The State of the U.S. Tea Industry

Just when we thought the recession was behind us, there is growing evidence that the economy is continuing to struggle to break out of the doldrums. Unemployment remains stubbornly above 8 percent, retail sales are lackluster at best and while new housing starts are showing some signs of life they are still half of what is historically considered to be good. Adding to this somber mood is a federal government that has come to a virtual halt awaiting the results of an election year and State & City governments are struggling to balance their own budgets, with some actually declaring a bankruptcy as options evaporate. To make matters worse, as bad as things are in the USA, the global situation is even worse with multiple countries close to bankruptcy and even the growth countries watching a contraction of their GDP.

Thankfully, the USA Tea Industry has fared better than most others during the past three to four years and 2011 has seen yet another, albeit modest, increase in tea imports of just under one percent but still achieving record breaking total tea imports of over 281 million pounds! The dollar value of wholesale tea sales is also estimated to be up a modest 5 percent to $8.2 billion. Within the tea industry there are segments that are faring better than others with RTD and Specialty Tea on top of the list.

To further improve your mood the Sage Group has recently estimated the retail size of the USA tea industry in 2011 to be more than $27 billion; a number which is notoriously difficult to calculate but falls entirely within the realm of possibility.

Tea has always been considered to be nearly recession proof but the length and depth of these trying times is truly putting it to the test. Yet signs that tea is becoming ever more ubiquitous are all around us. If anyone believes that the United States Tea Industry is not undergoing a dramatic period of change, they should take a quick tour of their local supermarket and observe what is happening. Even within this single distribution channel, change is pervasive and immediately apparent.

When walking through the supermarket, a noticeable new development is that tea can be found in several different locations throughout the store, not just in the "coffee" aisle. But, even in its traditional location, the amount of space devoted to tea has increased tremendously and the number and size of competitive offerings has changed dramatically. In addition, many new sections have been added within the supermarket to accommodate all the new forms of tea that have been introduced in recent years.

You may observe the significant amount of space now being devoted to ready-to-drink teas in the "soft drink" & “water” and “functional beverages” aisles. There are even separate sections for merchandising gallon jugs of room temperature RTD tea. This, of course, is only the beginning. Traveling around the store, you may also find tea in the dairy case in both bottles and gallon jug containers. Also, you will notice a number of new brands competing for space in this valuable refrigerated section. Additionally, depending on the size of the supermarket, you might encounter an additional refrigerated cabinet dedicated completely to tea.

More often than not you may spot some form of tea on a promotional display or in a vending machine near the entrance or exit. Most recently, organically grown tea is finding its way into special departments that have been set up to organize these products. Tea is even finding its way into the health and beauty aisle as an ingredient in other products or as a concentrate. Please don’t forget the juice aisle where tea is being added as a beneficial ingredient to several juices. You may even find tea in the candy aisle in the form of tea-infused chocolate bars and even chewing gum. Tea is so ubiquitous that you will even find its presence in the pharmaceutical departments in the form of Green Tea supplements and extracts.