Ready-to-drink (RTD) bottled teas and juices have improved in quality over the last few years, which is one reason why the category has expanded greatly in the U.S. Additionally, greater numbers of organic, low- and no-sugar RTD tea and juice products have broadened consumer choices within the category.
And what’s good for the consumer is good for c-store sales, as sales figures indicate.
Liquid teas remain strong with dollar sales growth of 10.5%, according to a recent Wells Fargo Securities’ report covering Nielsen sales data, ending Dec. 20, 2014.
Market research firm Canadean noted in a recent report that the $5.4 billion U.S. market for RTD teas is expected to have a projected growth rate of 6% through 2018.
Just like flavored bottled water, RTD tea is also a segment of the U.S. beverage industry that is growing at a fast pace, due to a healthier, more natural perception. But unlike in bottled water, where margins are thinner, RTD tea, and in particular the premium products, are more profitable.
According to Sherry Frey, vice president of Nielsen’s health and wellness/fresh practice, RTD tea is a growing segment driven by select factors, including the market projection of a healthy image—especially with younger consumers.
“Actually, we see the entire tea category, which includes dry and liquid, appeals most to the boomer and Generation X audience,” Frey said.
Because of heightened consumer interest, more flavors and product innovation is helping move the RTD tea category into 2015 and beyond. Nowhere is the category’s diversity more on display than in the 650-plus Pilot Flying J locations across North America.
Anne LeZotte, communications manager for Pilot Flying J, said Lipton products are leading the way.
“Lipton Tea achieved great growth in 2014, primarily in its Lipton Pure Leaf brand and green tea,” LeZotte said. “We added Argo Tea, a premium flavored tea, in September 2014 as a test. As a result of its success, we rolled it out nationwide this year. Unique Argo flavors include Hibiscus Tea Sangria, Green Tea Ginger Twist and Carolina Honey.”
It’s now accepted that consumers are shifting away from soft drink consumption because of growing health concerns and are instead seeking out more nutritious alternatives including RTD juices—and not just fruit juices either.
Vegetable juices made up 5.1% of the juice market in 2014, with citrus juices claiming 57% share and non-citrus juices making up the remaining 37.9%, IBISWorld reported.
Although healthy, premium attributes are a big part of the consumer purchase decision in the juice and juice drinks category, taste rules, the Mintel International Group reported. Seventy-seven percent of surveyed consumers aged 18 and older said they buy juice and juice drinks for the taste, according to Mintel.
Because of customer preferences, teas and juices are earning shelf space in c-stores, as a result.
“Naked Juice varieties have been successful for Pilot Flying J throughout the past two years, and V8 also is experiencing significant growth,” said LeZotte. “Juice sales have been somewhat flat, while tea sales experienced some growth. As a result, we expanded retail space for tea in 2015, to maximize real estate in the stores for more products in the functional beverages category.”