Tea Market Builds Momentum Backed by Functional and Herbal Blends - Persistence Market Research

The global tea market has evolved into a dynamic industry, influenced by changing consumer preferences, innovations in flavor profiles, and a growing awareness of tea's health benefits. As one of the oldest and most consumed beverages globally, tea continues to remain a staple in many cultures while adapting to modern wellness trends. From traditional black tea to niche herbal infusions, the tea industry reflects both heritage and innovation.

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In 2015, the global tea market was valued at US$ 13,847.4 Mn and grew to approximately US$ 14,448.3 Mn in 2016, registering a 4.0% year-on-year growth. Forecasts estimate that the market will reach US$ 21,329.7 Mn by the end of 2024, expanding at a CAGR of 5.0% between 2016 and 2024. The black tea segment holds the highest market share, accounting for approximately 42.5% of total value. Asia Pacific (APAC) dominates the global landscape due to strong tea culture, emerging economies, and growing demand for flavored teas.

Key Highlights from the Report

➤ The global tea market is projected to reach US$ 21,329.7 Mn by 2024, growing at a CAGR of 5.0%.
➤ Black tea dominates the global market with a value share of 42.5%, followed by green tea.
➤ The APAC region is the largest regional contributor, accounting for 41.2% of the market in 2016.
➤ Hyper/supermarkets lead the distribution channel segment due to wide accessibility and consumer reach.
➤ Rising demand for flavored tea, such as mint, lemon, and chocolate, is driving innovation and consumer engagement.
➤ Green tea is expected to witness a CAGR of 5.4%, creating an incremental opportunity of US$ 2,499.2 Mn by 2024.

Market Segmentation

The tea market is segmented primarily based on type and distribution channel. By type, black tea is the most consumed category, favored for its robust flavor and cultural acceptance, especially in Asia and parts of Europe. It is followed by green tea, which has gained popularity owing to its antioxidant properties and health benefits. Oolong and herbal teas serve niche segments, while specialty teas like white and flavored infusions cater to health-conscious and gourmet consumers.

From a distribution perspective, hyper/supermarkets account for the majority of sales due to their extensive reach and product variety. Online stores, though smaller in share, are rapidly gaining traction, especially among millennials and health-conscious buyers. Convenience stores and specialty retail outlets continue to provide accessibility in urban and semi-urban zones.

Regional Insights

Asia Pacific leads the global tea market with a commanding 41.2% share as of 2016. This dominance stems from the region's long-standing tea-drinking traditions in countries like China, India, and Japan. The growing middle-class population and the rise of modern retail formats in APAC further contribute to market expansion. Urban consumers are shifting toward premium and flavored teas, while rural markets continue to favor traditional varieties.

Europe ranks second, backed by a strong presence of black and herbal tea culture, particularly in the UK, Germany, and France. North America, though historically a coffee-preferred region, has seen a surge in specialty and green tea consumption. This is driven by increasing awareness about health benefits, leading to rising imports and diversified product offerings.

Market Drivers

One of the most prominent growth drivers is the global inclination toward health and wellness. As consumers increasingly seek functional beverages, tea is emerging as a natural, antioxidant-rich alternative. The growth in organic and herbal teas, such as chamomile and peppermint, aligns with this trend.

Innovation in flavor profiles has also significantly contributed to the market's expansion. Flavors like lemon, mint, and chocolate are drawing new consumers, particularly in the younger demographics. The convenience of tea bags, ready-to-drink (RTD) teas, and tea capsules is another important driver, aligning with fast-paced urban lifestyles.

Additionally, cultural factors and the expansion of café chains and tea bars have elevated the social status of tea. In many developing regions, tea remains a low-cost beverage, sustaining its widespread appeal across socioeconomic classes.

Market Restraints

Despite its growing popularity, the tea market faces several constraints. Excessive tea consumption may lead to side effects due to caffeine content, such as insomnia, anxiety, and digestive problems. Green tea, while healthy in moderate doses, has been linked to increased risk of certain cancers and complications like high blood pressure when overconsumed.

The availability of alternative beverages, including coffee, soft drinks, and energy drinks, poses competition. Moreover, climate change affecting tea-growing regions and fluctuating raw material costs can disrupt supply chains and pricing strategies, limiting market potential in certain regions.

Market Opportunities

The rising demand for specialty and premium teas presents significant opportunities. Organic, decaffeinated, and functional teas designed for specific health benefits like digestion, sleep, or detox are attracting niche audiences. The increasing popularity of sustainable and ethically sourced tea is also opening new avenues for branding and consumer engagement.

Emerging markets in Latin America, Africa, and the Middle East remain largely untapped, offering high-growth potential as consumer awareness and income levels increase. Technological advancements in processing and packaging are expected to elevate the appeal and shelf life of tea products.

Moreover, online retail presents a transformative opportunity. As digital consumption grows, especially in post-pandemic scenarios, tea brands leveraging e-commerce and D2C channels can capture previously inaccessible segments.

Reasons to Buy the Report

✔ Provides detailed insights into current and future tea market trends across major regions.
✔ Helps identify key growth drivers, restraints, and emerging opportunities to craft informed strategies.
✔ Offers valuable segmentation data by type and distribution channel to support targeted marketing.
✔ Enables competitive benchmarking by profiling top players and their recent developments.
✔ Assists in assessing market size forecasts and investment opportunities through 2024.

Company Insights

• Unilever - A global leader with iconic brands like Lipton, driving growth through innovation and sustainability initiatives.
• Associated British Foods - Known for its brand Twinings, focusing on herbal and specialty teas.
• Tata Global Beverages (Tata Tea Ltd.) - Dominates Indian and international markets with strong branding and regional appeal.
• Nestlé S.A. - Offers a range of RTD and powdered tea beverages under various sub-brands.
• Starbucks Corporation - Through Teavana, Starbucks has entered the premium tea segment with a global presence.
• DAVIDsTEA - A North American specialty tea retailer known for unique blends and customer engagement.
• WISSOTZKY TEA - Israel-based tea company with a strong legacy and diversified portfolio.
• Akbar Brothers Ltd. - A major Sri Lankan tea exporter with emphasis on quality and global reach.
• The Republic of Tea - Offers an extensive collection of premium teas targeting the health-conscious market.

Recent Developments

In 2023, Unilever announced new sustainability goals for its Lipton brand, focusing on recyclable packaging and ethical sourcing.

Tata Tea launched a new range of "Wellness Teas" in 2024, infused with Ayurvedic herbs and vitamins to meet consumer demand for functional beverages.

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Conclusion

The global tea market is undergoing a dynamic transformation, blending age-old traditions with new consumer expectations. As demand surges for health-oriented, flavored, and sustainably sourced teas, both legacy brands and new entrants have opportunities to thrive. With Asia Pacific at the forefront and innovations shaping distribution and product types, the industry is poised for robust and inclusive growth through 2024 and beyond.

From a strategic perspective, the key to success lies in adapting to evolving consumer preferences, investing in sustainable sourcing, and leveraging digital platforms for broader market access. As tea continues to win over health-conscious and taste-seeking consumers alike, its journey remains as rich and varied as the brews it offers.

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