Edit New varieties and flavors, combined with rising consumer interest about its many health benefits, are brewing excitement in the tea aisle.
By Richard Turcsik
No need to visit a fortune teller to find out the future for packaged tea—it’s hot! In fact, thanks to numerous studies touting its antioxidant benefits, exciting product introductions filled with trendy ingredients such as superfruits, a more sophisticated consumer palate and an economical price of only pennies per serving, tea has never been hotter. Throw in the latest trend of using tea bags to make iced tea and it is easy to see why this category will not be cooling off any time soon. That is why astute retailers are taking a closer look at how they are merchandising their tea to reach its maximum sales and profit margins.
“We have found to our glad surprise that tea is one of those creature comforts that people are not really willing to forego,” says Benjamin Harrison, co-owner/vice president of sales for Rishi Tea, a Milwaukee-based company specializing in teas from China, Japan and Taiwan.
Rishi sells loose leaf teas that are carried in upscale retailers, including The Food Emporium, Wegmans, Fairway and Zabar’s. “There is a stigma that loose leaf tea is expensive, but when you do the math and look at what the real cost is by the cup, the so-called ‘expensive’ teas are generally bumping their heads on 20 cents a cup,” Harrison says.
Astute retailers can use tea to draw in the upscale demographics that they crave, manufacturers say.
“Retailers are realizing that the demographic they hope to and do attract to their stores is becoming more sophisticated and moving into the direction of trying the different teas that are out there,” says Mark Rajeski, president of San Ramon, Calif.-based Brands of Britain, which imports the Taylors of Harrogate brand of tea from England.
“What has been fueling this growth is that the health benefits of tea have been well documented and written about,” Rajeski says.
Retailers can improve the profitability of the tea aisle by following the lead of brands with proven performance, says Chris Costello, national sales manager for Fairfield, Conn.-based R. C. Bigelow, Inc. “Make sure your tea section is easy to shop.”
Deborah Glasser, marketing director for Tata Global Beverages, the Montvale, N.J.-based manufacturer of the Tetley Tea brand, suggests retailers use “like pricing” among product groups. “We price our product groups similarly. For example, set flavor teas are at one price and iced tea varieties are at another,” she says.
Sales can also be aided by running “multiples pricing” promotions, like buy-one-get-one-free and five for $5, Glasser says, along with promoting teas seasonally. “Secondary locations can also increase visibility/purchase consideration,” Glasser says. “For example, place iced tea displays near barbecue foods or paper goods and hot teas near the tissues or soups.”
Revenues are still driven by the time-tested products, observers say. “Keep the tea section robust with a broad selection of established favorites and be among the first to offer new products when proven brands expand their lines,” Costello says.
To that end, Bigelow is introducing three teas rich in antioxidant fruits: Black Tea with Pomegranate, Decaffeinated Green Tea with Pomegranate and Decaffeinated Green Tea with Wild Blueberry & Açai. “Our newest introductions once again demonstrate the unsurpassed skill of Bigelow’s master blenders in creating teas with exquisite, natural fruit flavors,” says president Cindi Bigelow.
Market leader Lipton has been so pleased with the three superfruit green teas it introduced last year—Purple Açai and Blueberry, White Mangosteen and Peach, Red Goji and Raspberry—that it is extending the line to include more flavors.
“Those teas have done very, very well, and that really speaks to the consumer’s desire not only for the health benefits of green tea, but to also be really delighted by all of the different flavor experiences that green tea can offer,” says Darren Palmet, senior brand manager, Lipton, for Englewood Cliffs, N.J.-based Unilever.
“We’re working on a number of innovations and in 2011, green tea will be a huge thrust for us,” Palmet says, adding that four new herbal flavors are currently in test market. “We think that there are a lot of opportunities in herbals and we want to take a bigger leadership role.”
Peter Burns, general manager for Boulder, Colo.-based Celestial Seasonings, sees wellness and medicinal teas as the hottest trends. “People are always looking for natural alternatives to going to the doctor or taking medication,” he says. “We’re launching products in our wellness segment that are condition-specific, focusing around our Sleepytime sub-brand with Sleepytime Throat Tamer, Sleepytime Extra and Sleepytime Sinus Soother.”
An added benefit of these products, Burns says, is that they can be merchandised not only in the tea aisle, but also cough-and-cold set and at the pharmacy counter.
Burns says Celestial Seasonings has found success with its flavored offerings. “Our company is really known for flavor, so we want to drive the flavor aspect in the green tea segment with our Peach Blossom Green Tea and Gen Mai Cha Green Tea,” he says.
Naivetea, a Burlingame, Calif.-based tea importer, has brewed a niche in the crowded tea aisle by specializing in loose leaf oolong tea imported from Taiwan. “What sets us apart is that we focus only on really high quality premium teas that Taiwanese people would actually buy in Taiwan,” says Lawrence Lai, president.
Lai points out that while loose leaf teas have higher price tags—Naivetea retails for $16—they are still very economical. “One pound of whole loose leaf oolong can generate about 200 cups,” he says.
On the other end of the price scale, Monroe, N.J.-based Bromley Tea has positioned its Estate tea as a value. “If you drink a cup of our Estate tea and a cup of Lipton, ours is a better quality product—at a better price,” says Ira Barbakoff, president.
Bromley recently expanded its product line with 48-count boxes of Earl Grey and English Breakfast teas.
Redco Foods, the Windsor, Conn.-based manufacturer of the Salada and Red Rose brands, will once again be promoting its “Unbottle Your Tea” campaign this summer. “The whole point is to encourage consumers to drink freshly brewed tea instead of bottled tea or soda,” says Michelle Peters, brand manager for both brands. “The three pillars of our campaign are: It’s good for your health, good for your wallet and good for the environment.”
Although it still offers a 100-count black tea, Redco has positioned Salada as a green tea brand. Red Rose, meanwhile, is being portrayed as a high-quality blend. “We try to make each brand about its own specialty, and with Red Rose it is really about black tea,” says Peters.