The pandemic and climate drove refrigerated, cold-brewed, and iced tea sales to new highs in both the US and Europe in 2021. However, the most significant trend dates to 2020, when black tea, for the first time, lost its dominance as the outright leader of loose and bagged tea sales in US retail outlets.

Sales of green tea globally are projected to grow 11.9% through 2028 to $34 billion, but botanicals are more likely the infusion of choice for former black tea drinkers.

Taking tea at home is preferred in most countries except the US, where iced and ready-to-drink teas, consumed away from home, account for almost half of sales. In 2021 sales of tea online promoting health benefits and convenience-focused retail formats like iced-tea drive-thru outlets boosted at-home consumption.

According to IRI, a Chicago-based market research firm, sales of packaged tea declined 6% in 2021 to $1.4 billion. The price per unit increased ($0.07 to $3.53) in step with inflation. Unit sales of tea bags and loose leaf tea declined 7.8%. In contrast, sales of canned and bottled teas grew 4.4% to $4.3 billion, but here, too, unit sales declined 2.8%, mainly due to foodservice closures.

“Black tea has been consistently losing share to other formats, above all fruit and herbal tea, which appeared to better address consumer concerns,” writes Euromonitor in its tea in the US report.

“Tea in the United States was uniquely vulnerable to (COVID-19) since an unusually high proportion of it is consumed at foodservice,” writes Euromonitor beverage analyst Matthew Barry. Statista estimates that 52% of spending and 5% of volume consumption in the tea segment will be out-of-home by 2025. In 2019, that proportion was 48%. In the US, the decline is most evident as iced tea at lunch occasions plummeted along with hot tea served as celebratory occasions in tearooms, tourist locations, and hotels.

Globally the ready-to-drink beverage market was valued at $17.4 billion in 2022 and is expected to grow at a compound annual rate of 6.5%, according to Future Market Insights generating an estimated $28 billion in sales by 2032.

Packaged Goods Retail

Tea earned a dismal $3.50 per carton in US grocery and mass-market outlets in 2021, mainly because grocers continue to drive down prices aggressively. Higher priced and higher margin teas with health and sustainability claims are available on the top shelf. Still, tea is a very effective loss-leader category for the largest US outlets, including Kroger and Wal-Mart. Still, there is evidence of changing consumer preferences. Wal-Mart announced in 2021 that its private-label Great Value Tea is 100% Rainforest Alliance certified and sustainably sourced.

The sale of Unilever’s tea portfolio (except for brands retained by the Lipton-PepsiCo partnership) will make ekaterra tea the sales leader in the market. In January, Kate Palmer, a former buyer at Whittard of Chelsea and later Costa Coffee, was named ekaterra’s Head of America’s Tea Procurement, a newly created position. Look for ekaterra “to breath new life into a tea business,” writes Euromonitor.

Western Europe’s tea market is valued at $6.3 billion, according to Euromonitor, with primary growth in premium categories. Herbal and fruit blends are growing even faster at 6%. Outside the US and Europe, packaged tea For the first time in decades, tea consumption is outstripping supply globally (where the retail picture is much brighter than in the developed countries).

The most resilient category in 2021 was refrigerated teas (except kombucha), where sales increased 7.5%, with unit sales rising by 5.5%. Sales of kombucha were flat, and unit sales were down 1.7%.*

HTeaO, an iced tea drive-thru in Amarillo (West Texas), combines drink-at-home convenience and value that drive sales of refrigerated teas.

The franchise chain, founded in 2009, has expanded rapidly despite the pandemic. “We’ve got thirty-two stores open, thirty-seven in some phase of construction, and another one hundred and fifty in development,” founder Justin Howe, President & CEO for HTeaO, told Texas Monthly.

HTeaO resembles a convenience stop with 26 fresh brewed sweet and unsweetened iced tea flavors mixed, garnished, or blended with cut fruit. It’s a fun place to hang out with “happy hours” that draw crowds of patrons rewarded with loyalty points and complimentary tea. The focus is refreshment with pebble ice machines, Tik Tok-inspired recipes, and gallon jugs to go. Twelve-ounce cups are nowhere to be found in these shops. Start with 24 ounces, top off a 44-ounce cup with pineapple or cherries or choose the contractor’s favorite 51-ounce (1.5-liter) Peach-ginger or Sweet blueberry green iced tea. Buy a $3.50 tankard or pay $19.99 for four gallons to take away. Shelves are stocked with healthy snack options and a full line of YETI merchandise.

Construction workers arrive throughout the day to fill their on-site coolers with tea and fill five-gallon containers of double-pass reverse osmosis water, kids mix, and match at the self-serve fountain.