It doesn’t have the sugar police hot on its trail. Some call it “a great alternative to coffee.” It may be good for the heart and even fight cancer. Add all of this up, and you don’t have to read any leaves to realize that the future is bright for iced tea.
Cruizers Convenience Marketplace, the retail arm of Chapel Hill, N.C.-based Holmes Oil, first offered Coca-Cola’s freshly brewed Fuze Tea at its locations with Subway restaurants. Due to the success of the fresh dispensed tea, Holmes Oil reconfigured the merchandising of its dispensed-tea program in April. The company eliminated dispensed fountain tea, switching to freshly brewed iced tea and serving it in a stainless-steel urn. Cruizers stores now offer sweetened and unsweetened freshly brewed iced tea, and the beverages are included in bundling programs.
“There are now more beverage choices; tea has become evolutionary. It’s a noncarbonated and refreshing choice that is better for you, so [we] decided to enhance the program,” says John Zikias, COO of Holmes Oil. “By 2014, Holmes Oil will have freshly brewed iced tea in all of its stores.”
Health Halo
According to a July 2013 Mintel report on fresh tea and ready-to-drink (RTD) tea, sales are predicted to rise to $7.3 billion across all retail channels by the end of 2013. Mintel predicts a continued rise in tea consumption through 2018 due to “consumers’ increasing attention … toward the health of the food and drink products they choose. … Future success relies not only on continued innovation, but also the adoption of tea by new consumers who are looking for healthy beverage options.”
The report also indicated that 75% of respondents ages 18 to 24 believe tea is better for you than coffee. Sixty-eight percent of the same age group believes RTD teas are healthier than soft drinks.
“Population growth and healthier consciences have helped to keep the tea and ready-to-drink tea category growing year over year,” the report says.
And the public has indeed become more aware of what they put inside their bodies over the past few years. The health effects of soda have made headlines in the wake of New York Mayor Michael Bloomberg’s attempted ban of soda and other sugary drinks 16 ounces or larger. In July, the ban was voted unconstitutional, but the debate over sugary drinks continues to rage on.
The Harvard School of Health study “Sugary Drinks or Diet Drinks: What’s the Best Choice?” says, “The evidence is strong that cutting back on sugary drinks—or eliminating them altogether—may help with weight control and will almost surely lower the risk of diabetes. There’s emerging evidence that sugary drinks increase the risk of heart disease.”
These health concerns may be a benefit for tea. According to WebMD’s article “The Types of Teas and Their Health Benefits,” “Studies have found that some teas may help with cancer, heart disease, and diabetes; encourage weight loss; lower cholesterol; and bring about mental alertness. Tea also appears to have antimicrobial qualities.”
“There doesn’t seem to be a downside to tea. I think it’s a great alternative to coffee. … First, tea has less caffeine. It’s pretty well established that the compounds in tea, their flavonoids, are good for the heart and may reduce cancer,” says American Dietetic Association spokeswoman Katherine Tallmadge in the WebMD article.
Tulsa, Okla.-based QuikTrip offers both dispensed iced tea and freshly brewed iced tea at its more than 650 locations and, according to Mike Thornbrugh, manager of public and government affairs, “QuikTrip does not react to fads. We believe … tea will be around a long time.”
Steady Rise
While dispensed and RTD teas are holding their own, freshly brewed is the tea trend to watch. Since 2007, there has been a steady rise in the consumption of freshly brewed tea, and the Golden Arches may be the chain to thank for it. According to Samuel Nahmias, executive vice president and COO of Cedarhurst, N.Y.-based StudyLogic, “There were 230 million cups of freshly brewed iced tea sold in 2007, compared to 1.3 billion cups sold five years later in 2012. McDonald’s sold 69 million cups of freshly brewed iced tea in 2007 and jumped to 800 million cups in 2012. In 2007, McDonald’s began heavily promoting its sweet tea. With 14,000 locations, McDonald’s held 30% to 60% of the share in freshly brewed iced tea.”
And tea continues to make a name for itself. According to Nahmias, “In 2012, McDonald’s held 22% of the share in iced tea. The top convenience stores selling iced tea were 7-Eleven, with a 4.9% share; Circle K with 1.2%; Speedway/Super-America with 1%; and Wawa with 0.9%.
“Soda is contracting in the sweet beverage category; people are moving toward a more healthy beverage choice,” Nahamis continues.
Tea lovers seem to be open to trying new things, too. Unlike soda fans, who many times will stay with their favorite drink, iced-tea drinkers enjoy the refreshment of the drink and are more likely to try a new flavor or brand.
“The choice of iced tea, especially RTD tea, runs the gamut. There are so many innovations and flavors, from green to white teas, which contributes to the growth of this category,” says Gary Hemphill, managing director of research for New York-based Beverage Marketing Corp.
“Consumers can customize their iced tea, [such as] adding flavors,” says Mark DiDomenico, director of business development for Chicago-based Datassential, which tracks the incidence of items on menus. “Customization is the strength of the c-store. Many c-stores offer customers different flavors to make that special drink. [They] use the drink as the base to customize their beverage to their liking.”
Also, based upon the time of the year, consumers may change their tastes to something lighter or sweeter, customizing their beverages based upon taste and their particular mood.
“[Holmes Oil] has expanded the stores with flavor shots so customers can customize their drink with strawberry, raspberry, lemon, lime or vanilla,” says Zikias.
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