STiR coffee and tea magazine

34 STiR coffee and tea / Issue 3, 2018 (June / July) B By Josh Doyle ottled drinks are the fastest-growing beverage segment worldwide. Driven by nutritional health concerns globally and convenience, consumers have el- evated flat and sparkling ready-to-drink (RTD) tea to become the no-mess alternative to sugary sodas. Volume growth is second only to bottled water (see chart) and with exciting new innovations in flavor, packaging, and brewing technology, the RTD tea industry is meeting this demand. The U.S. market The United States is the world's third largest RTD market by value. Tea loving Ameri- cans warmly welcome innovative lines of RTD tea products. In 2016, RTD sales reached $72.25 billion globally with more than three quarters of those sales tea prod- ucts. That trend is building momentum with projections of a combined annual growth rate (CAGR) of 5.6% through 2024. American tastes have changed. U.S. consumers show a clear preference for pre- mium brands. Value growth outpaced volume growth in 2017, with higher-end prod- ucts from brands like Pure Leaf outperforming most of their competition, and value- oriented brands finding it harder to compete. This spells trouble for cherished U.S. brands like AriZona, famous for printing "99 cents" on their cans and taking a quantity-based approach. They still rank top for RTD sales in the U.S., but with more consumers leaning towards healthier alternatives, AriZona tea's high sugar levels are out of favor. The market is increasingly competitive, and intently focused on health. "Consumers are looking for transparent products that don't hide ingredients, and with little sugar," said Rachel Heinzinger of Tiesta Tea. "Consumers are also in search of a variety of caffeine levels, whether they are looking to increase or cut down on their caffeine intake." This may be why RTD tea growth is outpacing soda. Between 2016 and 2017, RTD tea sales saw a 3.9% rise in retail dollars, while soda saw retail value growth of only 1.2% according to the Beverage Marketing Corporation (volumes declined). Soda brands are staying in the game by focusing on low and sugar-free alternatives to traditional soft- drinks, and finding more and more consumers are concerned about sugar content. Health Conscious Consumers Choose RTD Tea Functional bottled teas are hit Argo's single origin, single-serve

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