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Strong opportunity to develop the UK’s tea out-of-home market for those who brew it better

The UK tea out-of-home market has grown to an annual turnover of £305m, according to Tea Out-of-Home UK 2016, the latest report from Allegra World Coffee Portal. As consumers look for more variety in their choice of hot beverages, there is a strong opportunity within coffee shops to further develop this market through better brewing and a wider selection of speciality tea.
Tea is an integral part of British culture, with more than 165 million cups of tea consumed each day in the UK. While the majority is consumed at home or work the amount of tea drunk out-of-home is increasing. This uplift, combined with increased pricing, has led to 2% growth, with the total out-of-home tea turnover across the entire coffee shop market estimated at £305m.  

Tea preparation and premiumisation are key

The most popular tea in the UK is tea with milk, chosen by 62% of consumers, but demand for premium tea is growing and there is huge potential in this market for coffee shops that offer tea-loving customers something extra. Twinings remains the most popular brand of tea, both at home and out-of-home.
34% of consumers stated that coffee shops needed to offer a larger tea offering and 49% said they would spend more on a premium tea, such as loose leaf mesh bags or loose leaf in a pot, if it was available. The most successful operators are already responding to consumer demand by offering a wider variety of teas, including green tea, herbal tea, chai and matcha.
Coffee shops also need to improve their tea-making skills with 29% of consumers claiming that coffee shops do not make a cup of tea the way they like it and stating that they can make a better cup of tea at home. Consumers also want to see premium tea brands in coffee shops, with 58% considering this to be the most important factor when ordering tea out-of-home.

The Future Marketplace

In the long-term, tea innovation will be driven by the leading operators that are changing and improving the consumer out-of-home tea experience. Allegra expects there to be a surge in the number of premium tea bars on the UK High Street, following Starbucks’ acquisition of Teavana in the US and Unilever’s purchase of T2.
Additionally, the rise of innovative brewing technology will lead to growth of artisan tea bars, while the current trend for health and wellness will increase consumer demand for healthier beverage options wherever they are.
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