Fresh Cup Magazine, providing specialty coffee and tea professionals with unique insight into the trends, ideas, products and people that shape their world.
Issue link: http://freshcup.epubxp.com/i/178110
T hree years ago, Veerinder Chawla made an investment in the long-term growth of ready-to-drink teas. The company he owns—Portland's The Tao of Tea—built a bottling facility and launched a line of unsweetened RTDs made from full-leaf teas. "In our opinion, tea already has so much sweetness if you brew it well that you don't need to add sugar," says Chawla. It's an approach that some may see as extreme, especially considering that sweetened teas constitute the lion's share of the RTD market. But the "absolutely no sugar" approach gives The Tao of Tea something that every RTD tea manufacturer needs to stand out on the shelves: a hook. Yes, it's as difficult as ever to differentiate one's product in the crowded world of RTD teas, with countless items in the marketplace and major beverage players such as Coca-Cola and Pepsi now contributing RTD tea brands. Not coincidentally, it's also a valuable category: In its July 2013 "Tea and RTD Teas - U.S." report, research firm Mintel projects the canned/bottled RTD tea market will break $4 billion in 2013. With specialty tea arguably beginning to break into the mainstream, RTD is the beverage category's most recognizable arm. But for many who work in the specialty-tea retail realm, RTD teas are somewhat of an enigma: a highly profitable category that has a lot in common with the product through which you make your living—but is at the same time entirely different. After all, an RTD tea can typically live on the shelf for a long period, while your tea is special in part due to its freshness. But many manufacturers of RTDs—The Tao of Tea, for example—are finding that having quality product is key to achieving success in RTDs. Here we look at the current RTD tea market—and how some of its players are carving out success. SLIGHTED SWEETNESS To understand the growth of RTD teas, it helps to look at a product that is losing market share: the soft drink. This summer, New York City Mayor Michael Bloomberg fought a very public battle to prohibit businesses from selling sodas and other sugary drinks larger than 16 ounces. The link between soft drinks and childhood obesity, type 2 diabetes and other health concerns has caused many consumers to back away from the beverage. "The American Heart Association recommends no more than nine teaspoons [36 grams] for men or six teaspoons [24 grams] for women of added sugars in a daily diet," says George Jage, founder and director of World Tea Media. "Take a look at the back of your next can of soda to see how much you exceed that by with one 12-ounce serving." While the majority of RTD teas have sugar, most manufacturers are clear to stress the type of sugar they use. "Our products use cane sugar, and that's a big deal," says Jody Piagesi, director of marketing and customer relations for H2M Beverages, maker of Herbal Mist Iced Teas. "It is better to have natural sugar than processed sugar." Another RTD brand, Rooibee Red Tea, uses organic cane sugar in most of its line, but CEO Heather Howell says RTDs don't need sugar to sell. "We have an unsweetened [tea] with absolutely no sugar, and it's one of our top sellers," she says. Both Herbal Mist and Rooibee won 2013 North American Tea Championship (NATC) awards—a contest produced by World Tea Media. "We are seeing a much stronger demand for lightly or nonsweetened RTD teas," Jage says. GET YOUR HOOKS IN When Walter Apodaca perused grocery-store shelves 25 years ago, not only did soda dominate the landscape, but a few brands ruled the roost. "The non-alcoholic beverage category was really three companies: Coke, Pepsi and Dr. Pepper/7-Up," he says. It was the arrival of two beverages—Snapple and Red Bull—that shook the beverage industry and opened the door for new players, he says. "The bottom line is that somebody broke the glass ceiling and started to put beverages in the market that were unique," Apodaca says. "They were building creative and interesting beverage concepts that the big companies hadn't even thought of." Apodaca is hoping to follow a similar path of beverage pioneering with Tea of a Kind, a three-flavor line from Gizmo Beverages, of which he is president. The product—which won a pair of 2013 NATC awards—uses a patented gadget called the Gizmo closure to protect elements of the drink from degradation. When the user twists the cap to open the beverage, it infuses the stored elements into the liquid in a burst of color. "We're breaking into the beverage space with something really exciting and innovative," says Apodaca. With so many RTD products vying for shelf space, it's as important as ever for manufacturers like Gizmo to have a clear distinguishing factor to which they can tie their marketing efforts. "I think a story is key," says Howell of Rooibee Red Tea. For that product, the story is that all its products contain rooibos, the continued on page 34 freshcup.com October 2013 33