The untapped potential of ready to drink tea

Shaun Weston27 Feb 2013 (Updated 6 Mar 2013)

Luis Fernando Ramirez, marketing and commercial director of Beverage Partners Worldwide, explains to FoodBev Media's Claire Phoenix why the continuing growth of the RTD tea sector shows no sign of abating.

Ready to drink (RTD) tea is one of the fastest growing beverage categories globally. In fact, it’s expanding twice as fast as other categories. Beverage Partners Worldwide (BPW), the joint venture company between The Coca-Cola Company and Nestlé SA, responsible for marketing Nestea in over 50 markets, is taking full advantage of the expanding popularity of RTD iced tea.

What’s most promising is the fact that it’s a development that continues to show further potential. If you consider a mature market such as Switzerland, the average person drinks 24 litres of RTD iced tea a year, but in most of our rapidly growing markets, for example in Eastern Europe, the average is less than three litres per cap.

From our point of view, this shows huge potential for growth. Interestingly, we know that just over four out of 10 people in our markets have even tried ready to drink iced tea, leaving a whopping half the population yet to sample it.

Sampling and conversion

Our experience in sampling for Nestea has shown us that there is a high correlation between sampling and conversion, which gives us extremely positive expectations for continued expansion.

A number of drivers are behind this impressive growth, not least the impulse towards 'naturalness'. Consumers are looking for healthier, more natural choices, and RTD iced tea fits perfectly into that slot, providing the strong antioxidant powers of tea combined with the purity of water.

However, if consumers were simply looking for the most natural drink they could find, they would logically drink just water. So that brings us to look at the other key drivers of taste and refreshment. Only RTD tea stands uniquely placed to offer convergence of all three drivers.

We offer over 25 varieties of Nestea black and green teas, and are always looking for opportunities to appeal to individual markets. In the RTD tea industry, we have immense potential for creativity. In many places, we also offer seasonal varieties, such as a winter tea, designed to be drunk hot, that add something special to our usual product offering.

In keeping with increasing interest in naturalness and health, consumers have also demanded more choice in natural sweeteners. To respond to this, we have introduced Nestea with stevia in some of our markets, including France and Greece. While consumers are enticed by the calorie-free benefits of stevia, they are also attracted by its offer of extra refreshment.

Green tea

While there is an overall growth in the RTD tea category, the biggest movement can be seen in green tea, in large part because it is an engine towards naturalness but also because of the health benefits associated with it.

Green tea is immensely popular in Asia, but has also been gaining momentum on a global level in recent years. For example, between 2006 and 2011, the whole category grew 9.9% but green tea grew 12.7% (source: Canadean).

In some of our markets, green tea is responsible for transforming single-digit figures into double-digit figures. Globally, 9.5% of RTD tea is green tea (source: Nielsen), compared with only 7.5% in 2007.