UK
Tea premiumization has become an overarching priority for sellers and producers across the globe. A Tetley Tea Report defines it in terms of consumer appeal: the willingness to trade up and pay more for a superior drink.
As with many other analyses, it sees millennials as the key target and their preferences for variety, experimentation, health, and ambiance as key drivers of their choices, including coffee.
The Tetley report admits that the very need for premiumization reflects the neglect of these factors. Commoditization has eroded several key markets: basic black tea sales in the UK and Russia have dropped substantially. Yields and quality of low-end farming have compounded financial losses and cutbacks in Assam, Kenya, and Africa. Coffee shops greatly outnumber tea service outlets in major urban centers.
Premiumization is a very broad term that obscures the difference strategies Here are what appears to be the main thrusts:
Leaf premiumization: This focuses on the grower, with Kenya’s purple tea a noted instance of a new designer leaf. It includes widespread efforts to move away from a near-total reliance on commodity green and black teas. Vietnam, Colombia, Kenya and several African nations are adding premium crops: organic, clonals, and wild teas. While total sales may not be great, the margins are attractive in an industry where cost pressures and price erosion are continuous.
Wellness and lifestyle appeal: This lies behind the growth of green tea in expanding markets, where black tea remains over 80% of volumes. It extends to consumers’ valuing the natural, organic and healthy, and their being open to supporting social issues of supplier relationships, authentication, and transparency, It has been simpler and faster for specialty tea brands like Bigelow, Numi, Harney & Sons, Tao of Tea, Mighty Leaf, and Republic of Tea to make this shift than for the mass market giants. That said, Lipton, Tetley, Dilmah, and Twinings are aggressively pre-immunizing their range of products in this direction.
Product innovation: Much of premiumization is aimed at attracting Asian millennials via variety, originality, and intersections with food and service. Bubble tea, cheese tea, matcha, kombucha, cold brew, and alcohol-infusions are not all new, but they are intendedly different from the mainstream tea product inventory.
Flavor innovation: The adoption of botanicals, improvements in blending technology, use of spices and fruits mark a true flavor revolution for tea, with turmeric, hibiscus, pea flower butterfly tea, Andean herbs and fruits being infused into traditional green and black teas, rooibos and even gin.
Ambience-enhancement: Starbucks has become the Dark Force of the tea industry along with Britain’s Costa Coffee. They offer a combination of varied and quality drinks served in an ambient setting. Tea has lagged badly, though it has a long tradition of fine individual tea houses and high tea services. Now, Chai Point and Chaayos in India, TWG in Singapore and T2, based in Australia but now global, are setting new standards for tea salons, restaurants, and bars. The customer, of course, decides what premiumization is and what it’s worth.