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QSR Feature
Tea Party
Although sales have slowed in recent years, innovation—from sophisticated flavors and health-infused benefits to quicker brewing methods and the green effect—has the tea category poised for a strong comeback.
Sustainable production of tea leaves is a draw for eco-minded consumers.

There’s a lot brewing in the tea industry these days, despite the economic downturn’s effect on sales. Most experts seem to feel this is a temporary fluctuation that will right itself as consumers’ financial prospects improve.

“Following 2 percent annual gains in 2008 and 2009, we expect to see an increase of 5 percent in 2010, followed by steadily rising annual percentage gains through 2014, when growth will again reach the double digits at 10 percent,” says Daniel Granderson of Packaged Facts, a consumer market-research company that recently published a study on the category. According to a recent report commissioned by The Nielsen Company, 43.9 percent of U.S. households purchased ready-to-drink (RTD) liquid teas at least once during the 52 weeks ending June 27, 2009; those households spent an average of $26.10 for the year on tea, a sign that the tide may already be turning.

In reviewing Datamonitor’s Product Launch Analytics database, director Tom Vierhile concludes that RTD tea trends will mirror the other beverage markets, including the growing popularity of antioxidants and other “better for you” ingredients such as super fruits and hemp; an emphasis on more sophisticated formulations such as varieties beyond black and green teas; and a move toward cleaner products, including those that do not contain high fructose corn syrup. There are also opportunities to deliver made-on-demand products through new technologies that make it easier for quick-service restaurants to offer the customer fresh-brewed beverages. QSR spoke with industry leaders for a look ahead, and on the opportunities in store.

A Cup of Sophistication

Traditionally, black tea has been the most popular flavor with U.S. tea drinkers. In fact, it represents 80 percent of the tea consumed in the country, according to Joe Simrany of the Tea Council of the USA. But he says there is evidence that consumer tastes are changing. “There are so many studies out now on tea, showing the different benefits of it, and each time that happens tea becomes more popular—and this is a coffee-drinking culture,” he says.

Simrany notes that white tea in particular is really popular. “It was very rare a few years ago,” he says. “In fact it was only produced in one area of one province of China for a very short season. Then the cosmetic industry made it popular by adding it to hand creams and other products, touting the antioxidant benefits.” Green tea, he says, remains as a hot varietal, driven mostly by its health benefits and the fact that science favors it.

Quality is another key factor. Tazo teas have built a loyal following based on the promise that each of the tea blends uses the most authentic, highest quality tea leaves and botanicals from 29 countries around the world, says Kevin Lee, a public relations representative for the line.

“This attention to detail results in something that discerning tea drinkers are looking for: a line of super-premium teas available in a variety of flavor profiles,” Lee says. Tazo teas, which include a full line of filterbags, latte concentrates, and RTD teas, are available at Starbucks, Seattle’s Best Cafes, and a variety of other cafés, coffee shops, and retailers such as Whole Foods worldwide. This month Tazo will introduce a new line of full-leaf tea sachets that will come in tins of 15 filterbags and sell at a suggested retail price of $8.99–$9.99. The flavors include Vanilla Rooibos, a blend of rooibus, Tahitian vanilla, cinnamon, and peach flavors; and Orange Blossom, a light blend of jasmine green tea, goji berries, and tangerine peel.

Adding a premium air to the product, as Tazo has done, seems to be another strategy tea makers are turning to in this competitive market. According to Maria Caranfa of Mintel Menu Insights, many tea brands are differentiating themselves by identifying the country or province where the tea leaves are sourced. Harney & Sons, for example, offers a line of elegant “art teas” made with green tea leaves from the Fujian Province that are cured and then scented with high-quality flowers.

The Health Benefits

Without question, part of the tea category’s growing appeal has been its intrinsic antioxidant health benefits. Red Mango recognized this demand for healthier beverages as an opportunity to expand its tea line and even take it one step further. Last summer the company launched what it describes as “the world’s first low-calorie, all natural, probiotic iced tea.” According to Dan Kim, CEO of Red Mango, the tea is available year-round, incorporating a probiotic called GanedenBC30, a patented strain that is shown to help support the immune system and regulate the digestive system.

“The probiotics, which are stored in single-serve pouches and kept in a cool environment, are mixed in immediately before the tea is served to the customer,” Kim says. Flavors include Lemonocity, a green tea with pure cane sugar and the mild zing of lemonade; Mysteaque, a black tea with vanilla, pure cane sugar, and hints of sweet bourbon flavor; and Fanteasia, a hibiscus tea with pure cane sugar and notes of berries. All of the teas are fat-free, sodium-free, and cholesterol-free.

Tropical Smoothie Café experimented with tea flavorings and other healthful ingredients with great success, says Mike Rotondo, vice president of operations at the company. “We introduced a green tea smoothie with various flavors: kiwi citrus green tea; very berry green tea; and strawberry, blueberry, and matcha green tea,” he says. Each one is between 160 and 200 calories, which appeals to female consumers.

“There’s a certain person looking for green tea—women between ages 25–35—which is a good representation of our demographic,” he says. “Drinking a tea smoothie in the morning or mid-afternoon is a great alternative to the traditional mid-afternoon coffee pick-me-up. Also with smoothies, there’s less caffeine than an 8-ounce cup of coffee, and our smoothies have 2 grams of fiber.” Rotondo says that the company chose the green tea versus black tea because it has a milder flavor and mixes better with the other ingredients.

Nearly half of U.S. households purchased ready-to-drink liquid teas.

Other quick-service outlets such as Subway have also recognized the need to provide more freedom of beverage choice to the consumer. This past summer, the chain added Fuze iced tea to its nearly 22,500 restaurants nationwide. Each Fuze tea contains natural tea antioxidants and provides 10 percent of recommended daily vitamins B3, B5, B6, B12, and C per 8-ounce serving. “Fuze is brewed throughout the day to bring the freshly brewed taste to our consumer,” says Bill Schettini, chief marketing officer for the chain.

RTD tea companies have also expanded their offerings. Snapple, for example, has a new formula that uses sugar as the sweetener rather than high fructose corn syrup. The varieties in the new formulation include green tea, diet green tea, mango green tea, Asian pear green tea, diet lime green tea, diet pomegranate red tea, and nectarine white tea, among others. Bigelow RTD teas are advertised as 100 percent natural, and are said to be rich in antioxidants, loaded with vitamin C, B3, B5, B6, and B12, and sweetened with just a touch of organic sugar. Peet’s Coffee & Tea line of RTD teas, which are brewed from whole tea leaves such as green, oolong, white, and black teas, also rely on pure cane sugar for their sweetness, which allows the company to sidestep the controversy over the use of high fructose corn syrup in RTD beverages.

Not to be outdone, filterbag tea lines such as Tazo have also created a category focused on health and wellness. Called the Well-Being Teas, Tazo Rest, Tazo Thrive, and Tazo Focus are made with ingredients that the company says were selected to offer a sense of holistic balance while ensuring flavor quality and consistency. Tazo Rest features rose petals, valerian root, and citrusy herbs to encourage relaxation; Tazo Thrive blends green tea, spearmint leaves, rose hips, chicory, and licorice root to encourage balance; and Tazo Focus mixes black tea, lemon balm, cocoa peels, and citrus essence oil to energize the body. The possibilities to create mixtures that appeal to the consumer’s desire to live a more healthful lifestyle offer a wealth of opportunities to quick-service and fast-casual restaurants looking to set themselves apart from the competition, garner goodwill with their base, and bring in new customers.

Quicker and Cleaner

One of the challenges many quick-service restaurants have encountered with offering tea is the question of how to brew it quickly and in a small footprint. Coca-Cola’s new iced tea brewer, FlexFresh, aims to solve both of these issues, says Randy Raymond, Coca-Cola expert in all things tea-related. With one machine, a restaurant can offer the customer a variety of flavors, freshly brewed, and dispensed in less than one minute. All that is required is enough space to accommodate a unit 15” x 21” x 32”.

“The beauty of this platform is that it is so flexible,” Raymond says. “A restaurant can take it the premium route, choosing from 50 different varieties that we offer or they can pare it down and choose to offer just one or two flavors of the day.”

Conservation is a concern for quick-service and fast-casual restaurants not only in terms of space but also in terms of the ecology. Lipton teas, for example, offer a variety of iced and hot teas in which at least 50 percent of the contents of each bag have been sourced from Rainforest Alliance Certified Farms, making it a choice that eco-minded consumers can feel good about, says Dennis Moy of Unilever Food Solutions, the makers of Lipton teas.

“The Rainforest Alliance is an international nonprofit organization that works to conserve biodiversity and promote the rights and welfare of workers, their families, and the communities in which they live,” he says. “The farms from which these teas have been sourced have met comprehensive standards for sustainability. By 2015, all Lipton tea bags will contain tea sourced from Rainforest Alliance Certified farms.”

Despite the beverage’s emphasis on sustainability, tea’s stigma as the drink of vegetarians and hippies is beginning to go away, says Aaron Allen, a noted restaurant consultant. “The real key is reprogramming the consumer away from the cultural conditioning that I feel is part of why we drink so much coffee in the U.S.,” Allen says. “As people begin to see more of the health benefits—tea as a way of getting more clarity of mind, along with its health benefits—its potential will grow. I predict we’ll see a national tea chain in the next few years.”