Ready-To-Drink Tea Market - Global Outlook & Forecast 2023-2028

MARKET OUTLOOK

The global ready-to-drink (RTD) tea market was valued at USD 59.47 billion in 2022 and is expected to reach USD 86.21 billion by 2028, growing at a CAGR of 6.38%. RTD tea has become immensely popular in the tea market due to its convenience and the perceived health benefits derived from its natural ingredients, particularly antioxidant polyphenolics found in tea. This ready-to-drink tea is widely available in glass or plastic bottles. Still, many companies have recently started packaging it in steel or aluminum cans due to the ease of manufacturing and recyclability. The increasing prevalence of busy lifestyles among consumers has driven a significant market demand for "on-the-go" products. Such factors have led to the popularity of ready-to-drink (RTD) beverages, particularly those with "natural" label claims, and boosted the ready-to-drink (RTD) tea market.

Ready-to-drink (RTD) tea is a packaged tea product ready for immediate consumption without brewing or preparation, usually in the form of iced tea. It is a growing segment within the beverages industry. It typically includes various types of tea, such as black, green, white, oolong, or herbal teas, brewed, processed, and then bottled or canned for convenient on-the-go consumption. Unlike tea bags, which need to be steeped in hot water to make tea, RTD tea is already brewed and does not require additional preparation. Further, the ready-to-drink (RTD) tea market has grown significantly and is popular worldwide. These beverages have become a preferred choice for consumers due to their convenience, portability, and perceived health benefits.

The availability of various flavor options and blends in the RTD tea market has been another factor driving demand. Manufacturers have been introducing unique and exotic flavors, appealing to different consumer preferences and expanding the product's appeal. Further, urbanization in North America has played a significant role in shaping consumer preferences and behaviors, particularly when it comes to the demand for ready-to-drink (RTD) tea. The fast-paced urban lifestyle is one key driver of the North American ready-to-drink (RTD) tea market growth. Busy schedules, limited time for meal preparation, and a desire for on-the-go solutions characterize urban environments. RTD tea perfectly aligns with this lifestyle, offering a convenient and refreshing beverage option that doesn't require steeping or brewing. Moreover, rising disposable income contributes to the demand for RTD Tea in the United States. With higher disposable incomes, consumers have more spending power, making it easier to purchase RTD tea regularly as a refreshing and convenient beverage option.

MARKET TRENDS & OPPORTUNITIES

Rising Demand for Premiumization
Premiumization refers to the growing consumer preference for high-quality, premium, and upscale offerings within the RTD tea category. Premium RTD tea brands focus on providing a diverse range of flavors and taste profiles, appealing to consumers with different preferences. These offerings may include exotic fruit infusions, unique herbal blends, and sophisticated tea varieties. Many premium RTD tea brands prioritize ethical sourcing and sustainable practices, such as using organic tea leaves and eco-friendly packaging.

Increasing Health Concerns & Awareness
The ready-to-drink (RTD) tea market has witnessed a substantial increase in consumer health concerns and awareness in recent years. This significant trend can be attributed to several factors that have shaped the preferences of today's health-conscious consumers. First and foremost, there has been a growing awareness of the importance of maintaining a healthy lifestyle. People are becoming more conscious of their dietary choices and are seeking beverages that align with their health goals.

INDUSTRY RESTRAINTS

High Availability of Substitutes
The high availability of substitutes is a significant challenge in the ready-to-drink (RTD) tea market. Some RTD tea market substitutes include coffee, especially iced coffee and cold brew variants, a popular substitute for RTD tea. Coffee offers a different flavor profile and caffeine content, attracting consumers who prefer a stronger and bolder taste. Additionally, coffee has a thriving culture and loyal consumer base, which can draw attention away from RTD tea. Further, consumers seeking healthier alternatives to sweetened beverages prefer natural fruit juices, such as orange, apple, and mixed fruit juices.

SEGMENTATION INSIGHTS

INSIGHTS BY TEA TYPE
The global ready-to-drink (RTD) tea market includes various tea types – green, black, oolong, and other teas. Black tea accounts for the largest share of over 40% of the global industry. Black tea contains caffeine, which boosts moderate energy and helps with mental alertness. Thereby making it a preferred choice for people looking for a natural stimulant without the intensity of coffee. Moreover, it is known for its mild nature and beneficial effects on the stomach, making it particularly suitable for consumption during colder months.

INSIGHTS BY PRODUCT
Conventional products dominated the global ready-to-drink (RTD) tea market primarily due to the widespread accessibility of these products globally. Conventional RTD teas are often more widely available and can be found in various flavors and packaging formats in supermarkets, convenience stores, and beverage vending machines. They are generally more affordable compared to organic options. However, organic products are expected to grow fastest in the global ready-to-drink (RTD) tea market during the projected period. This is attributed to the growing consumer consciousness regarding organic RTD tea and the increased efforts by major industry players to introduce and promote organic RTD tea products.

INSIGHTS BY FORMULATION
The availability of carbonated and non-carbonated RTD teas allows consumers to choose the formulation that aligns with their taste preferences and desired beverage characteristics. The carbonated teas are known as sparkling teas, which are anticipated to grow rapidly during the forecast period in the global ready-to-drink (RTD) tea market. However, the non-carbonated segment has emerged as the dominant force, capturing a substantial industry share. Due to the rising demand for healthier and more natural beverage options, RTD teas have still gained popularity among health-conscious consumers who seek beverages with lower sugar content and fewer artificial additives than traditional carbonated soft drinks.

INSIGHTS BY PACKAGING
The global ready-to-drink (RTD) tea market comprises various types of packaging, including PET, canned, and other (tetra packs, glass bottles, and pouches). The PET segment is driven by its convenient consumption and storage attributes and is anticipated to be at the forefront in 2022. Additionally, the expansion of this market division is being fueled by innovative bottle packaging solutions and the diverse range of bottle sizes available. However, the canned segment is forecasted to achieve the most significant CAGR during the projected period.

INSIGHTS BY DISTRIBUTION CHANNEL
The global ready-to-drink (RTD) tea market by distribution channel is divided into offline (traditional stores) and online (e-commerce) segments. The offline category includes supermarkets, hypermarkets, convenience stores, and other retail outlets. As of 2022, the offline segment held most of the industry share. However, the online sector is predicted to experience a more pronounced compound annual growth rate (CAGR) throughout the projected period. This shift towards online growth is mainly steered by significant companies opting to expand their market presence through e-commerce platforms, thus driving the online segment's expansion.

GEOGRAPHICAL ANALYSIS

The Asia Pacific region was the primary contributor to the global ready-to-drink (RTD) tea market, responsible for more than 50% of the total revenue in 2022. This substantial share can be attributed to the robust demand for tea within countries like India, China, and Japan, where extensive plantations of these beverages are present. Anticipated growth in the Asia Pacific market remains promising, with Indonesia and Thailand predicted to show significant progress. Additionally, the increasing presence of contemporary grocery retail chains in ASEAN nations, including Malaysia, Thailand, Indonesia, and the Philippines, significantly bolstered the sales of ready-to-drink tea and coffee products.

Middle East & Africa will likely witness the fastest growth rate in the global ready-to-drink (RTD) tea market during the projected period. Tea holds immense cultural significance in the Middle East, shaping social norms and fostering a sense of community. It represents hospitality and companionship, acting as a unifying factor. A significant portion of the prominent industry players are presently situated in North America and Europe, granting them convenient access to consumers of ready-to-drink tea. These ready-to-drink tea products are also marketed as high-quality commodities within advanced markets. As the desire for premium products continues to rise in developed regions, the ready-to-drink tea sector within these countries is projected to expand.

COMPETITIVE LANDSCAPE

The global ready-to-drink (RTD) tea market boasts a highly competitive landscape with several key players vying for industry share and consumer attention. The industry has a global presence, with multinational companies and regional players actively participating. Major players such as Coca-Cola HBC, Nestlé, PepsiCo, Monster Beverage Corporation, SUNTORY HOLDINGS, and Nongfu Spring dominate the ready-to-drink (RTD) tea market. These industry giants leveraged their extensive distribution networks, established brand recognition, and marketing prowess to maintain their positions and compete vigorously. One of the defining aspects of the ready-to-drink (RTD) tea market is the diverse range of products available to consumers. Companies offer many RTD tea options, catering to a wide spectrum of tastes and preferences.