especially among Top RTD Milk Tea Brands in Asia Pacific, Jan – Jun 2023
young consumers, due to its sugar content and flavours. Its No of SKUs
wide availability in tea shops such as Heytea in China, as well Dongwon
as constant product innovation, has attracted consumers. Over
time, its presence has spilled over into retail where ready-to- Asahi
drink milk tea is readily available. Despite growing concerns
over sugar and obesity, consumers continue to indulge in milk Ayataka
tea due to its taste.
Within e-commerce between January and June 2023, Japanese Kwangdong
RTD tea brands Kirin and Ito En had the strongest SKU presence Nongfu Oolong Black
in milk tea variants. This highlight the wide penetration across Suntory Milk Tea Low Sugar

Asia Pacific markets, especially in Japan, China, Hong Kong and

Master Kong
South Korea. Moreover, its taste appeals to young consumers
seeking sweet flavours, who consume it during break times.
Nongfu Spring
Chinese brands Nongfu Spring and Master Kong, which are
focused predominantly on their domestic market, have also Ito En
expanded their presence overseas, in particular in Hong Kong
and Singapore, appealing to local consumer tastes. Kirin
Kirin Afternoon
Furthermore, to appeal to health-conscious consumers, low- Milk Tea
sugar variants are being offered for consumers to indulge 0 40,000 80,000 120,000
themselves while minimising sugar intake. Source: Euromonitor International Via online tracking, Jan – Jun 2023 Source: Company websites
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Minimal price change observed across top RTD milk tea brands in e-commerce
Average Price Growth for Top RTD Milk Tea Brands, January – June 2023
% growth
12%
9%
6%
3%
0%
-3%
-6%
Jan-Feb Feb-Mar Mar-Apr Apr-Jun May-Jun

Kirin Japan Ito En Japan Nongfu Spring China Master Kong China
Source: Euromonitor Via online tracking, Jan – Jun 2023

Despite the current cost of living crisis, RTD milk tea brands remain popular, having seen only minimal price changes between January and
June 2023. In Japan, Kirin and Ito En milk tea saw little movement in prices, while in China, there were price fluctuations for Nongfu Spring
and Master Kong, mainly attributable to brand strategies and price competition. This was seen in April, in particular, when both Nongfu
Spring and Master Kong saw 5-10% price rises, but rises tapered down thereafter.
The availability and popularity of still RTD milk tea, especially among young consumers, results from its taste appeal and price points, and it
competes with fresh milk tea in consumer foodservice. Consumers can also store it at home and consume it at any time at their
convenience. Brands are constantly coming up with new innovations to attract consumers, while ensuring that sugar content is minimised,
given health concerns.
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 Conclusion

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 CONCLUSION 33
33

How to win in tea and ready-to drink tea in Asia Pacific

▪ Tea players are set to enhance formulations, ranging from healthy ingredients like
vitamins to local flavours, as a strategic way to gain advantage over competitors and
Enhanced flavour formulations
appeal to the target consumers. This is especially so as demand for functional beverages
that address consumers’ need
and wellness culture are set to grow post-pandemic. Tea consumers are constantly
states
seeking alternative ingredients for new need states, and this includes category
crossovers, such as tea mixed with alcohol.

▪ In order to engage young consumers, it is important for tea players to increase their
digital interaction through innovative means, such as investing in the metaverse, and
Engaging young consumers offering innovative experiences and content to engage young consumers and garner
through digital interaction consumer loyalty. This is especially so among Gen Z and Gen Alpha consumers, where
there is growing interest in exploring virtual games, NFTs and engaging with brands that
deliver personalisation.

▪ Price inflation and the rising cost of living are set to impact consumers’ purchase
decisions. As such, tea players are likely to launch margin-friendly but affordable options
Balancing affordability and across pack types and channels. At the same time, in order to tackle the challenges of
premiumisation rising labour and commodity costs, tea players can find the opportunity to drive value
sales through value-added premium products. This can be in the form of highlighting
local flavours, origins and sustainability.
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 CONCLUSION 34
34

Key findings

While the cost of living crisis has posed challenges to the prices of fast-moving consumer
Commodity prices and
goods, the price of tea has not experience many of the shocks, with price rises typically below
labour costs remain a
the overall rate of inflation. Nevertheless, the surge in commodity prices and labour costs,
challenge for tea players
owing in part to ageing populations, has resulted in an increase in production costs.

While tea has traditionally been a volume-driven category compared to coffee, rising
Tea players opt for disposable incomes across Asia Pacific are set to provide opportunities for premiumisation in
premiumisation to drive tea. Furthermore, with the effects of inflation softening, global tea players have the
value sales opportunity to seek value growth in Asian markets, while local brands can expand their
footprint.

Wellbeing and its evolving As consumers prioritise wellbeing, such as lower stress levels, better sleep, a good immune
meaning for consumers in system and physical wellbeing, this provides tea players in Asia with an opportunity to respond
Asia Pacific provides to consumers’ health concerns by tapping into health functionalities in their products, such as
opportunities for tea players stress relief, aiding sleep and boosting the immune system.

RTD milk tea remains Milk tea is widely popular in Asia Pacific, especially among young consumers, and its presence
popular despite concerns has spilled over into retail, where ready-to-drink milk tea is widely available. Despite growing
over sugar content and concerns over sugar content and obesity, consumers continue to indulge in milk tea, due to its
obesity taste, and it is typically consumed after a meal.
© Euromonitor International
CHANGING CONSUMER NEEDS AND OPPORTUNITIES FOR TEA IN ASIA PACIFIC

For Further Insight please contact

Nathanael Lim
Insight Manager, Beverage Asia
[email protected]
• https://www.linkedin.com/in/nathanaellimwz/

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