STiR coffee and tea magazine

STiR coffee and tea 23 T By Billy Dietz he American tea market is transforming, driven by consumers' in- creasing awareness of health and wellness. What was once a simple choice has evolved into a sophisticated marketplace of functional teas, adaptogens, and wellness-focused blends that promise everything from better sleep to enhanced cognitive function. This shift is fundamentally reshaping the entire tea industry. The Numbers According to the World Tea News' 2025 State of the Tea Industry Survey, functional and wellness teas have emerged as the dominant consumer trend, with 25.1% of industry respondents identifying this category as the biggest trend in tea. Perhaps more telling is that when asked what has most impacted their tea sales, the majority of respondents (26.3%) cited consumer interest in health and wellness. This growth is occurring within the broader context of America's func- tional beverage boom. According to data from Gary Hemphill at Beverage Marketing Corporation, functional beverages have increased their share of the beverage market from 13.5% in 2019 to 15.1% in 2024. "In general, demand for functional and health and wellness drinks is outpacing the overall market and gaining share," Hemphill explains. "Today's consumers are, by and large, drinking and eating healthier." While ready-to-drink (RTD) tea represents 14.7% of functional bever- age wholesale dollar sales and 26.5% of volume, the premium and functional segments are driving disproportionate value growth. The functional beverage market's wholesale dollar sales are growing at a compound annual growth rate (CAGR) of 7.1% between 2019 and 2024, significantly outpacing volume growth of 1.7% CAGR over the same period. This divergence highlights the premiumization trend driving the functional RTD tea segment. The Ingredient Revolution The success of functional teas hinges on specific hero ingredients that consumers actively seek. Tra- ditional wellness ingredients are experiencing re- newed popularity alongside emerging adaptogens and nootropics. "We have seen consistent popularity of ingre- dients like peppermint for digestion, chamomile for sleep, and turmeric for anti-inflammation," ex- plains Smritika Sharma of Luxmi Tea. The trend extends beyond traditional botanicals. Ryan Col- lins of Finlays Solutions notes that "well-known functional ingredients like ginseng and ginger are seeing renewed interest as adaptogens have gained widespread knowledge." Emerging ingredients are also gaining traction. "We have seen valerian root for sleep, ashwagand- ha for focus, and lemon balm for relaxation get a lot of interest recently," notes Collins. "Other not-so-common functional ingredients that are gaining traction include collagen, vitamin B, and botanicals such as barley, mint, and other fruit va- rieties like blueberry or lychee," Collins adds. This diversification reflects consumers' growing under- standing and acceptance of functional ingredients. The Product Portfolio Evolution Companies are responding to wellness demands by introducing new formulas or incorporating functional ingredients into existing products. The transformation is evident at established tea com- panies, where functional blends increasingly domi- nate product lines. Functional Beverages and Wellness Teas: Reshaping the US Market Many tea companies are launching new product category lines featuring functional ingredients like ashwagandha (pictured above) to meet the growing demand for health and wellness teas. Photo credit: Bankim Desai Three popular functional herbal tea blends from Luxmi Tea: Astounding Ashwagandha, Turmeric Time Out, and African Rose. Photo credit: Luxmi Tea

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