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The Tetley Tea Report 2018

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The Tetley Tea Report 2018 A COMPLETE LANDSCAPE OF THE OUT OF HOME TEA MARKET CONTENTS 3 INTRODUCTION 4 WHAT’S THE FUTURE FOR FOODSERVICE? 6 A GREAT BRITISH BREW 8 BEAN VS BAG 10 THE TEA DRINKER OF TODAY 12 EXPLORING NEW TASTES IN TEA 14 EXPLORING CHANNEL OPPORTUNI-TEAS 16 THE WORKPLACE TEA BREAK 17 REVITALISING HYDRATION FOR CARE 18 CAFÉ CULTURE 19 ENJOY A LEISURELY BREW 20 OUR BOOMING BREAKFAST CULTURE 22 PREMIUMISATION OF TEA 24 FUTURE TRENDS 26 INSIGHT PARTNERS & ABOUT TETLEY THE TEAREPORT 2018 INTRODUCTION his year, Tetley celebrated still going out, with the majority of us eating a milestone 180 years of and drinking out more than we did pre the delivering quality and expertise Brexit vote. Customers still expect the same T level of service and are keen to explore new to the tea sector. As the nation’s tastes and flavours, but experience is king favourite tea brand and the no.1 and keeping customers interested in your wholesale tea supplier2, we have been offering is paramount to driving success. committed to being at the forefront Good food and drink is no longer enough in this hugely competitive marketplace. of the continual evolution of the tea category since our inception in 1837, In this, our second Tea Report, we explore supporting operators in serving the the changing landscape of the foodservice sector, challenging perceptions around the perfect cuppa time after time, with quality of tea served out of home, identifying the aim to drive profit and deliver ways in which operators can attract custom exceptional customer experiences. with a stand-out tea offering, and diving deep into the key channels for the hot beverage The hospitality sector is facing an category. We welcome you to join us on unprecedented period of uncertainty and this journey, which we hope will unlock challenge following the referendum vote the true potential of tea in your outlet. in June 2016. Everything from rising costs to attracting talent to the industry from across Europe will need to be considered and potentially addressed. There’s no GRAEME KARAVIS denying, there are sure to be interesting Managing Director times ahead for those of us operating UK&IRE at Tata within the foodservice industry. Global Beverages Amongst all of this, consumer behavioural habits remain largely unchanged. Britain is 3 WHAT’S THE FUTURE FOR FOODSERVICE? o just how are business COST OF GOODS, BUSINESS leaders reacting to the UK’s RATES AND EXCHANGE RATES Smomentous exit decision? And APPEAR TO BE HAVING THE just what effect has the result had LARGEST EFFECT, CREATING on consumer habits out of home? DIFFICULT TRADING CONDITIONS AND CURTAILING PROFITS. WHEN Over a year on from the EU referendum, ASKED WHICH ISSUES ARE MOST the wider economic impact is still unclear, as exports and manufacturing are showing AFFECTING THEIR BUSINESSES, positive signs of expansion, while real RESPONSES INCLUDED: wages have seen a fall behind inflation. 1 ATTITUDES Within the foodservice industry, there is an interesting dichotomy between what 81% 78% 73% is happening in industry and what is INCREASE IN COST BUSINESS FALL OF POUND happening in the attitudes of consumers. OF INGREDIENTS RATES STERLING The implications of Brexit on foodservice businesses appear to have had a real time, negative effect on trading, with 71% of Better still operators already noting the impact. But it’s not all ACROSS THE SECTOR, LIKE 76% FOR LIKE SALES GROWTH of business leaders IS ESSENTIALLY FLAT… bad cite performance as in line with, or 1 Like for like news above, expectations BUSINESS LEADER sales growth CONFIDENCE REMAINS HIGH over THE past 12 months: 1 50% of drink-led venues are feeling positive 1.2% about the market1 THE TEAREPORT 2018 WITH CONGESTED HIGH STREETS PACKED WITH COMPETING CHAINS AND THE RISE OF THIRD-PARTY OPERATORS CHANGING THE WAY WE RECEIVE FOOD AND DRINK... Consumers are engaging with brands in a different way, demanding new technologies and innovations in the out of home market. Cutting through the noise and delivering a superior experience is therefore ATTITUDES more important than ever. There remains a disconnect between operator attitudes and consumer behaviour. 4in5 of business leaders are operators state high quality customer experience as ‘very concerned about consumer confidence important’ in the success of their 1 57% over the next six months business over the next 12 months 1 BUT YOUNGER CONSUMERS ARE EATING OUT AT LEAST ONCE A WEEK 55% of consumers are excited to see how technological advances will proportion of age groups change the eating and drinking eating out ONCE A WEEK out market in the future 1 1 18-24 25-34 35-44 45-54 55+ BUT THERE’S STILL ROOM FOR GOOD-OLD-FASHIONED 61% 66% 52% 38% 34% PERSONAL SERVICE… of consumers are worried of GB consumers predict no change that technological advances in the industry will limit or increases to their monthly 1 1 81% eating & drinking out spend 47% face-to-face interactions 5 A GREAT BRITISH BREW he value of tea in the UK foodservice market increased by an impressive T13.6% between 2015 and 2017. 13.6% Despite this, the category remains exceedingly competitive, and a deep understanding is vital tea value under tough overall trading conditions. As coffee shop culture continues to embed itself within growth consumers behaviour, operators are looking for out of home new ways to add value to their tea offering. vs. 20151 REAT BRITISH LOVE A A G FFAI TEA, R... 11.6m 2015 14% said the tea CHOOSE they drink out of home is BLACK TEA 12.4m significantly better than 1 2016 what they make at home 1 75%OUT OF HOME consumers are 13.1m 31.4m 2017 cups of tea consumed out drinking 1 of home on the average more tea 1 1 CONSUMERS DRINKING TEA OUT OF HOME weekday in the UK 1in5than they did a year ago THE TEAREPORT 2018 THE BATTLE OF THE BRANDS… Black tea brand awareness remains high out of home, but the challenge for brands is to convert awareness into brand loyalty and brand desire. 6.2% T E TYPHOO E R T I % L H 7 E S . Y K 3 1 R 27 A 2 O E 7 Y T . 3 TOP 5 % % CATEGORY 1 . 8 1 LEADERS S G N I SALES SHARE N P I G W T T I P S 2 5 . 3 % BRAND AWARENESS, CONSIDERATION AND USAGE OOH 1 PRIVATE LABEL conversion rate between 65% 47% 68% 70% 52% 45% 51% 34% aware to consider conversion rate between 61% 71% 59% 60% 44% 36% 38% 43% aware to drinking 7 afé culture is no longer simply restricted to coffee shops; we’re Cbecoming a nation of food and drink connoisseurs both in-home and out, increasingly seeking new and exciting hot beverage trends to try. From nitro coffee to turmeric-infused tea, the battle between the coffee 3.8bn bean and the tea-leaf is heating up. OOH COFFEE OCCASIONS 4 1 Coffee to go (-10% VS. 2016) Coffee purchase occasions continue to decline out of home, while tea sales remain stable across the board. Coffee continues to dominate purchase decisions in the morning and remains a key competitor for tea, as over half of tea drinkers also drink coffee. Coffee is chosen for energy but is declining across all other needs and showing reduced consumption within the workplace.4 Budget conscious consumers are opting to brew coffee at home, to take to work in a travel mug. 22 OF COFFEE EMS IT ALSO ER DRINKERS H 4 T O DRINK TEA E 43% D U L C N I O S L A 40% S N O I O S F A C C C O O F F E E OF TEA DRINKERS 53% ALSO DRINK COFFEE 4 THE TEAREPORT 2018 1 2017 £2.10 1 2016 AVERAGE COFFEE£2.04 cost per cup 2015 2017 £1.98 £1.77 2016 1 AVERAGE Tea cost£1.73 per cup 2015 £1.69 Reading the tea leaves Insight shows 40% of all tea is drunk in the morning,3 making this day part key for operators looking to increase hot beverage sales. When compared to coffee cost per cup, purchase price is significantly lower. To increase tray spend, tea should be included in meal deals. Tea is chosen habitually and to quench thirst, but is also seeing growth as consumers choose it for energy or simply because it’s their favourite drink. They are more likely to consume food with tea then any other hot beverage.4 22 OF T EA O C C A S I O 3.1BN N S OOH TEA A 4 L S OCCASIONS O I 62% N (+1% VS. 2016) C L U D S E M O E T T I H E R 9 THE TEA DRINKER OF TODAY… ith more than 51 million tea drinkers in the UK, 165 million Wcups of tea drunk every day, and almost 2000 cups consumed every second,23 we can safely say that tea is a drink that can be enjoyed by all. However, when it comes to drinking tea out of home, consumers are less inclined to partake in this daily ritual. 34% of consumers who drink tea in home don’t consume it out of home,1 creating an opportunity for the foodservice sector to convert these valuable customers. 1 T ea e o u m t o o h f n 34.4% 6.3% h i o 59.3% m a e e T Increasing penetration of tea out of home can only be achieved by understanding and analysing the identity of perspective customers, and meeting their needs and wants.
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