Who doesn’t love a cup of tea? Cure of all known ailments and the go-to response whenever there is a problem, tea is the hot beverage at the heart of the UK.

Black tea: It’s all about the right pack sizes

The figures put everyday black tea in a long-term decline, but can it be turned around? Tetley director of shopper and customer marketing Andrew Pearl says the everyday teas remain important, but retailers should be looking elsewhere for growth.

“As tea manufacturers, the challenge for next year and beyond is to begin to offset the decline in everyday black tea sales by helping retailers make more of the growth areas in tea, particularly green teas, which have grown 18.8% in value and 13.9% in volume speciality teas, which are up 6.9% in value and 4.3% in units and fruit and herbal, up 14.3% value and 13.8% in units,” he says.

Pearl adds that retailers should focus on a few key black tea lines to ensure they cover their bases. “In the general market, Tetley Everyday 240s are an important size, and sales of these have grown 8% year on year by value,” he says. “Aside from the larger convenience stores, smaller pack sizes tend to have more appeal for convenience shoppers with packs of 40s, 80s and 160s being important.”

Taylors of Harrogate’s John Sutcliffe believes that retailers should cut back on their everyday black tea range. “The standard black tea market is exhausted with NPD, and as this sector is in decline it’s important to concentrate on stocking the essential pack formats of 40s and 80s,” he adds.

But perhaps the one problem it can’t solve is how to turn around flagging sales and expected long-term decline. According to the Mintel report Tea and other Hot Drinks, volume sales of tea dropped by 3% in 2013 and the market is forecast to see a decline of 3.6% over 2013-17.

Mintel senior food and drink analyst Amy Price says this is down to other subcategories in hot beverages taking more market share. “Tea consumption is in long-term decline, as the market faces competition from rival sectors such as coffee and soft drinks,” she says.

All is not lost, though, as Price believes there is an opportunity for brands and retailers to put tea back in the spotlight through new products, premium lines and promotions. “The onus remains on operators to support usage by reminding consumers about tea and continuing to update their proposition to meet consumers’ changing expectations,” she says. “Encouraging experimentation and trading up within the market through NPD and marketing support remains key for driving growth.”

So before you rush to throw out those packs of tea, the advice is to take a long, hard look at the types of tea you offer and what it is your shoppers want. That’s exactly what Chaz Chahal, who runs Costcutter stores in Bromsgrove and Kidderminister, did. He had begun to feel that his hot beverage offering wasn’t quite up to scratch, so decided to overhaul it with a focus on premium and variety products.

“The category wouldn’t be in my top 10 so it probably didn’t get the same care and attention that others did, but I felt it was time to examine it properly,” he explains.

“Retailers can’t just focus on value they need to look at offering something different in hot beverages.”

Trading up

The first thing Chaz did was to weed out some of the value lines that offered volume sales but very little margin, and replace them with higher-value products. “I think the hot beverages category should be treated like the wine category: with a mix of both value and premium to suit all tastes,” he advises.

Don’t overlook hot chocolate

Hot beverages comprise more than just tea and coffee, and the hot chocolate and malted drinks market is seeing its fortunes rise.

Mintel estimates that sales will grow by a third between now and 2017, so it’s important to make space for these products.

This growth is set to be driven by hot chocolate, with Nielsen reporting a 4.8% growth in value sales in the past year and a market now worth £142m.

Mondelez, which has seen solid sales growth figures in the hot beverages segment over the past 12 months, attributes some of this success to the renaissance that home baking has enjoyed over the past year, with consumers using hot chocolate powder as an ingredient.


He warns against delisting all the products that customers associate with the hot beverages category, though. “Retailers need to have a bit of variety that takes in new products while not overlooking the core range,” he says.

“I know that customers are varying what they purchase, but people will always want standard black tea bags and you shouldn’t ignore them. You still have to offer what customers want, and black standard is still an important distress purchase for us. That’s why I continued to stock Yorkshire Tea as it satisfies both premium and core demands.”

The overhaul also involved examining his coffee lines. “I was really missing out on premium lines so I introduced more Douwe Egberts products and some from Lavazza, which has helped to encourage retailers to trade up.”

Chaz also now stocks eco-refill packs, which he says have been popular with his customers. “They take up less space on the shelf, represent good value for shoppers and help the environment - there’s no downside to stocking them.”

He sums up: “You have to be a bit bold with the category and test these things out. If you don’t stock premium products then customers can’t buy them and the category remains static. As hot beverages have quite a long shelf-life there’s less risk you’ll suffer from waste.”

Donna Morgan of Brownlies Best One in Biggar, Edinburgh, believes she has managed to find that balance between stocking the core range and experimentation in the tea category in order to drive it forward.

Pods and fresh ground coffee

With last year’s High Court ruling that British manufacturer Dualit could sell Nespresso-compatible coffee pods, the sub-category has been blown wide open.

According to Mintel, the coffee pods segment experienced the fastest growth between 2010 and 2012.

Mintel’s Amy Price says there is still work to be done in educating the consumers about their quality, though, with just one in four adults convinced that the quality of the coffee is worth the extra cost. She says: “This suggests that the coffee pods segment needs to convince the wider population that the price premium is justified, eg through promoting the lack of wastage, increased freshness and quality taste.”

Taylors of Harrogate convenience channel controller John Sutcliffe says there is more to come from pods in 2014, but warns that it’s not the only solution. “The roast and ground coffee category has seen a significant increase over the past few years, up 14% year on year, driven by filter, cafetière and pods.

“As more consumers own coffee machines at home, fresh ground coffee is becoming more important as part of a weekly shop,” adds Sutcliffe. “Therefore, it is important for convenience stores to cater for this as a top-up mission.”



“Customers want a little bit of variety when it comes to tea, and they’re prepared to pay for it,” she explains. “We have a range of flavoured teas, including limited-edition seasonal ones, which sell for about £5 for a box of 16. At that pricepoint I wasn’t sure that they would sell when we first considered stocking them, but they proved to be so popular that they more than justify the space on shelf.

“Of course, you have to stock the brands that cash-conscious shoppers want to buy,” adds Donna. “We have the Bestway own label tea for 69p, which always sells because people use it as an everyday tea. Our store’s entire range is made up of the typical products you get in a convenience store, plus some added extras that you won’t find anywhere else, and our hot beverages display is no different.”

Brewing sales

While tea is expected to be in decline over the next three years, sales of coffee are estimated to grow 22% to £1.4bn by 2018. Instant coffee accounts for 70% of sales in the sub-category in both value and volume terms, but shoppers are becoming more discerning and are looking for products that replicate that coffee shop taste at home.

Londis and Budgens retailer Binny Amin has witnessed the move to premium lines at his store in Whitstable, Kent. “In my Londis store I have a core range of teas and coffees because that’s what the customer base wants, but in my Budgens store I’ve really expanded my range, especially in coffee,” he explains.

“People are looking for alternatives and are willing to pay for them. I see more customers looking at the packs to see the strength, quality and provenance of coffee, and making decisions on that basis rather than price, or even brand. Customers are trading up and also buying more linked products such as filters and flavourings, especially at weekends. Vanilla essences have become very popular in the store.”

Binny believes that while shoppers are cutting back in some areas of their lives, they are willing to treat themselves when it comes to their hot drink of choice. “It’s not a massive expense to buy a better quality coffee, and some shoppers like to experiment with new flavours as a treat,” he says.

“Fairtrade has also become quite popular of late, so it’s worth looking at brands that have the Fairtrade logo on front of packs.”

Instant attraction

While he’s introducing more varied flavours, instant is still a strong seller in both of Binny’s stores. “It’s always been an awesome seller and you simply can’t afford to ignore it just because it doesn’t always scream premium,” says Binny.

“It’s important to remember that it’s not just their own households that people are buying for - they may want a jar of coffee to bring into work and don’t want to buy ground coffee as instant is easier and more cost-effective. Instant earns its place on the hot beverages display it’s just about varying the range to complement it and encouraging shoppers to trade up.”

One of the ways to make sure shoppers stop at the hot beverage aisle is to jazz up its merchandising, and Scotmid Barnton manager Clare Surgenor says that the coffee display provides retailers with the perfect opportunity to add a little theatre to their store.

“At our Edinburgh store we installed a coffee grinder beside our hot beverages display for customers to grind up their coffee beans and bag them themselves. It’s not in constant use, but there are regulars who use it, and it doesn’t take up too much space. It also gives us an opportunity to be a bit different. It’s all about offering a little bit of variety where you can to grow the category and set yourself apart from the competition.”

Binny also has some canny ways of exploiting the fact that customers want that premium café taste in coffee in their own homes. “In our Budgens store we have a Tassimo coffee machine that we use for hot beverage sampling, and we put a tray of coffee beans into the oven to get that roast coffee smell wafting around the store first thing in the morning,” says Binny. “The coffee smell is amazing and lingers all day customers smell it and immediately head to the hot beverages section.”


Tetley Folk on TV till spring

Tetley is to increase its marketing activity in 2014 with a £1.8m television campaign. Running for several months from the end of January, the campaign focuses on the Tetley Tea Folk and the power of the product to bring people together.

Fruit & herbal PG Tips range

PG Tips has launched a new range of fruit & herbal and green teas. Supported by a £5m marketing campaign, the fruit & herbal range includes juicy red berries, red bush & vanilla, fresh peppermint and delicate camomile (rrp £1.19), while the green teas comprise pure green, vibrant mandarin orange, fragrant jasmine, zesty lemon and juicy raspberry (rrp £1.19). Packs contain 20 bags.

Makeover for Cadbury hot chocolate range

Cadbury has unveiled new packaging for its hot chocolate range. Available across its drinking chocolate, instant and Highlights ranges, the new look is designed to provide better differentiation within the range and help shoppers to view the various products on the fixture more easily. Mondelez trade communications manager Susan Nash says: “The new design conveys the iconic stature of Cadbury while portraying a more modern feel.”

Nescafé marketing campaign

Nescafé Original will benefit from a major marketing campaign in 2014. Utilising TV, radio, digital and sampling, the campaign will run until the middle of March and will focus on urging consumers to ‘grab life by the mug’ in the mornings.