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Demand for tea will continue to heighten over the next five years due to increased health awareness and new product offerings, supporting the Tea Production industry. Tea is becoming infused into the American diet as consumers become more health-conscious and look for alternatives to sugar-rich carbonated beverages. As small niche tea companies sprout up at increasing rates, the brands and tea varieties available to consumers are also growing. While the tea industry will continue to experience an upswing, strong demand for ready-to-drink teas and beverages will somewhat limit revenue growth because they are not included in this industry. For these reasons, industry research firm IBISWorld has added a report on the Tea Production industry to its growing industry report collection.
Los Angeles, CA (PRWEB) May 05, 2012
Emerging from the long shadow of the Coffee Production industry, the Tea Production industry is beginning to come into its own. Despite rising unemployment and waning consumer confidence – both of which affect the industry – IBISWorld estimates industry revenue will increase at an annualized rate of 3.1% to total $987.0 million in the five years to 2012. Revenue is expected to grow at a slower rate of 1.8% in 2012. Helping to drive the industry's growth is an increased emphasis on healthy living and changing consumer dietary patterns. “Backed by the scientific community, tea manufacturers are marketing the various health benefits of tea consumption, especially tea's effect on lowering cholesterol,” says IBISWorld industry analyst Agata Kaczanowska. In particular, herbal teas are experiencing substantial success on the market as consumers increasingly use them for at-home medicinal remedies. Additionally, as Americans have become more health-conscious, they have looked for alternatives to sugar-rich carbonated beverages.
Tea is also becoming more popular thanks to the increasing variety of flavors, strengths and sweeteners. “The high differentiation of teas has enabled the industry's major players to earn high profit margins and perform well despite recessive economic conditions,” Kaczanowska says. The high brand and customer loyalty major players command has also contributed to high profit margins and sales growth. In particular, multinational conglomerate Unilever has the distinction of longevity with its Lipton brand. Though following in a distant second, Hain Celestial Group Inc. also commands a decent share of the Tea Production industry with its Celestial Seasonings teas. On the other hand, as members of a growth industry, niche players have had some significant opportunities to serve increasingly fragmented consumer needs, such as the specialty and gourmet segment. Niche players such as Rishi Tea, which specializes in wellness and exotic teas, have been steadily increasing their share of the market. The product lines of the major brands typically comprise mid- to low-value, high-volume branded products. Given the high brand value of these products, these players enjoy a high degree of loyalty and familiarity from their consumers. Smaller players tend to focus on niche markets, supplying specialty products that are of high value and margins but have shorter production runs and, hence, lower volumes.
The Tea Production industry's future is bright. America's aging population, which embraces tea's antiaging and health attributes, will be a strong source of future demand and will drive sales of specialty products, especially for green and herbal teas. In addition, the emphasis on innovation and new product introductions will further stimulate demand over the next five years. Though the major brands will remain dominant, IBISWorld forecasts the industry to become less concentrated as small specialized tea producers continue to sprout up nationwide. For more information, visit IBISWorld’s Tea Production in the US industry report page.
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IBISWorld industry Report Key Topics
This industry includes businesses that blend and package tea, excluding iced and ready-to-drink tea.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.
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