Tea is Habit Forming

Deemed an affordable luxury, tea seems recession resistant. Despite record high prices, consumers are still sipping.

The beverage saw gains of 2% in 2008 and 2009, according to Tea and Ready to Drink Tea in the U.S., a study by market research firm Packaged Facts. Estimated tea sales through retail and foodservice channels reached $9 billion last year. Packaged Facts forecasts a 5 percent increase in 2010 and annual rises through 2014 to a projected $12 billion.

“Tea consumption is habit forming,” said a report from the U.N.’s Food and Agriculture Organization (FAO). Leaf prices reached record levels in 2009 because of crop damage and shortages due to severe weather in Asia and Africa, according to the FAO. Commodity price increases were often passed along to consumers, who paid more for loose, bagged and bottled teas. But that situation should ease this year.

Tea’s popularity is due to several factors. Chief among them is its “healthy halo” that seems brightened weekly by some new research study. The latest suggests tea may aid weight management, thanks to its hefty dose of epigallocatechin gallate (EGCG). A study at Penn State University found that EGCG and other compounds in tea may increase the body’s metabolism and reduce fat absorption.

Packaged Facts reports that there is also a greater emphasis on quality teas. A wealth of new products backs this up, including premium loose teas, better-quality tea bags and floral and fruit infusions. The Republic of Tea, for example, just introduced a line of five Hibiscus Superflower Teas made with African hibiscus flowers. Giving the products a boost is a study indicating that hibiscus tea lowers blood pressure.

Another factor fueling the growth of tea is involvement by beverage giants like Coca-Cola, PepsiCo and Nestle and a greater emphasis on foodservice. Coca-Cola just debuted two of its RTD iced teas–Gold Peak and Fuze–for in-house brewing. Fresh-brewed Gold Peak is made from hand-picked Ceylon black tea and Fuze boosts tea’s natural antioxidants with added vitamins. Both branded iced teas can be brewed with a logoed satellite machine from Bunn.