The global ready to drink (RTD) tea and coffee market size was USD 71.43 billion in 2015 and the is expected to increase exponentially on account of health benefits provided by these drinks. These drinks are being touted as a healthy replacement for carbonated drinks which are associated with numerous health hazards including obesity and hypertension. Improving health awareness coupled with rising disposable income is expected to boost demand for these products.
The demand for these drinks is high among the millennials who are on the lookout for instant energy drinks. Manufacturers have now started formulating RTD drinks with nutraceutical ingredients to enhance the nutritive value provided by these drinks. The rising demand for on the go drinks is expected to boost the demand for these products.
The major factor affecting the industry is the prices of tea and coffee. The untimely rains and rise in agricultural input costs have resulted in an increase in prices of the products. The unstable prices have resulted in manufacturers opting for the purchase of tea plantations or contract based acquisitions of plantations to ensure proper supply of raw materials.
U.S RTD Tea And Coffee Market Revenue, By Distribution Channel, 2013 - 2024 (USD Million)
Distribution Channel Insights
Supermarkets/Hypermarkets are the most preferred distribution channel contributing for a revenue of over 35% of the global market. The improving retail scenario in developing countries is expected to boost demand for RTD tea and coffee through this channel.
Foodservice is expected to be the fastest-growing distribution channel with a CAGR of over 6% from 2016 to 2024. The rising number of millennials adopting the café culture is expected to boost the demand for these products through the food service distribution segment.
The packaging type has a direct impact on the demand for these products. The major packaging in which these products are available is PET Bottle. The total value of consumption of RTD tea and coffee in the PET Bottle was over 22 billion in 2015.
The other packaging types used predominantly are canned, glass bottle and other types such as cartons and pouches. The demand for cartons and pouches is expected to reduce over the years owing to rising awareness about plastic pollution.
Price Segment Insights
Premium price segment dominates the ready to drink tea and coffee market with a share of over 37%. The demand is expected to grow as the manufacturers are looking to introduce the new flavor and trying to capitalize on the premium products comprising these flavors.
The other price segments at which these products are offered in the market are regular and fountain. The regular pricing is majorly preferred by the supermarket distribution channel to improve the demand for these products.
RTD tea is the fastest growing product segment in the market with a CAGR of over 5%. The demand for the product is expected to increase owing to the presence of natural oxidants present in tea and the nutritional benefits associated with their consumption.
RTD coffee which has a market share of over 20% is finding greater acceptance due to improved taste and the introduction of new flavors by manufacturers. The rising consumption in restaurants and offices is expected to boost demand.
Asia Pacific dominated the global market with a share of over 40%, in terms of revenue, in 2015. The demand in this region is driven by countries such as Japan and China which have a high number of tea and coffee plantations. The market is expected to grow even further on account of increasing demand from countries such as Thailand, Indonesia, and India.
The Middle East & Africa is anticipated to grow at a CAGR of over 7% from 2016 to 2024. High tea consumption coupled with changing retail landscape is expected to boost consumption of ready to drink products in this region. The growing foodservice segment in this region can further augment the product growth.
Competitive Market Share Insights
Key industry participants include Suntory Holdings Ltd., The Coca-Cola Company Ltd., Nestle S.A, Unilever NV, Uni-President Enterprises, Pepsico Inc., Tsing Hsin International Group, Starbucks Corporation and Arizona Beverage Company. New product development and incorporation of new flavors in the existing products are the key strategies being adopted by the industry participants in order to strengthen their market position. Starbucks and Teavana Corporation are working towards the introduction of new epicurean and naturally flavored RTD teas by 2017.
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