TEA TIME 2000-04-10 (2)

KAREN DeMASTERS

The beneficial health claims associated with drinking tea continue to drive up the sales of all types of tea bags in supermarkets, a trend that likely will continue for some time to come.

Consumers' interest in eating healthy began affecting tea sales in 1998 when studies revealed that drinking tea, particularly green tea, could help promote a healthy lifestyle. Since then, more studies have associated tea with fighting wrinkles and even combating fat, as well as with fighting heart disease and cancers. The claims have made tea sales in most markets skyrocket.

"Tea got a big boost because of the health claims," said Greg Whitney, marketing director for Food 4 Less and Nickel's Payless based in Visalia, Calif. "We have particularly seen this in the addition of specialty flavored green teas like green mint."

Don Whittaker, grocery and deli merchandise buyer for Rosauers, which has 19 stores in Oregon, Idaho and Montana, agreed. "Tea has been a very strong seller for some time now. That applies to black, green, herbal -- the whole mix."

The boom in the tea market began in 1997 and 1998 when studies showed that tea contains antioxidants that help neutralize free radicals and thus fight cell damage that can cause coronary heart disease and cancers. The benefits were associated more with green tea because the studies being done were on populations that drank mostly that. In fact, black tea contains the same ingredients.

"Previously, people looked at tea strictly as a beverage," said Michael Langenborg, director of marketing for Traditional Medicinals of Sebastopol, Calif., the leading producer of medicinal teas. "Now people are discovering medicinal teas and their health benefits and the awareness is going to keep growing.

"Tea presents an enormous opportunity for supermarkets, which is already the main avenue of sales and has the potential of picking up even more from the health and natural food stores," he added.

The sale of bagged teas in supermarkets jumped to a little more than $500 million for the 52-week period ended Feb. 21, 1998, from $484 million the year before. The following year sales reached nearly $508 million, and by the 52-week period ended Feb. 19, 2000, bagged tea sales had soared to $539 million, according to ACNielsen, marketing and retailing researchers based in Chicago.

Much of this increase is attributed to the increase in bagged and packaged herbal or specialty teas, in particular green tea, which increased sales in supermarkets from $223 million for the 52-week period ended Feb. 21, 1998, to $294 million the next year and $347 million for the 52-week period ended Feb. 19, 2000, according to ACNielsen.

"Every day additional research is coming out about the connection between tea and good health," said Michael J. Novosel, vice president of sales and marketing for the private-label division of Tetley USA based in Marietta, Ga.

"We are working to get this quantified, so we can make definitive claims, but tea consumption is on the rise and specialty teas, predominantly green tea, are getting the biggest boost. We are very excited about the future," Novosel added.

Although green tea has gotten most of the publicity in connection with health claims, both green and black tea come from the same plant and contain caffeine, which in moderate doses is considered beneficial. Herbal teas, which include medicinal teas, are made from various types of plants and herbs and have no caffeine. However, the categories overlap and green tea is often considered a medicinal tea.

Specialty teas, which is another name for herbal and green teas, have benefited the most from health claims, growing 14% during 1999, according to Traditional Medicinals. Green tea in particular reflected the good publicity, jumping 70% in sales last year.

The rise in use of herbal remedies, including teas made from such plants as ginseng, chamomile, Echinacea and chai, cut across age lines, with increases in sales reflected in generation X, baby boomers and mature shoppers alike.

"Medicinal teas started in the health food stores, but now there is a tremendous opportunity in grocery," Langenborg said. "For the third year in a row, the number of SKUs offered has grown tremendously. All of these should be put in the main grocery aisles, not in a store-within-a-store."

Supermarket managers and buyers agree.

"As much as possible, we put all of the teas in the regular tea and coffee and cocoa aisle, so people do not have to search for them," said Terry Panther, category manager for Tidyman's supermarkets based in Greenacres, Wash. "We have four shelves, 16-feet long for tea and cocoa. Then, we recently added specialty teas that are on an additional four feet of shelf space next to the regular teas.

"In some stores we do not have room for the added four feet, so we have to put the specialty teas in the natural foods section," he added.

Tidyman's saw the biggest increases in sales last year after the stores added new varieties and did extra advertising, Panther said. "Normally, winters are good for tea sales, but last summer was good, too."

Big Y Foods, based in Springfield, Mass., also displays teas in the coffee aisle with similar kinds of teas displayed together, but the stores also use shippers for large, in-aisle displays and put 100-count black tea boxes on end caps, said Allan Young, Big Y Foods category manager.

"We do a feature weekly on some type of tea," Young said. "Black tea is a very mature subsegment, but a lot of growth has been seen in the green and herbal teas due to the health factor. Overall sales were up 12% to 13% last year."

Big Y stores devote up to 12 feet of shelf space to teas and include them in the in-store circular.

Food 4 Less also keeps the teas in the regular store aisles with the coffees and uses end cap displays on occasion to help boost sales, Whitney said. "But we don't want people to have to search for the tea."

Rosauers has put some specialty teas in the deli department "with mixed results," said Whittaker. For the most part, teas have been left in the regular aisles and space has been added as more varieties are promoted, he said. Cold Brew for iced tea came out last summer, and Whittaker predicted the new line of decaffeinated Cold Brew would be a big seller this summer.

Lipton, the top-selling tea in the country with total sales of $349 million projected for this year, launched Cold Brew last summer in limited markets as a way to promote convenience in making iced tea, said Virginia Blake West, director of marketing for Lipton Tea in Englewood Cliffs, N. J. Cold Brew will be expanded to the entire country this summer and decaffeinated Cold Brew will be the new addition for this year.

"We wanted to bring younger consumers back to the bagged tea category," Blake West said. "Cold Brew has reshaped the category, but the green tea segment is still growing at a significant rate and decaffeinated green is particularly strong."

The Mitchell Grocery Corporation based in Albertville, Ala., which has 160 Foodland, Lewis Jones, Shop-Rite, and Food Giant stores, recently added green tea and Lipton Cold Brew to its shelves.

"We had calls for them from customers," said Joel Childress, Mitchell Grocery buyer. "Regular tea also is continuing to grow."

Where the products are displayed is left up to the individual stores, but Mitchell uses shippers that convert to easy display cases. When shippers are used, price decreases and increased advertising are usually combined with them to help boost sales, he said.

"I think advertising and good prices have contributed as much as the health claims to boost sales," Childress said.

Lipton will begin helping with the advertising starting next week with nationwide campaigns, Blake West said.

Although tea sales have leveled off somewhat for Scolari's Food and Drug, based in Sparks, Nev., the numbers are still up for the last two years, said Charles Jones, senior buyer.

"In store advertisements, reduced shelf price and club card specials are the main things we use to support sales," Jones said. With a total of 12 feet of shelf space devoted to teas, about two feet of that is now occupied by specialty teas.

"We try to have retailers put all of the varieties of tea in the same aisle," said Missy Taylor, marketing analyst for Bigelow Tea in Fairfield, Conn., which helps retailers by doing radio advertising and reducing prices when special displays are shipped.

"Grocery stores are beginning to have a lot more varieties of teas," said Steve Hughes, CEO of Celestial Seasonings in Boulder, Colo. "Our advice to retailers is to have fewer brands but more variety within each brand. Chai is the emerging tea now, just as green tea was a year or so ago."

While tea continues to be a dynamic category for the supermarket channel, the industry itself is changing. Earlier this year, Tata Tea of Bombay, India, bought the Tetley Group in a $434 million deal. Celestial Seasonings, the market leader in specialty teas, combined with Hain, the leading natural and organic food company in Uniondale, N.Y., in a move that should boost Celestial Seasonings sales in international and food service channels.

The recently announced standards for organic foods by the federal Agriculture Department may also boost sales of teas that qualify for the organic label. American consumers spend about $6 billion annually on products labeled organic.

"Health consciousness among Americans is here to stay," commented John Opasinski of Arthur Andersen, business consulting and retail experts based in Chicago. "Health and herbal supplements as a whole, such as those made into teas, are increasing in acceptance, and not just among the older age groups. It's true among the younger consumers also. This is applicable across the food categories and reaches into all the channels, including supermarkets."