Storm in a Teacup

Just about every tea firm has moved into fairtrade, ethically produced or some other feelgood organisation, which today customers expect. But where is tea heading now? And what effect will rising prices have on the sector? David Hurst reports

A cloud is hovering over the tea category as the effects of dry weather conditions in key tea growing areas such as Kenya, India and Sri Lanka have affected crops and production.

With the usual ramifications of supply and demand, prices have therefore inevitably shot up. But how far will these go? And how will this affect tea drinking out of home?

Some of the leading suppliers admit there is potentially less tea around but are reticent about the actual amount that tea prices will increase by.

However Nick Klos, who owns Tudor Tea & Coffee which sources some of its tea from Kenya and Sri Lanka, acknowledges that prices will have to rise. He says the low rainfall in these three main tea growing regions of the world has meant the tonnage of black tea harvested was down some 100,000 tons during 2009.

"This coupled with increased demand for tea in the burgeoning domestic markets of China and India has meant the market price for tea has soared. It is unlikely in the short term that these market conditions will change, so inevitably all tea blenders will be raising their prices later this year," he explains.

Tudor offers ethically sourced products, which includes its 100% Rainforest Alliance certified Kenyan tea in tagged teabags.

One matter that concerns Klos is that consumers don't give tea the same credence as coffee and questions whether people are prepared to pay for the "right tea".

According to Unilever Foodsolutions' marketing manager Claire Sullivan, black tea still continues to be the favourite beverage among consumers overall. "However customers do want to see different varieties served alongside traditional black tea out of home," she says. "Our research shows that the value growth of green tea has increased by 10.9% and value growth of fruit and herb infusions increased by 3.9%, giving operators the opportunity to expand their tea offering to include these flavour options.

"To make customers aware of the speciality teas and infusions on offer, it is key for operators to use full descriptions on menus. If they are educated about the flavour profile of each variety of tea, then they will be more likely to make a purchase based on the blend that suits them."

The company has just launched a category report that gives operators all the information they could possibly want about tea, and is aimed at helping caterers maximise profit opportunities, which it says is essential in the current economic recession.

Unilever's insight into the tea category suggests today's consumers are time and cash poor but that their expectations are higher and they are looking for emotional and healthy benefits from their purchases.

A key issue with tea served out of home, says the report, is that consumers aren't happy with the quality of the tea they buy and would pay more for a better beverage if it is served the way they like it. Unilever says there is therefore an easy profit opportunity for foodservice operators who are prepared to invest time and effort into improving tea offerings and it's about serving a familiar, quality brand, in the right format to suit the need and the occasion.

Twinings senior customer marketing manager Andrea Stopher believes however that things are beginning to change for tea out of home. "With the coffee market reaching saturation point and a general move towards a healthier lifestyle, tea is definitely in vogue. Customers are looking for a premium tea experience when out of home, not an over brewed teabag left in a polystyrene cup.

"Key to this new move is the rise of the afternoon tea experience. While coffee is all about convenience and on the go, tea is about taking time out to relax and socialise.

"With a wide range of tea now available, including green, white, infusions, and an array of speciality blends, a tea renaissance is imminent. The old fashioned image of tea is now a thing of the past, as a new audience of younger drinkers are experimenting with more premium teas."

This view is echoed by Marco Olmi of Drury Tea & Coffee. "A big trend in recent years has been the resurgence of afternoon tea. For long the preserve of top London hotels, it is actually something that smaller high street tearooms can do equally well for a fraction of the price and still make a healthy profit."

David Latchem of Café du Monde says there is a marked trend back to leaf tea. "Teabags have for many years dominated the market for their convenience, but leaf tea gives a depth of flavour that is difficult to achieve with bags. Probably on a par in importance is the 'theatre' of leaf tea service. Served on a tray with hot water, milk jug, sugar bowl, it becomes an occasion and can be premium priced."

Twinings also believes the quality of service is crucial. Stopher says: "It is essential to serve tea so that the customer has full control over the brewing process and can add milk and sugar to taste.

"It is also the finishing touches that make tea such an experience, such as stylish crockery, slices of lemon and food accompaniments.

"Consumers in general are becoming more discerning and are looking for different kinds of tea, expanding their repertoire as they become more adventurous in their tastes.

"By offering a menu pairing different tea with food, caterers can create an experience on a par with food and wine pairing, encouraging customers to trade up to a meal or snack with their tea and appreciate the tea with food that will complement it."

She says 75% of purchasing decisions are made at point of sale, which makes branded merchandising hugely important to communicate the brand and range of tea served, and most tea companies have this POS material to support their products.

Tetley has got behind its brand with a new website for caterers to spread more information about different tea types.

It says the site is about "caterers keeping in touch, expressing opinions, providing feedback and asking questions". Caterers can also order free POS material, get the latest market data and find out more about ethical and sustainable beverages. The company is also encouraging caterers to stock up on Tetley for Christmas.

For every two cases of Tetley 2x1100s or seven cases of envelope 250s bought from delivered wholesalers until November 7 2009, Tetley will reward caterers with a £10 Argos or Marks & Spencer voucher. Tetley says there is no limit to the promotion so the more you buy, the more vouchers you receive. All you have to do is contact wholesalers or visit Tetley's website for details in order to reply, along with proof of purchase, by November 21 2009.

Typhoo has recently announced its new partnership with charity FDS (Federation of Disability Sport) with a high profile endorsement from football legend Sir Geoff Hurst and the Great Britain disabled football team.

The charity link is part of a significant marketing investment the company is putting behind the brand in 2009, which also includes PR activity and TV advertising set to appear later this year.

Typhoo believes tea is a drink that grows in popularity as people mature. In its tea category overview, it says tea becomes a fundamental way of life as we grow older, and between the ages of 20-40 people increase their tea consumption by 25%, and by the age of 65 tea accounts for more than half of drinks consumed.

For the past 17 years, Typhoo has been involved with a quality assurance programme that covers all ethical and sustainability issues. Its extensive portfolio, which includes traditional Typhoo tea, London Fruit & Herb tea, and Ridgways standard, organic and fairtrade, has recently been taken on board by British Airways. The company says with the expansion of BA routes to new countries, it will create new leads for its Typhoo brand to expand into these markets.

In April this year, Typhoo's sales director Keith Packer was appointed CEO. The company says he was key in managing the transition of the product range from Premier Foods to the current owners, Indian group Apeejay Surrendra. Commenting on his appointment, he said that "with the support of our owners and a highly committed team, we have some excellent plans to capitalise on the opportunity for Typhoo during 2009 and beyond".

Health is often mentioned as part of the attraction of speciality teas, and brands that began life in health food shops are now spreading their wings and moving into foodservice.

One of these is Dr Stuart's herbal teas that were previously retail only and are now available for foodservice, for which tea pairing menus are being recommended. For example it suggests pairing particular teas with specific dishes, such as apple and ginger herbal tea with a slice of homemade carrot and walnut cake, or camomile tea with a traditional cream tea.

First Choice Coffee has recently launched a range of tea to take advantage of what it sees as a possible 25% rise in speciality tea sales this year. Its broad range includes some interesting exotics such as white ginger pear and vanilla orchid.

Newby Teas also boasts a wide range and this autumn is adding rooibos orange, based on the caffeine free redbush, and a blackcurrant and vanilla 'berries delight'. Newby is distributed by Café du Monde which says it is taking the in-bedroom category further up market with careful presentation of a range of teas.

Café du Monde's Latchem expresses surprise at the popularity of the rosehip and hibiscus as well as the more usual peppermint to aid digestion and camomile to promote restful sleep.

With all these infusions and flavours it is easy to forget that tea originated in China and Chinese teas are gaining ground in the UK.

Specialist companies such as Bristol based All The Tea In China (ATTIC) and London's Jing tea are supplying tea to many upmarket hotels and restaurants. ATTIC's Ric Vaughan-Davies points out that fresh coffee upstaged instant and now leaf tea should free the drink from the teabag.

But Peter Haigh, brand development manager for Tetley, brings things back to earth. "With so many blends available it can be costly and confusing knowing which to serve. This is why Tetley has developed the specialist tea starter pack to help outlets offer customers their favourite specialist blends. It is simply a pack containing six of the most popular specialist teas, enabling the caterer to trial each blend on the menu, without committing to buying a full case of each."

Going back to basics however, Tetley's On The Go range contains almost everything caterers need to offer a takeaway tea service. Haigh says: "The case contains 300 teabags, plus 300 branded double wall cups and non spill 'sip lids'. All you have to do is add milk and water – it really couldn't be simpler to set up. Having recently sold more than a million and a half cups in six months, the case is already proving to be a popular solution with caterers throughout the UK."

Related Articles:

• 14 Jan 2011 - New range of Chinese teas introduced for hotel and catering trade
• 20 Oct 2010 - Tetley launches online shop for caterers
• 23 Aug 2010 - The London Tea Company wins two gold stars at the Great Taste Awards
• 17 Feb 2010 - Tetley adds Rainforest Alliance certification to its tea
• 29 Oct 2009 - Twinings and Swissôtel partner for new Afternoon Tea Concept