“The acquisition of Harris Tea strengthens our competitive positioning in the fast-growing tea category and adds unique blending and sourcing capabilities that customers desire, building upon TreeHouse Foods’ category leadership, enhancing our position through additional depth and scale,” said Steve Oakland, chairman, CEO, and president. “This acquisition aligns with our long-term strategy to build capabilities in our higher-growth, higher-margin categories,” he added.

The acquisition includes Harris Tea’s manufacturing facilities in Moorestown, New Jersey and Marietta, Georgia, and TreeHouse Foods will welcome approximately 300 Harris Tea team members. The acquisition of Harris Tea will provide vertical integration across TreeHouse’s existing tea business and will be accretive to its overall growth and margins.

“The tea category presents significant opportunity for future growth,” said Kevin Shah, co-CEO of Harris Freeman. “It was clear that TreeHouse Foods would provide a great fit for our next chapter of growth, given its depth of capabilities, scale, industry expertise, and customer relationships, and I am confident we will maintain our upward trajectory as a result of this transaction.”

TreeHouse has agreed to a purchase price that equals roughly 8.5x trailing-twelve-month adjusted EBITDA, or 6.5x net of synergies and the net present value of future tax benefits. This transaction is expected to close in the first quarter of 2025 and will be funded primarily with cash on hand, and fully satisfies TreeHouse’s obligation under its bond indenture to either reinvest certain proceeds from the previously completed meal preparation sale or retire debt. Upon closing, TreeHouse expects its leverage ratio (covenant leverage ratio is defined as total company net debt outstanding divided by EBITDA including various adjustments as defined in the credit agreement) to be within its target range of 3.0x to 3.5x. Finally, TreeHouse Foods is reiterating its 2024 full year guidance, including the expectation of sequential improvement in volume growth and profit margin in the fourth quarter.

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The private label tea and coffee market in Eastern European and Nordic states is steadily growing this year, thanks to a stable demand and the ongoing expansion of portfolios by leading local players. 

In contrast to Western Europe, where the tea and coffee private label segment has been actively developing since the 1980s, most Eastern European states have registered significant market growth and massive launches of new, private label products in recent years. The same, however, cannot be said for the Nordic states, where the popularity of private label tea and coffee brands, produced by leading local retail chains has always been high. 

One such brand is Norwegian chain, REMA, which is implementing its REMA 1000 private label strategy that involves actively developing its private label brands in both the Nordic states and other Eastern European states. REMA has significantly expanded its portfolio of private label tea and coffee brands over the past few years, and most of analysts expect the company will continue to develop this segment. 

REMA’s current list of tea and coffee brands is wide and includes some iconic brands in the Nordic market. An example of this Kolonihagen, a well-known Norwegian coffee and tea private label supplier within REMA, which in recent years has strengthened its positions both in the domestic market and overseas.  

Arnt Ove Dalebø Englund, co-founder and director of innovation at Kolonihagen, said that Kolonihagen recently entered the premium tea category with a range of four variants. “This is part of the REMA 1000 private label strategy, having alternatives — [opening price point] (Prima), mid-range (R) and now finally also covering the premium through the organic Kolonihagen brand.” He said that this series of teas is nationally distributed and is present in all 650 REMA 1000 stores in Norway. According to the size of the category [in each store] (both shelf space, rotation and turnover), there are four premium products at the moment. 

“We do not have plans to expand the [number of products, [instead] bringing in new flavours [as a] one in-one out. Additional value propositions are also highly relevant and part of a continuous strive to do things better. That is the core of our brand,” said Dalebø Englund. “One example of this is to put regenerative principles (and certifications) on top of the organic standards. Seasonal products are [also always being considered].” 

Dalebø Englund expects Norway’s private label market and that of other regional countries as well as Eastern Europe will show stable growth rates in years to come. “It’s hard to answer this on behalf of competitors in FMCG market in Norway, but in general, the private label category share is lower than that of other Nordic and European countries. [I predict] that moving from 20 percent to between 40 and 50 percent is likely in a two to three-year period, and this will probably be even higher for the tea and coffee category. 

Other major players are also considering accelerating their expansion both in the market of Nordic states and Eastern Europe. 

Bethany Physick, marketing manager at Finlays Europe Extracts, shared that across Europe, Finlays is continuing to help European brand owners tap into the health and wellbeing trend with its Just Add Water solution, a range of sachets containing tea and botanical powder blends that are designed to meet consumers’ desire to drink functional water on the go. “Later this year, Finlays’ new cold brew coffee extraction facility will open in the United Kingdom bringing an exciting range of cold brew coffee extracts to the fast-growing European market,” she said. “The coffee extraction facility will produce for branded and [private]-label suppliers in the UK and European and Eastern European retail and hospitality sectors.” Physick noted that Finlays is already a global leader in cold brew in the United States, and it expects growth in the category in the European market. 

Regarding future market prospects, Sian Edwards, insights manager, Finlays Group, explained that tea in all formats offers major potential in Eastern Europe, in terms of the market scale and growth prospects. “There are big markets, many of which are fast premiumising, as consumers seek a wide range of healthy, functional and indulgent beverages. The ready-to-drink (RTD)/iced tea market was valued at USD $2 billion in 2022, and has yet to reach maturity, with a forecast of 18 percent CAGR between 2022 and 2027, to reach an estimated market size of $5 billion in 2027.” Furthermore, he noted that RTD/iced tea is being bolstered by consumers seeking healthy and innovative alternatives to traditional soft beverage categories. 

“Hot tea and infusions are a more mature category for consumers in Eastern Europe. The category was valued at USD $9 billion in 2022 and is expected to exceed $10 billion by 2027 – with a 2 percent CAGR,” said Edwards. “Per capita consumption in the region is particularly high, with tea established as a habitual, daily necessity in many Eastern European markets. There is continued consumer demand for both RTD/iced tea and hot tea and infusions, and we see private label continuing the play a valuable role in this market growth.” 

PL still strong in Western Europe 

The private label market is traditionally within the interests of some major Western European players. 

Jens Schneider, managing director of Kloth & Köhnken Teehandel GmbH, one of leading tea suppliers in Europe, said the company has big plans for the further expansion this year. “There is an ongoing demand for organic and the wish for a sustainable supply chain throughout the world. The Nordic states, and Eastern Europe are markets we have good contacts in for many years, and we [see] steady, growing consumption [in both]. 

Still, according to Schneider, after three years of continuous challenges with consequential influences in sales channels, filled stocks and market movements, “it is currently difficult for the company to predict what trend or demand it really has in the market. [However], the focus on and trends toward organic, transparency and sustainable sourcing will be ongoing and rising.” 

PL optimism fades in the Nordics 

Representatives of some leading Nordic and Northern European retailers are less optimistic, regarding further prospects of the private label market, particularly in the coffee segment. Juhani Haara, a senior sales manager, S Group, a Finnish retailing cooperative organisation, said that private label, the coffee segment in particular, has decreased. “According to our sales data, there is a clear decline in private label coffee sales volume – a nearly 19 percent drop – this year. The reason for this is the increased campaigning with branded products both in S-Group and in the market. On the other hand, private label tea sales volume has increased significantly, by about 25 percent, during this year,” she said, adding, “this is certainly influenced by the economic situation. We expect this trend to continue towards the end of the year.” 

Haara said that new private label products have been added to the tea selection this year: two Kotimaista herbal teas and four different X-tra products. “There hasn’t been any promotion in tea products, but our own PL products are remarkably affordable compared to brands. This year there have been no private label novelties in coffee yet, but we are developing our selection.” 

Most independent analysts also do not expect sharp market growth rates in years to come. Julija Poliscuk, a senior consultant at global market research firm, Euromonitor International, believes that private label tea and coffee items are not growing as quickly as in other food and drinks categories. “The slow dynamics in current value and flat or declining volume share can be attributed to these products’ association with rituals and thus, the demand for high-quality offerings, reflecting the cultural and image significance they hold.” 

She said that in 2022, the current value share of private label in Nordic countries for coffee and tea increased slightly, reaching 9.3 percent. “This cooling trend aligns with stabilised consumer financial confidence and desire to spend after the challenging years of Covid-19. Notably, the volume share of retailers’ own brands in coffee rose by 0.7 percentage points, reaching 11.8 percent in 2022, signaling better performance compared to the overall coffee market in Norway, Sweden, Finland, and Denmark combined,” Poliscuk explained. “In Eastern Europe, historically known for brand-oriented preferences in tea and coffee, the current value share declined by 0.2 percentage points in 2022, reaching 5 percent. Coffee’s volume share was 7.2 percent (versus 7 percent in 2021), which pales in comparison to the strong growth of discounters and retailers’ own brands’ performance in other categories.” 

She added that many Eastern European markets offer big promotions for national tea and coffee brands, which reduces price gap between those products and private label ones. This market situation, according to Poliscuk, favours branded products. “When the price difference is marginal, consumers opt for familiar brands, purchasing them on discount. This hampers the development of private labels in tea and coffee in the region.” 

Poliscuk said that the hyperinflation in Eastern Europe, did not boost private label in 2022, as consumers inertially continued their ‘revenge’ spending after the Covid-19 period. “However, 2023 might bring a different outcome as consumers already started downtrading, potentially making private label a more attractive option. The level of sophistication and price segmentation within private label is more prominent in countries with well-developed modern grocery retail.” Additionally, recent launches of private label coffee and tea products in the Nordics target audiences seeking added value, which leads to the appearance of more specialty coffee (eg, specific bean origins). “Retailers are also expanding their assortment to align with sustainability strategies, offering more organic teas and coffee in modern, environmentally friendly packaging.” 

Per Poliscuk, private Labels primarily are considered ‘anti-crisis products’, allowing consumers to save or maintain their preferences without compromising on quality. The hyperinflation in Eastern Europe during 2022 and continuing into 2023 will impact consumer behaviour and drive the surge in private label adoption. As people seek cost-cutting measures, price increases in coffee and tea will push them to revise their previous preferences. “While Private Label won’t dominate the hot drinks market due to the nature of these products, its expansion alongside aggressive discounters will positively influence retailer’s offerings.” 

In Nordic countries, Poliscuk said the volume of private label hot drinks is expected to stagnate, even decline, but the value share will increase alongside the price. More premium coffee and tea aimed at quality seekers eager for better prices will emerge. “More caffeine-free and health-improving teas are expected, while coffee offerings will focus on specific beans and roasting variations. Retailers in these Western countries have the expertise to develop premium store brands based on specific needs like sustainability or fair trade.” 

Despite the impact of war on logistics chains and prices, with a small private label market and a decreased national brands presence, Eastern Europe expects a stronger demand than ever before for retailers’ own brands. 

• Eugene Gerden is an international freelance writer, who specialises in covering the global coffee, tea and agricultural industries. He worked for several industry titles and may be reached at gerden.eug@gmail.com. 

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Changing consumer habits and the development of grocery retailers are shaping up the private label segment of the tea and coffee market across Europe. The growth potential in this segment is yet to be exhausted, especially in the eastern part of the continent, where market players are now catching up with Western trends.

Over the past few years, private label coffee has been increasing its presence in the European market. Numerous European supermarket chains put their own brands on the shelves, such as Perla from Dutch supermarket Albert Heijn, E.Leclerc’s L’origine du goût in France, and Tesco Finest and Marks & Spencer in the United Kingdom.

Private label tea at Netherlands-based grocery store, Albert Heijn. Image: World Brand Design Society Website

Nowadays, it is believed that the share of the private label tea and coffee products is the highest among discounters, and they could drive growth in sales in Europe even further.

“Private label genesis and evolution are impossible without developed modern grocery retailers. Further penetration of discounters, especially in Eastern Europe, brings more space for private label moves and initiatives,” commented Julija Poliscuk, senior analyst of London-based market research company, Euromonitor International. “This is the main factor for healthy dynamics of retailers’ own brands across hot drinks. Channel shift transforms private label to comprehensive and trusted brands,” she added.

The entire European market is currently under an influence of the rising production costs, which affect all links in the production chain, and change consumer attitudes, Khansaa Ruiz, export manager of the Alicante-based coffee factory Burdet Coffee said. “There is a major crisis. Roasting factories are suffering at the moment because of the increase in coffee prices. We have been struggling to keep business going. The coffee prices have escalated tremendously due to the Covid-19, then due to the transport problems, and now due to the war. So, it’s a bit chaotic.”

“As for the private label coffee the trend is towards higher quality coffee, or at least this is our business, and we do see an increase here,” Ruiz said. She explained that there is a relatively high demand for new brands on the market. In general, many small businesses and people are looking for small business opportunities, and the market witnesses a very important increase in small businesses, including those wanting to create online websites to sell coffee.

“As for the quality of the coffee, we see that more and more a single-original coffee is being sold better. [This concerns] pure coffee, such as Colombian, Ethiopian, Guatemalan, Costa Rican, etc. People are starting to appreciate the meaning of good quality coffee,” she added.

Alberto Lusini, head of Northern Europe at Massimo Zanetti Beverage cited New York-based consultancy, Nielsen, estimating that private label share in the European coffee market is between 10 per cent and 25 per cent. “This data has had a relatively constant growth in past years. Private labels in the mass market and food service are no longer synonymous with entry-level pricing,” he explained.

The private label segment developed an important evolution in terms of innovation and improvement in quality, typical of the branded business, Lusini said, explaining that trade labels are answering the needs of consumers for additional transparency, and traceability, in case of single origins, and sustainability. “The increased sales of coffee beans is proof of a trend to bring the barista experience at home,” he added.

Poliscuk said that another reason why private label coffees are so popular is that there is more variety. “Most supermarkets offer several quality options and coffee from different origins. Many supermarkets have entered the premium segment and are expanding their range of certified coffee products. Retail sales of organic-certified private label brands are increasing. Examples of organic private label brands in Europe include REWE Bio in Germany, Carrefour Bio in France, and Waitrose Duchy Organic in the UK.

Covid-19 as a game-changer?

The coronavirus pandemic has reshaped the European grocery-retail landscape tremendously. With restaurants, cafés, and bars remaining largely closed in most countries during at least the first wave of the pandemic, consumers rushed to stock up on groceries.

The out-of-home coffee market was greatly affected during the Covid-19 crisis, said Utrecht, Netherlands-based consultancy ProFound-Advisers, in a post shared by the Dutch Centre for the Promotion of Imports from developing countries. Many coffee shops closed, and people worked and drank coffee at home instead. Coffee sales at supermarkets went up, which benefitted private label brands, and created a trend.

“Early in the Covid-19 pandemic, consumers around the world rushed to supermarkets to stock up on products. Retail sales went up a lot. Retailers also developed online sales and delivery solutions for consumers. This made supermarkets the main source of food and beverages during the pandemic,” the Dutch analysts added.

MZB says the demand for private label coffee is growing across Europe. Image: Massimo Zanetti Beverage

Lusini agreed, adding, “The Covid-19 pandemic and, even further the strong inflation on raw materials from Q4 2021, has pushed consumers towards private labels. In particular, the inflation driven by the strong price increases in green coffee has polarised the consumers towards entry-level prices on one side, and premium products on the other. Private labels could possibly take advantage of this.”

However, it is yet to be said that the Covid-19 pandemic has been a game-changer for the hot drinks market in Europe. Poliscuk explained that financial hardship caused by the pandemic forced consumers to re-think their spending, so value for money embodied in private label quickly became a priority, but that trend is primarily related to soft drinks. “Branded products remain important within hot drinks, due to their indulgence and rituality essence, in addition to the request for quality differentiation. Neither tea nor coffee of retailers’ owned brands did not gain share in 2020,” she added.

The European market is uneven

Private label hot drinks’ presence in Europe is not homogeneous and differs regionally and from country to country.

In 2021, almost 16 per cent of value sales of coffee and 14 per cent of tea in Western Europe were under retailers’ house labels. Meanwhile, in Eastern Europe this indicator does not reach 5 per cent for coffee and is 7 per cent for tea, Poliscuk said.

“The significantly stronger presence of private label in the Western part of Europe is explained with strongly developed chains of modern grocery retailers and already earned trust to own brands. Eastern Europe is only catching up with Hungary, Czech Republic, Poland, and Slovakia pursuing a Western model, with the strongest share of retailers’ brand overall and in hot drinks too,” Poliscuk noted, adding that these countries successfully adopted international – or developed their own – discount chains.

Single origin coffee is making its way into the private label segment. Image: Burdet Coffee

Different levels of development of store-owned brands define the way companies raise these products’ awareness. Thus, Eastern Europe usually puts the focus on low cost. More advanced chains enter the mode of portfolio expansion and product range broadening. Eastern Europe has already witnessed the evolution of basic needs’ satisfaction to catching up with expertise from brands they mimic, Poliscuk said.

Rising beyond the low-cost segment

As the popularity of private label products in Europe promises to gain traction in the coming years, this segment starts playing an increasingly important role for market players.

“We have a long-standing experience in private labels, both in mass market and food service. The management of private labels is part of our ongoing relationship with the trade at the global level and it represents one-fourth of our total turnover. We leverage our strong expertise in green coffee and the roasting capabilities of 18 plants located all over the world to support our PL clients,” Lusini said.

Poliscuk said that further projected penetration of modern grocery retailers and especially discounters will support the development of private labels across Europe with the highest dynamics in its Eastern part. “Private label in Western Europe is entering a new era where penetration of modern grocery and a developed omnichannel allow them to evolve towards something new and unique. Retailers’ own brands are ready to rise beyond low-cost, wide assortment and segmentation,” she said.

Currently, these brands target specific consumers’ needs and higher expectations with little or no sacrifice in terms of product quality. Poliscuk is confident that this will result in more private label coffee pods and fresh coffee beans with the underlined origin and technology of roasting, and private label tea will be able to offer more varieties and added value via functionality.

“As modern consumers are eager to buy sophisticated, premium organic or sustainable products, even price-sensitive private label [will be able to] enter the niches,” Poliscuk shared, adding, “It’s worth mentioning, that ever-continuing expansion of e-commerce with forms of dark stores and delivery services will draw new horizons for coffee and tea private label across Europe.”

• Vladislav Vorotnikov is a Moscow-based multimedia B2B freelance journalist writing about the tea and coffee industry since 2012

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