Ready to Drink (RTD) Tea and Coffee Market Share Report

Ready to Drink (RTD) Tea and Coffee Market Share Analysis By Product (RTD Tea, RTD Coffee), By Packaging Type (Canned, PET Bottle), By Price, By Distribution Channel, And Segment Forecasts To 2024

  • Published Date: Apr, 2018
  • Base Year for Estimate: 2016
  • Report ID: GVR-1-68038-192-4
  • Format: Electronic (PDF)
  • Historical Data: 2014-2016
  • Number of Pages: 104

Industry Insights

The global ready to drink (RTD) tea and coffee market size was estimated at USD 75.25 billion in 2016, growing at a CAGR of 5.6% from 2017 to 2024. The rising demand for energy drinks that have familiar taste as daily consumption beverages is expected to boost the demand for RTD products over the forecast period.

The changing lifestyles which encourage on the go eating and a growing trend to replace meals with smaller nutritional snacks have led to an increase in the adoption of RTD tea and Coffee. In addition, the trend of being proactive to chronic health problems is creating a staggering volume of demand for ready to drink tea and coffee as they contain antioxidants and other essential ingredients. Global trends are moving towards personalized nutrition.

U.S. RTD tea and Coffee market

In the U.S., RTD tea segment emerged as a dominant product in 2016, accounting for 76.2% of the total revenue share. The segment is expected to gain momentum owing to rising demand for iced tea and concentrates. The introduction of new flavors in the product categories is expected to further augment the industry demand for these products.

Rapid socio-economic development that has taken place over the decades is resulting in the rise in cases of several chronic diseases such as heart disease, cancer, and diabetes. Growing health consciousness among ageing population regarding chronic diseases is boosting consumer inclination towards RTD tea and coffee.

Fluctuating prices of raw materials owing to changing climatic conditions across the world is expected to hamper market growth. Tealeaves, coffee beans, acidulants, and sweeteners are key raw materials that are used in the manufacturing of ready to drink tea and coffee. Raw materials and bottling are the two largest elements in the cost structure of ready to drink tea and coffee manufacturing.

Rising healthcare cost is making people aware of the increasing costs associated with proper medical facilities. High cost associated with healthcare has led people to inculcate self-nutrition and preventive healthcare behavior. Such behavior can lead to increase in the demand for RTD tea and coffee, which offer several health benefits.

Product Insights

RTD tea and coffee are now being considered as healthy replacements for carbonated drinks owing to which the demand for these products is expected to grow rapidly. RTD tea was the fastest growing segment, occupying a majority of the market revenue share in 2016. This can be attributed to the availability of best tea flavors with added nutritional benefits.

Rising preference for carbonated RTD tea among consumers is supporting the growth of the RTD tea segment. Global soda consumption is on a decline owing to health hazards and this is a good opportunity for the product manufacturers to capitalize on the market and gain shares in the global arena.

RTD coffee segment is expected to witness substantial growth over the forecast period. The introduction of new flavors and high demand for drinks containing caffeine are expected to drive the demand for these products. it is a cold brewed coffee which has relatively high sweetness and high amounts of caffeine.

Rising demand for cold coffee concentrates is expected to contribute to the growth of RTD coffee segment. Protean coffee bean prices have been a major challenge for manufacturers for a long time. The El Niño effect, which caused a lot of problems in the coffee plantations, has eased down which is major boost for the industry.

Packaging Type Insights

PET Bottle emerged as a dominant segment in 2016, accounting for 31.7% of the total industry revenue. The low cost of manufacturing coupled with the ease of handling is driving the demand for this type of packaging. Their ability to mold in different shapes and the availability of different colors has led to a large number of manufacturers adopting this type of packing.

The demand for PET bottle RTD tea and coffee is increasing owing to its recyclability and reusability. PET bottles are easily recycled into many types of secondary products such as carpet fibers, pillow stuffing, tote bags, and strapping materials. The lightweight of plastic bottles minimizes the cost of transporting materials to recycling centers.

Canned packaging was the second largest segment that accounted for 27.9% of the revenue share in 2016. This can be attributed to its ability to enhance product shelf-life and flavor preservation. The manufacturers also prefer the canned packaging as it helps to emphasize the brand image of the product in the minds of the consumer.

Glass Bottle segment is expected to witness fastest growth rate over the projected period owing to its recyclability and reusability property. This packaging type is being majorly used for premium RTD tea and coffee as they aid in communicating the product image for these products. Many major brands use glass bottles for packaging as it improves the product image and also forms an important part of the brand identity.

Price Insights

Premium price segment emerged as a dominant segment in 2016, accounting for 36.9% of the revenue share. The demand is expected to grow as manufacturers are looking to introduce new flavors and trying to capitalize on premium products comprising these flavors. Several natural ingredients are being made a part of the drinks to give a premium feel to the product.

Regular price segment was the second largest segment that accounted for 36.2% of the total revenue share in 2016. The regular price segment products help the company to cater to a large number of customers. The major drawback of this price segment is the less number of different flavors and product types in this price segment.

The demand for RTD tea and coffee is moderate and expected to grow gradually over the forecast period. The rise of food service distribution channel is the major factor influencing the demand of these products in this price segment. Fountain price segment refers to the pricing of the combinations of different types of product.

This price segment is being explored by manufacturers as it contributes to the brand image of the manufacturers as well as creates an opportunity for returning purchase. The price segment also helps manufacturers to understand the demands of customers and the required taste combinations.

Distribution Channel Insights

Supermarkets/hypermarkets dominated the overall industry in terms of revenue in 2016, accounting 35.4% industry share. Presence of a large number of supermarket chains and changing retail landscape across the globe is poised to boost the sales of ready to drink tea and coffee through supermarket distribution channel.

The evolution of foodservice as a distribution channel has caught the attention of a large number of manufacturers. The rising brand associations with local drinks are expected to drive the demand of these drinks over the forecast period. The growing number of items involving RTD tea and coffee is expected to boost the demand for these products.

Global RTD tea and Coffee market

Food service distribution channel comprises a network of distributors that supply products to restaurants, cafeterias, industrial caterers, hospitals, and nursing homes. The growth of café culture around the world is expected to drive the demand of these products through this distribution channel.

Convenience stores are major distribution channels for RTD tea and coffee in countries such as Japan and China. Japan has been at the forefront in setting up convenience stores. The large network of convenience stores is responsible for major manufacturers preferring this distribution channel.

Regional Insights

Asia Pacific emerged as a dominant region in 2016, accounting for 41% of the total revenue share. The demand for the product 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 estimated to experience healthy in the coming years, especially in countries such as Thailand, Indonesia, and India.

The growth of RTD tea and Coffee industry in North America is driven by countries such as the U.S. and Canada owing to rising demand for these products. The overall industry in the U.S is growing on account of increasing health awareness in the country. The manufacturers in this country are in a race to introduce new flavors to capture greater market share.

The market the Europe is driven by countries such as the UK, Germany, and Italy due to rising health awareness in these countries. The high demand for instant energy drinks is expected to boost demand for RTD tea and coffee over the forecast period. The health benefits are the major driver for the rising demand for these products.

The Middle East & Africa is expected to grow at the fastest rate over the forecast period. High consumption of tea coupled with changing retail landscape is projected to provide an up thrust to the consumption of ready to drink products in this region. Flourishing foodservice segment in this region can further encourage the demand for RTD tea and coffee.

Ready to drink (RTD) tea and coffee Market Share Insights

Distribution channels play an important role in the value chain of the market. Generally, companies operating in the market are involved in mass production. Demand for the product mostly remains high, due to which easy access to the product becomes the major differentiating factor for manufacturers.

Manufacturers have established alliances with retailers for the sale of their products. Retailers are also gaining importance due to growing demand for soft drinks. Major retailers who have RTD tea and coffee in their product portfolio are Walmart Stores Inc.; Costco Wholesale Corporation; Carrefour S.A.; and Tesco PLC.

The market is highly competitive in nature and is, therefore, likely to witness new product development as one of the most commonly adopted strategies. Key players of this market include Suntory Holdings Ltd.; Nestlé S.A.; The Coca-Cola Company; Tsing Hsin International Group; PepsiCo Inc.; Starbucks Corporation; Monster Beverage Company; Uni-President Enterprises; and Danone.

Report Scope

Attribute

Details

Base year for estimation

2016

Actual estimates/Historical data

2013 to 2015

Forecast period

2017 - 2024

Market representation

Revenue in USD Million, and CAGR from 2016 to 2024

Regional scope

North America, Europe, Asia Pacific, Central & South America, Middle East & Africa

Country scope

U.S., Canada, Germany, UK, Italy, China, India, Japan, and Brazil

Report coverage

Volume and Revenue forecast, company share, competitive landscape, growth factors, and trends

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