global tea industry
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Global Tea Industry. Lenore Weich. 8. 13. 16. 3. 21. 24. Table of Contents. What is Tea? Tea Market Overview Tea Consumers Tea Producers A World of Tea Bibliography. WHAT IS TEA?. Tea Definition. Tea…. - PowerPoint PPT PresentationTRANSCRIPT
January 11, 2003
Global Tea Industry
Lenore Weich
What is Tea?
Tea Market Overview
Tea Consumers
Tea Producers
A World of Tea
Bibliography
8
13
16
21
3
24
Table of Contents
WHAT IS TEA?WHAT IS TEA?
Tea Definition
…a beverage produced by steeping in freshly boiled water the young leaves and leaf buds of the tea plant, Camellia sinensis. Two principal varieties are used, the small-leaved China plant (C. sinensis sinensis) and the large-leaved Assam plant (C. sinensis assamica)1
Tea…
Major Tea Categories2
…for example
Black: Assam, Darjeeling, Ceylon
Green: Bancha, Gyokuru, Oolong
Instant: Granulated Black Tea
Herbal: Chamomile, Mint
Flavored Earl Grey
Specialty Digestive/Medical
Preparation Methods
• Infused (Hot)• Iced (Cold)• Instant*• “Ready to Drink”*
*Manufactured
Processing Tea Leaves3
PLUCKING WITHERING ROLLING
FERMENTATION
DRYING
all tea leaves
Fermentation is the critical stage—
except for green tea
Black, Oolong, Pouchong
Green Tea
PACKAGING, etc
Oolong
Pouchong Black
Processing Time
Source: Encyclopedia Britannica
Alternatives to Tea4
U.S. Beverage Per Capita Consumption (gal)
0
50
100
150
200
250
1995 1996 1997 1998 1999 2000
Others
Distilled Spirits
Wine
Tea
Fruit Beverages
Bottled Water
Coffee
Beer
Milk
Carbonated Soft Drinks
• While total per capita beverage consumption remained flat, per capita tea consumption declined 8% from 1995-2000
• In contrast, Bottled water consumption grew 50% over the same period
Equitable global data not uncovered Source: Food Processing
2001 World Tea Production5
India: 840
Data in thousands of metric tons
China: 670
Sri Lanka: 290Kenya: 290 Indonesia: 180
Turkey: 130 Japan: 100
South America: 70
Bangladesh: 60
USSR: 10
Vietnam: 30
Others: 240
Total: 2.9 million metric Tons!Source: Tea Basics
TEA MARKETTEA MARKET
Global Tea Sales, by region, 1993-19976
Global Tea Sales, 1993-1997
0
2,000
4,000
6,000
8,000
10,000
12,000
1993 1994 1995 1996 1997
$US
D (
Mill
ion
s)
Latin America
Australasia
Africa
Middle East
Eastern Europe
North America
Japan
Asia
Western Europe
•14% Growth Rate of Global Tea Market Size from 1993-1997•17% Growth Rate of the North American Tea Market Market Size
Source: Euromonitor
Global Tea Consumption, by Type
World Tea Consumption by Type, 1997
Black Tea73%
Green Tea20%
Specialty1%
Flavored0%
Herbal5%
Instant Tea1%
Black 32%
Green 18%
Herbal 51%
Instant 24%
Flavored* 16%
Specialty* 26%
GLOBAL 32%
Volume Growth Rates1993/1997
* Growth rate 1995-97
Volume consumed growing faster than Value of market
Source: Euromonitor
“The green tea market has been growing more slowly than the black tea market in recent years, with the result that green tea represents a declining proportion
of demand for leaf tea as a whole.”
Top Tea Consuming Countries, 19978
0
100
200
300
400
500
600
700
800
900
Me
tric
To
ns
(000
)
Other 0 21.1 0 0 12.26 0 44.6 0 21
Herbal 14 23.2 9.5 1.6 1.9 4.1 5.3 7.4 0
Green Tea 50 245 17.8 0.02 0.04 9.3 43.7 0.93 38.7
Black Tea 713 42.7 134.7 146.2 127.1 115.1 30 81.7 10.7
India China Russia UK Turkey Egypt Indonesia US Japan
India consumes the most black tea by volume; China consumes the most green tea
Source: Euromonitor
Market Growth Projections (US)9
29.2
34.7 36.9 41
0
100
200
300
400
500
600
700
800
1997 2001 2002 2006
Ma
rke
t S
ize
(00
0 M
etr
ic T
on
s)
Other hot beverages
Tea
Coffee
Global growth data not found
1997 – 2001 Growth: 19%2001 – 2006 Projected Growth 18%
US Market growth stagnant, perhaps declining—mature market
Source: Euromonitor
TEA CONSUMERSTEA CONSUMERS
Tea - Global Consumer Profile10
• A drink for the ill• Staple Beverage• Loose leaf predominant• Black, with Sugar/Lemon
• A drink for any time of day• Black, with milk/sugar• Tea bag predominant• Loose leaf considered “old”
• Staple Beverage• Green Predominant
• Tradition-driven• Green• Ready-to-drink emerging• Second to Coffee
• Black, Sugar/Lemon• Ready to Drink popular• Pockets of Specialty/Organic
United States
United KingdomJapan
China
Latin AmericaIndia
Source: Euromonitor
Tea Consumer Facts11,12
•On an average day, 62% of US women drank tea, compared with 59.5% for ground coffee and just 24.2% for instant coffee.
•Consumption of all hot drinks is lowest in the West, due partly to the increased popularity of healthy diets in the region and warmer climates for most of the population.
•Tea tends to be perceived as a premium beverage, with consumption highest among the wealthiest consumers with an income of above US$75,000.
•Tea has been gaining increasing acceptance among US consumers, who have turned to the sector as a lower caffeine alternative to coffee. The proliferation of herbal and medicinal teas has also played a major role in tea sale increases recently. A continuation of these trends is expected to drive volume growth
12. Source: HOT DRINKS IN THE USA (JULY 2002), Euromonitor
•…Tea is increasingly acquiring a more sophisticated image in Europe and North America.
13. Source: INTERNATIONAL MARKET REVIEW: WORLD MARKET FOR TEA (NOVEMBER 1998), Euromonitor
TEA PRODUCERSTEA PRODUCERS
Tea Supply Chain—Macro View
Growers
Distributors
Manufacturers
Retailers
Consumers
Cultivate,Process
Import/ Export
Package, Market, Retail
Distribution Sell
Drink
Tea Competitive Landscape13
Tata Tea9%
Others49%
Mai2%
Cay-Kur4%
Shemto3%Beijing Tea
Admin2%
Tetley3%
Sara Lee2%
Unilever26%
Company Country of Origin
Unilever Netherlands/UK
Tata Tea India
Cay-Kur Turkey
Shemto Egypt
Tetley UK
Beijing Tea Administration
China
Sara Lee US
Mai Russia
•The tea market is fragmented and region-specific, with multiple companies comprising 49% market share
•Unilever is the largest manufacturer of tea world-wide with 26% market share
Tea Global Market Share, 1997
Source: Euromonitor
Unilever Profile14,15
Source: Hoovers, Yahoo Finance
• One of the top global consumer product companies in the world
• Dually operated by two holding companies (for tax reasons): Unilever PLC (UK) and Unilever N.V. (the Netherlands)
• 2001 Revenue: $45.9B
• 279,000 Employees
• Besides Lipton (tea), manufactures Dove, Sunlight, Country Crock, Hellman’s, Lever 2000, Degree, Surf, others
• Organized Geographically, then by food and non-food
• Currently working to consolidate brands
General
Africa & Middle East4%
Latin America
6%
Asia/ Pacific17%
North America
21%
Europe52%
Unilever Global Presence2001 Revenue Distribution
Market Cap $27B
Gross/Net Margins 49%/4.8%
Current Ratio 1.61
Debt/Equity 3.58
52-week low:$28.82 (Jul 02)
52-week high:$39.64 (Nov 02)
Unilever—Tea Facts17
• Global tea brands include Lipton, PG Tips (UK) Brooke Bond (India)
• Small portion of Unilever’s brand portfolio (between 5-9%)
• Overall Lipton brand grew 6% in 2001
• Japan market for ready-to-drink tea grew strongly
• Lipton Cold Brew rolled out in the US
• Central Asia market declined due to competition with Indian tea
• Ready-to-drink product expansion to Europe quoted successful
• Green tea launch continues in North America and Europe
• Recent marketing campaign “Paint the World Yellow” continues to raise awareness of Lipton Brand
Source: Unilever 2001 Annual Report
A WORLD OF TEAA WORLD OF TEA
Recent Facts
Industry “Alliances” – both in the “ready to drink” sub sector of tea
• Unilever joint venture with Pepsico to market/distribute Brisk in the Americas17
• Coke and Nestle joined forces to market “Nestea”18
“The tea tradition is sustaining the established markets, but there is increasing competition from soft drinks…”16 Euromonitor
Ready-to- Drink Teas Gaining Momentum in the US: According to Beverage Digest, the category’s volume increased 1.8%, year to year, to 637 million gallons. Retail sales of ready-to-drink teas advanced 3.8% to $3.31 billion in 2001 from $3.19 billion in 2000.19 --Standard and Poor
Current Marketing Strategies:20
• Tetley—market tea as healthy, to attract younger drinkers
• PG Tips (Unilever) responds with “Slice of Life” and “Tea Moments” to consolidate tea’s role in our lives
Tea linked to many health benefits• Rehydration• less caffeine• powerful antioxidants
Future Trends
Tea is predicted to be the fastest growing sector in volume terms over the forecast period, gaining 11.1% between 2002 and 2006, to reach a level of 41 thousand metric tons in 2006.21 Euromonitor
Products like iced chai and bubble tea in the US promise to add further variety and vitality to tea selling.22
--Restaurant Business
Bubble tea is tea with Tapioca “bubbles” and
optional flavoring added
BIBLIOGRAPHYBIBLIOGRAPHY
Bibliography (1/2)
1. Encyclopedia Britannica, “Tea.”2. Tea Basics; Rasmussen, Rhinehart; 1999.3. Encyclopedia Britannica, “Tea Production”4. "Beverages Were Healthier in 2001," Food Processing, August 20025. Tea Basics; Rasmussen, Rhinehart; 1999.6. INTERNATIONAL MARKET REVIEW: WORLD MARKET FOR TEA
(NOVEMBER 1998) Euromonitor7. Ibid.8. Ibid.9. HOT DRINKS IN THE USA (JULY 2002), Euromonitor10. INTERNATIONAL MARKET REVIEW: WORLD MARKET FOR TEA
(NOVEMBER 1998) Euromonitor11. HOT DRINKS IN THE USA (JULY 2002), Euromonitor
Bibliography (2/2)
12. INTERNATIONAL MARKET REVIEW: WORLD MARKET FOR TEA (NOVEMBER 1998) Euromonitor
13. Ibid.14. Hoover’s Online Profile: Unilever, accessed Jan 200315. Yahoo Finance Online Profile, accessed January 200316. INTERNATIONAL MARKET REVIEW: WORLD MARKET FOR TEA
(NOVEMBER 1998) Euromonitor17. Unilever 2001 Annual Report18. European Report, Sept 29, 2001 p344 “COCA-COLA-NESTL? DEAL
PRODUCES NO STORM IN COMMISSION'S ICED TEA CUP”19. Standard and Poor, Food and Non-Alcoholic Beverages Industry Survey, Dec
200220. Marketing, Oct 31, 2002 p13 “BRAND HEALTH CHECK: Tetley - How can
Tetley sell the virtues of drinking tea?”21. INTERNATIONAL MARKET REVIEW: WORLD MARKET FOR TEA
(NOVEMBER 1998) Euromonitor22. Restaurant Business, “SPECIAL-TEAS,” Feb 15, 1999, JAMES SCARPA.