TIME FOR TEA

KAREN DeMASTERS

The sustained interest of aging baby boomers and young people in health is now sparking sales in the bagged tea category.

Although sales of black tea bags have been stagnant in recent months, increases for green tea and herbal and medicinal teas have been in the double digits recently, and industry leaders predict the sales jumps will carry over into the black tea category in the future.

Tea is growing at such a dramatic rate that there is disagreement about which merchandising techniques should be used to take advantage of consumer interest. However, everyone agrees that the recent publicity about the health benefits of tea is creating the new wave of growth.

"We have seen a strong upward trend in tea sales for about six months now," said Greg Whitney, marketing director of Food-4-Less, Visalia, Calif., "although it started even before that. People are switching from soft drinks, and we have seen a lot of movement in specialty lines like green tea and ginseng and echinacea."

According to Elaine Myers, vice president of sales and marketing for Tetley Tea's private-label division, Marietta, Ga. "Evidence shows that tea contains antioxidants that help neutralize free radicals and thus fight cell damage that can cause coronary heart disease and cancers.

"Green tea originally received a lot of publicity last year, which started the wave of interest from health-conscious tea drinkers," she said. "The benefits are equally as exciting for black tea, the most commonly consumed tea in the United States. Now Tetley is capitalizing on the trend."

Marty Kushner, a health-food expert and technical consultant to Tetley, added that "Green tea has been the major benefactor of the good publicity, because the studies that were done were in countries where people were heavy green-tea drinkers." In reality, the same beneficial properties can be found in traditional black tea, he said.

Both green and black tea, which come from the same plant, have caffeine, as opposed to herbal teas, which are made from various other plants and herbs and usually have no caffeine. Medicinal teas are considered to be a subset of herbal teas.

Green-tea sales jumped 88% during the 52-week period ended March 28 to $40 million, compared to the previous year's $22 million in sales, according to data provided by Information Resources Inc., Chicago, to N. Michael Langenborg, director of marketing for Traditional Medicinals of Sebastopol, Calif. The same data showed that herbal-tea medicinal blends had jumped 23%, from $32 million to $39 million.

"Tea acquired an aura of healthfulness," said Linda Gilbert, president of HealthFocus, a health-food consultant based in Des Moines, Iowa. "Tea has been the benefactor of a demand for more adult refreshment beyond soda and bottled water. I would expect this trend will continue."

Virginia Blake West, director of marketing for Lipton, Englewood Cliffs, N.J., agreed that the upswing is only beginning.

"The real driver is green tea, which has seen explosive growth, because most research is done on heavy green-tea populations.

"We believe the green-tea phenomenon will carry over to black," she added. "To do this we have rolled out a category management plan called Tea for Life, which is meant to help retailers educate customers about the benefits of tea drinking. There is a huge opportunity here."

Both Lipton and Tetley have produced green and herbal teas for some time now, but new varieties are brought out regularly to keep consumers interested.

Lipton remains the leader in bagged and loose tea, with $185 million in sales for the 52-week period ended March 28, according to IRI. Total sales for bagged and loose teas, which include black, green and herbal varieties, were $616 million.

Celestial Seasonings, Boulder, Colo., is second in sales, with $84 million; Bigelow Tea, Fairfield, Conn., is third, with $55 million; and combined private labels are fourth, with $51 million.

Supermarkets differ in their strategies for merchandising tea. Some retailers, for example, have begun highlighting specialty lines by merchandising them with related products.

"We have put them in the diet section where we have items for diabetics, because diabetics are going to be health conscious. They are also inclined to be better educated about the health benefits," said Ashley Caldwell, director of community relations for H.G. Hill Food Stores, Nashville, Tenn.

"We put the herb and medicinal teas that are good for headaches or that settle the stomach in the aisle with the medicines, and then we also put them in the tea aisle," Caldwell said.

At Martin's Super Markets, South Bend, Ind., teas are sometimes put in the deli department.

"People who shop in the deli are a little more discriminating and more likely to have read about green tea or the benefits of ginseng," said Doug Murphy, director of grocery merchandising for Martin's. "We also put some with the homeopathic vitamins and supplements." However, he added the store has not had enough experience with this technique yet to know how effective it is.

Whitney at Food-4-Less, which is a warehouse store, uses pallet drops in the aisles close to the teas or near other beverages to merchandise special promotional items.

Brookshire Grocery Co., Tyler, Texas, on the other hand, keeps its teas mostly in the coffee and tea section and does little cross merchandising.

Sam Anderson, director of public relations, told SN, "We try to advertise tea fairly often, especially in the summer, and feature it as a temporary price reduction. We try new items as the big companies come out with them. The latest is a cold brew tea from Lipton that is just now reaching the stores."

Brookshire and Dahl's Food Markets, Des Moines, Iowa, both devote about 8 to 12 feet of shelf space to teas, but the products that occupy that space have changed, said Ross Nixon, vice president of merchandising for Dahl's.

"Years ago it was nothing but instant tea. Then, for five years, we have stocked mostly tea bags. Now, for the past six months, we have been stocking flavors and green tea," Nixon said. "People jump at lemon and mint. We primarily use in-store displays and price reductions to promote tea. The amount of shelf space has stayed the same, but things have changed within the section."

Although green and herbal teas started out in health-food stores, they have been adopted by the major manufacturers and are thoroughly mainstreamed into supermarkets now, said Blake Waltrip, vice president and general manager of beverages for Celestial Seasonings.

"This is all driven by the consumer. Aging baby boomers have higher expectations of their lives, and as far as their health is concerned they want prevention rather than cure," Waltrip said.

Likewise, Traditional Medicinals, which used to market its teas in health-food stores but has now fully integrated its line into supermarkets, works with the retailers to promote the category. "Green tea is the harbinger of things to come," Langenborg said. "But we tell merchants to integrate all of their teas in one location. People don't want to look a bunch of different places to compare teas."