NEW YORK -- The growth rate of ready-to-drink iced tea is expected to slow dramatically over the next few years, a new study conducted by Beverage Marketing Corp. has concluded.
In 1994, iced tea growth was a still vigorous 60%, but the market is expected to mature and reach saturation. By 1999, consumption is expected to peak at 310 million cases, or 3.5 gallons per capita, up from 177.3 million cases projected for 1995.
"We're projecting a compound annual growth rate for ready-to-drink iced tea this year of 21.3%, 16.3% in 1996 and 10% in 1997," said Hellen Berry, vice president of marketing at Beverage Marketing, a beverage industry research and consulting firm here.
Signs of consolidation are already cropping up. Late last year Snapple Beverage Corp., East Meadow, N.Y., was acquired by Quaker Oats, Chicago. The report predicts further consolidation among the more that 150 iced tea brands currently on the market.
"Ready-to-drink iced tea is like all new markets that become incredibly popular very, very quickly. Everybody wants to get on the bandwagon, and by God they have on this one. But I do see a shake-out at some point in the future," Berry said.
"The breadth of flavors in ready-to-drink iced teas has been one of the great marketing ploys. With all of those marvelous flavors enticing the consumers, it is going to take a while to get around to all of them," she said.
In 1994, Lipton iced tea, a partnership between Unilever and PepsiCo, gathered a market share of 25% and dethroned Snapple, which had held the lead since 1992. In 1994, Snapple had a share of 23.2%. However, both brands continued double-digit growth and higher-priced Snapple retained the lead in dollar sales.
The report found that supermarket placement of iced tea continued to grow, but smaller stores accounted for three out of four sales.
Berry said the relatively tiny ready-to-drink iced coffee market has an expected wholesale volume of $45 million this year, the same as in 1994. However, the category has the potential of being the next big beverage trend, especially since Pepsi has teamed with Starbucks, Seattle, to market a ready-to-drink coffee this year, she said.