The escalating prices prevent more active growth of the industry and lead to the change in preferences of many local consumers with more of them beginning looking for cheaper products. Euromonitor International analysts confirm this, noting that current negative economic factors may lead to stagnation of both tea and coffee sectors of Germany in the middle term.

Lina Sidorenke, a senior analyst with Euromonitor International, said, “[According to our data,] inflation, a prevailing concern in Germany, is exerting a considerable influence over consumer behaviour. The prices of daily essentials, including coffee, have witnessed upward spirals, prompting consumers to be more judicious in their purchasing decisions.”

She said that the impact of inflation is visible in coffee, where consumers are increasingly opting for cheaper brands and exploring discounters to address rising costs. “Rising prices have encouraged many brands and retailers to offer promotions and discounts to drive up volumes. Still, despite the increasing prices of food and beverages, German consumers remain loyal coffee drinkers, as coffee is part of their everyday routines, thereby supporting positive retail demand at present.” Euromonitor reports that sustainability in coffee remains a dominant theme both for consumers and brands. For example, single serve coffee capsules have come under scrutiny for their contribution to environmental waste. According to the global market research firm, several players have introduced compostable packaging solutions to address these concerns. Effectively communicating these sustainability features has become paramount, as consumers increasingly seek eco-friendly coffee products.

Sidorenke explained that “the demand for fresh coffee beans is on the rise in Germany and continues to pose a threat to coffee pods and/or capsule machines. There is increasing availability of fully automated coffee machines that can actually compete with single-serve solutions, both in terms of price and taste.” She said in the long term, an increasing number of consumers are expected to switch to fresh coffee beans, especially as they are perceived as offering a richer coffee experience.

Mintel, shares the same view, noting that due to cost issues more and more German customers prefer to consume coffee at home instead of visiting cafés. A recent report from the global market research firm states that given the current economic backdrop, the reintroduction of 19 percent VAT and the overall strained financial situation in Germany, many consumers are trying to bring the café feeling home.

According to Mintel, most local customers are turning to inexpensive products and blends that are based on barista-made coffee. Instant coffee and coffee blends are the perfect solution for coffee lovers who are careful with their money. Mintel analysts believe that in the short term, this ongoing financial pressure on households holds further potential for more cost-effective formats. Companies can take advantage of changing consumer behaviour. Younger target groups in particular respond to barista-made coffee drinks at home. Both analysts and local coffee companies said this may all be good news for coffee brands, but the situation is highly problematic for cafés.

Cafés had a tough time during the pandemic due to constant closures. And now they are once again feeling the pressure of rising living costs, which are being exacerbated by the reintroduction of 19 percent VAT in the hospitality industry of Germany.

At the same time, they are threatened by outlets that do not specialise in coffee. For example, percent of consumers actually buy their coffee from a bakery or retailer, not in a café. Due to ongoing income pressures, more local consumers have become disloyal to their coffee brands, which created serious problems even for some major local players. Furthermore, the market is highly competitive and highly fragmented.

Premium brands in particular have been hit hard. And even the market leader Nescafé, which continues to lead the instant coffee segment, has been faced with downward trend. Some leading representatives of the German coffee sector shared that the ever tightening regulations along with climate change may lead to the decline of production of some coffee varieties.

Thomas Eckel, coffee sommelier and owner of the Murnau Coffee Roastery, one of the largest roasteries in Bavaria, in an interview with German Meininger business paper, said the EU Deforestation Regulation (EUDR), which aims to keep products linked to deforestation off the European market will  oblige companies to prove that their supply chains do not contribute to deforestation and that environmental, labour and human rights are respected. That may create some problems for the industry, as all of the companies will require support from farmers.

Eckel has also expressed some serious concerns about the effects of climate change on the entire industry and German coffee producers. “Coffee is one of the agricultural products most affected by climate change. We should take this very seriously. In general, we will definitely not drink coffee the way we do today in 2050. Many cell-based coffee products are also coming onto the market. These will help to close the gap in coffee supply.”

The current market challenges are putting additional pressure on leading German coffee manufacturers and could be associated with serious losses for them already in the short-term. In contrast to previous years, they will be unable to increase prices for their products to compensate their losses due to recent
accusations in price fixing.

For example, at the beginning of the current year, the local trading company Bartels-Langness accused Melitta of having formed a Germany-wide coffee roasting cartel with competitors Dallmayr, Kraft Foods (now Mondelez) and Tchibo between 2002 and 2008, which agreed on coffee prices. During this period, Melitta is said to have charged prices that were around 11 percent too high. Most of the companies declined to comment, however all of them believe the pressure from regulators on the market will continue to grow in Q4 of this year and in 2025.

Tea Struggles but Shows Resilience

Euromonitor’s Sidorenke added that similar to coffee, inflation is impacting Germany’s tea sector. “As inflation drives up the cost of everyday essentials, including tea, local consumers are making thoughtful choices in an attempt to manage their expenses. One prominent shift is towards private label and
discounters, where cost savings become paramount. Established tea brands are
responding by offering competitive promotions and discounts to retain their share.”

She said that at the same time, it would appear that the medium-priced segment is struggling the most, as consumers either turn towards cheaper options or they can still afford their favourite premium brands. “Although the cost-of-living crisis is forcing many consumers to reduce their expenses, tea remains popular, especially as it is considered a natural remedy to strengthen one’s immune system or simply for staying hydrated throughout the flu season.”

Germany-based tea manufacturers also said the existing problems seriously complicate their further development. Dirk Wollenhaupt, managing director o, which imports and blends teas, said the current situation remains complex, however the company sees potential for its further growth that will be achieved by the rise of efficiency of

Due to escalating costs, more German consumers are drinking coffee at home rather than in cafés.  “The German tea market is currently restrained and challenging. However, we expect a positive development in the medium term. The market has changed and the challenges have increased. In order to meet these challenges, we have adapted our processes and implemented many measures to increase efficiency,” he said, adding that being a producer of tea blends, Wollenhaupt has pursued a strategy of operational excellence over the past few months and orientated all processes towards being able to optimally serve its customers.

“The aspect of rapid availability and reliable, punctual delivery is extremely important in the tea market. We have invested intensively in the training and development of our staff and optimised production processes. In addition to
these measures, we have strengthened our sales activities with a sales office in the USA for the North American tea market,” Wollenhaupt explained.

Despite the existing problems, in its latest report Tee Report 2024, the German Tea & Herbal Infusions Association (GTHIA) revealed that most of local players have been able to adapt to the current realities of complex economics. Per the report, most medium-sized and family-run German tea companies were able to
consolidate and some even expanded their economic success in 2023-2024. The GTHIA said this was mainly due to their high-quality and innovative range, which enjoys big demand both in the domestic market and abroad.

The report finds that even though per capita consumption fell slightly in 2023 versus 2022, tea manufacturers have been able to record increasing sales. The GTHIA believes that is a sign of the strength of the German tea industry, noting that new, innovative products such as cold brew teas or functional teas, manufacturers are arousing the desire, especially among younger target groups.

Optimism for Future Growth

Even with the tough economics, most local producers and analysts expect that both coffee and especially tea sectors of Germany will resume its growth in the mid-term. On the product side, Dirk Wollenhaupt said there is the ever increasing demand for functional teas, ie, teas with additives such as melatonin, minerals and vitamins, and have greatly expanded our range in this area. “Other trends that we are observing in the German tea market and can serve with our products are wellness teas, iced teas, milk teas and mocktails with tea. The demand for high-quality green teas is also increasing. Sales of matcha in particular continue to grow in Germany due to its wide range of applications. With our partner in Japan and an extensive, high-quality range, we are very well positioned and are now one of the largest suppliers in Germany.”

He added that even though tea consumption in Germany fell slightly in 2023 compared to 2022, it remains at a high level. “Due to numerous new applications as an ingredient, as a beverage base or as a cocktail, we firmly believe that tea consumption will continue to rise in the medium term.”

As for coffee, most of local analysts expect the segment of caffeine-free coffee will provide a serious impetus for growth for the entire German coffee sector already during the period of 2024-2025. Mintel analysts report that more than half of 16 to 24-year-olds would welcome a larger range of caffeine-free products and would also be willing to pay more for such alternatives. This offers companies and brands opportunities for innovation in the area of low-caffeine and caffeine-free alternatives, for example in thecdrinking chocolate and tea segment.

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By strict definition, tea is a beverage made by brewing tea leaves in near-boiling water. Whether the tea is black, green, white or oolong, these leaves come from the same plant: Camellia sinensis. Technically, anything not made from this plant should not be called tea.

The history of mixing Camellia sinensis leaves with those from other plants to get new taste and aroma traces its roots to ancient times. Over the years, some additives and alternative plants have started to be consumed independently from Camellia sinensis leaves. This emerging segment is frequently referred to as ‘new teas’, and according to market players, it has a bright future.

The Covid-19 pandemic was certainly good for the herbal tea category, commented Matthew Barry, insight manager, food & beverage research with Euromonitor International, an international think tank.

“Many herbal teas have strong functional positionings that were in demand in 2020, including immune support, anxiety relief, and treatment of Covid symptoms like coughs and sore throats,” Barry said. Growth has been slower since then, but it is notable in itself that the category did not shrink in 2021 the way so many other food and beverage categories did once the pandemic eased, and people’s shopping habits started to return to normal, he added.

In recent years, yerba mate tea, one of the prominent segments of the new teas, enjoyed a strong growth in popularity, commented Amelia Quelas, president of the newly established American Yerba Mate Association (AYMA).

Up until a couple of years ago, the yerba mate business was restricted to those who brought the custom and tradition to consume it from their homelands, specifically South America, including countries like Argentina, Uruguay, Paraguay, and Brazil, and the Middle East, and was sold in small markets and delis that catered to those communities, Quelas said.

“Slowly but steadily, a couple of companies started producing yerba mate-based carbonated drinks and entered the market through larger chains of food supply. Also, stars like Lionel Messi and teammates in the soccer world have spoken about their commitment to using yerba mate for stamina, energy and resilience,” Quelas added.

The emergence of new ‘teas’

Other types of new teas are performing similarly well. The moringa tea market, for one, has been growing steadily in the past several years, commented Clarissa Akakpo, CEO of the Accra-based moringa tea manufacturer, Aguma Tea.

“My tea business is primarily in West Africa, and there is a certain level of local knowledge that the moringa leaf is a great source of nutrients and can aid the symptoms of a variety of ailments,” Akakpo said.

In general, there used to be a perception that moringa is a tea to be consumed when sick or dealing with some form of health condition. The pandemic, however, was a game-changer for the moringa tea market.

“With the Covid-19 outbreak at the beginning of 2020, there was an increase of enquiries for moringa tea globally,” Akakpo shared, explaining that customers were looking to strengthen their immune systems and alleviate some of the symptoms. “This developed an increased general knowledge about the benefits of moringa tea,” she said, emphasizing that the impetus started by the pandemic to the moringa sector had not winded down even when the worst period ended.

Occasional reports indicated that purple tea, another type of the new tea segment, also enjoyed a rise in popularity, although it is twice the price of traditional black tea. Companies working in this niche also emphasize the health benefits of their product.

For example, Summer Tea, a prominent Kenyan purple tea manufacturer, lists high antioxidant content, weight management and improved heart health as the key benefits customers can get from consuming purple tea.

Capitalising on health habits

The Covid-19 pandemic undoubtedly boosted the popularity of at least some new teas, but there is more to it than that. As growing numbers of consumers continued to pursue healthier choices, new teas continue to come into the spotlight. Tea continues to benefit from consumers’ focus on health and wellness in a post-Covid-19 world, said Tan Heng Hong, senior food & drink analyst with Mintel, an international consultancy.

Additionally, Hong suggested that brands can deliver stronger messaging, provide more eco-friendly options, and deliver greater transparency to ensure tea’s continued relevance among sustainability-minded consumers.

In the coming years, the new teas market is poised for exceptional growth in sales, largely owing to a low-base effect. “Teas are recognised as having health benefits, and yerba mate, also has many health benefits, but because it was consumed by a much smaller population than traditional teas, it is coming a little late to the party in the US but [has staying power],” Quelas said.

With regard to herbals, Euromonitor’s Barry said there is not one specific factor behind the growth, “there are a number of things. One is simply a restlessness we find among younger consumers across many beverage categories. Younger people are abandoning sodas for waters, lagers for ready-to-drink (RTD) cocktails, etc.”

According to Barry, another reason for the rising popularity of herbal tea is the interest in functionality. Herbals have done a really good job of speaking to the functional space with a wide array of targeted products, he said, adding that in his opinion, black tea has not touted its own health benefits enough. “Regular consumption of teas from Camellia sinensis is linked to all sorts of positive health benefits, yet black tea is not really thought of as a health drink.”

Akakpo also said that the moringa tea business is growing, and the demand is increasing with the rise in interest in preventative health and well-being techniques. “I have observed that consumers want to incorporate new natural remedies into their everyday diet, and moringa is one of them,” Akakpo said.

A place on the infinite shelf

New teas offer excellent opportunities for tea companies looking to diversity their product range.

“We have been gradually increasing our range of herbal infusions over the last few years for those looking to avoid caffeine as well as to increase the range of flavour profiles,” said Holly Grinstead, a marketing manager for Edinburgh-based tea company, Rare Tea Co.

“The East-to-West cultural exchange will create demand for more tea varieties and new ways to consume it. Tea can increasingly take inspiration from energy drinks and other energizing beverages as consumers look for more natural sources of energy,” Hong added.

“If you have a market where black tea has been dominant for a long time, it’s not surprising to see millennials and Gen Z instinctively want something else,” Barry explained, adding that there is a lot of room for experimentation because of all the different ingredients you can use, and consumers these days are very interested in trying new and unusual beverages.

He noted that the internet has played a key role in this. “Even the most well-stocked tea retail outlet can only have so many options, but online, you have the ‘infinite shelf’. Tea out-performs in e-commerce compared to other food and beverage categories, and I think the variety available is a key reason.” Barry explained that people only want so many kinds of peanut butter or toothpaste to choose from before it becomes too much, but when it comes to tea and herbal teas specifically, they really do seem to want a massive selection.

Market players also continuously study various options for mixing new teas in different blends.

“Business has been good for us in the value addition space,” commented Sahil Radia, CEO and co-founder of Kenyan tea manufacturer, Bahari Teas, which focuses on purple tea, among other things. “We find there’s a lot of focus on tracing the tea from farm to cup and ensuring the tea is planted and produced at optimum standards. organic, Fair Trade, non-GMO tea are even more important now, but commitment to quality and sustainable packaging is also key,” Radia added.

Social media plays an essential role in the growth of the popularity of new teas. “Some health commentators on social media platforms have shared that moringa forms part of the cuisine in India; for example, in some villages, moringa leaves are put into curries and used as a herb; this was also a common practice in many parts of West Africa where moringa leaves and stems would be used as a vegetable in soups and stews,” said Akakpo. “This conversation has led to different types of enquiries. As a result, I have had requests for whole leaf moringa.”

The product range of new teas, as well as the number of market players working in this field, is likely to keep growing for the time being.

“The yerba mate business is still in its infancy, and one of the targets of the American Yerba Mate Association is to help those companies that are already in the market, those that are interested in selling yerba mate products in the US, and also those that are ready to enter the market such as Matea, a new concept out of Boise, Idaho, which is producing a yerba mate matcha energy drink in different flavours,” Quelas indicated.

In general, analysts remain optimistic about the future of the new teas. Barry, for example, pointed to the fact that a lot of the underlying drivers boosting growth are strong and that there is little reason to believe that there will be a reversal anytime soon.

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

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Tea already has a ‘health halo’ with 54% of UK consumers believing that green tea has a positive impact on their health (per GlobalData Plc, 2022). Functional teas take this one step further and combine tea with botanicals and fortifications to offer a specific benefit and create products that deliver a compelling health proposition for consumers.

Super teas arrived in the UK in 2015 when Tetley brought out the first ever range of EFSA (European Food Safety Authority) backed Super Green and Super Fruit teas. This paved the way for other brands and supermarket own brands to capitalise with new products being put on the supermarket shelf at a faster rate than in any other tea sector.

And it’s not just physical health — post Covid, consumers are increasingly seeking products that promise psychological or emotional benefits too. Claims relating to sleep or stress management attract the most activity, with one in ten new products using these claims according to Mintel’s Tea and other Hot Drinks Report, 2022.

How can brands capitalise?

The key to capitalising on this trend is for retailers and brand owners to understand the top claims and flavours that appeal to consumers. The traditional black tea market is still significant with over 85% share, but consumers are seeking variety when shopping this category and have a higher preference for healthy beverages than ever before. With a slightly higher price premium than other ‘tea’ products, not only do functional teas add choice to the fixture, but they also help to drive value into the category.

What’s next for functional tea?

In my view, this is just the start of the super tea trend. As consumer tastes evolve and demand for functional food and beverage heightens, there is huge opportunity for retailers to increase sales by looking beyond what is happening now and asking what will happen next. Tea – with its health halo – will be a mainstay, as will botanical infusions… but inspiration can be found in other categories and markets, where emerging ingredients such as mushroom tea, protein tea and adaptogens like ashwaganda are increasingly popular.

The key, as ever, is to join forces with an expert partner, who can help you stay ahead of the curve and tap into the extremely exciting opportunities within the functional beverage space.

• Rebecca Coath, category manager at Finlay Beverages, analyses the rise of functional teas in the UK and where the trend might be going next.

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Having experienced explosive popularity over recent years, cold brew coffee is now leading the next wave of coffee culture. In the United States, the cold brew market is now valued at $2.3 billion, growing by 213 percent since 2016 (GlobalData Plc, 2020). Meanwhile in Europe, cold brew is the fastest growing segment in RTD/Iced Coffee, with the United Kingdom becoming the fastest growing cold brew market, forecast volume growth of 10.5 percent between 2021-2025 (GlobalData Plc, 2021; Total RTD/Iced Coffee Market, Global Beverages Databook 2022).

Cold brew’s rapid ascent may in large part be down to its distinctive ability to meet consumer demands for convenience, health and premium flavour. With 83 percent of consumers expecting innovative flavours and new experiences in convenient grab-and-go formats to fit in with their busy lifestyles, cold brew can help beverage brand owners meet these key consumer trends (swnsdigital.com).

Demand for Premium Flavour

Unlike other coffee extracts, cold brew is made by slowly steeping coffee in ambient or cold water for extended periods of time. This gentle process extracts the superior flavours from the grounds, without using heat or pressure. The final product has a smooth, barista quality, rich flavour with a naturally sweet taste profile, similar to genuine roast and ground coffee. Cold brew is also perceived to be up to 67 percent less acidic than traditional hot brew and iced coffee, thus meeting consumers’ growing thirst for a more unique sensory experience (Mintel 2020).

The genuine roast and ground flavour has won favour with even the most discerning of coffee drinkers, being most commonly described as “smooth” and “indulgent” (Kerry 2018/foodnavigator-usa.com). This rich flavour profile has resulted in cold brew becoming a regular purchase for many consumers, overtaking iced coffee consumption (Datessential, SNAP Food Profile: Cold Brew, March 2018/GlobalData Plc 2021).

Due to its naturally sweet and rich flavour profile, one of cold brew’s unique appeals is that it can be drunk black without the associated bitterness of hot brewed coffee. This is particularly the case in Europe, where black is the most popular variety of cold brew, accounting for 69 percent of new product launches, highlighting the importance of coffee quality (Mintel GNPD, 2021).

Additionally, nitro cold brew offers a completely unique coffee experience. Infusing cold brew with nitrogen creates a silky smooth, velvety texture with enhanced sweet chocolatey notes, and a foamy head that resembles a Guinness. With its beer-like appearance, nitro taps into craft brewing trends and appeals to coffee lovers seeking a premium, unique beverage experience.

Image: H Webster

Convenience and Affordability

While consumers are seeking more premium beverage experiences, they still want their drinks to be affordable and fit in with their busy lifestyles.

Propelled by the pandemic, multi-serve formats have been gathering favour among consumers. Designed for at home consumption, bigger pack sizes and multipacks drive better value perception and also offer convenience and flexibility.

Multi-serve formats make it easy for consumers to enjoy cold brew at home, without the challenges of trying to brew it from scratch. Concentrate formats in particular can be diluted and paired with anything from oat milk to ice cream, offering consumers a completely customisable caffeine fix.

Healthier Beverages Without Sacrificing Taste

Research shows that 62 percent of consumers gravitate towards healthier beverage alternatives, seeking out caffeinated drinks with clean labels, free-from claims, and perceived health benefits such as improved mood, heightened concentration, and increased energy (Global Consumer Survey, 2020).

Cold brew is natural sugar and calorie free. Because of its naturally sweet taste profile and low acidity, it does not need heavy amounts of sugar or flavours; a little goes a long way, enabling beverage brand owners to tap into the demand for clean-labels, free-from and low-sugar claims.

Millennial and Gen Z consumers in particular are adopting a more holistic approach to health and are reaching for beverages that combine elevated health credentials, flavour and indulgence.

The versatility of cold brew allows beverage brand owners to diversify their product ranges and appeal to these younger health-conscious consumers, of which 40 percent of Gen Z consumers prefer their coffee in chilled, ready-to-drink formats like cold brew (Technomic Generation Report, 2018). The flexibility of ready-to-drink offerings and multi-serve formats, means that brand owners can cater to consumers’ varied preferences and, ultimately, tap into the next wave of coffee culture.

• Siân Edwards, group insights manager at Finlays, a leading B2B supplier of tea, coffee and botanicals, headquartered in London, UK. She is responsible for understanding the trends and dynamics that drive the global market for tea, coffee and botanical ingredients.

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It’s a new era for tea and coffee. As exciting new flavour innovations continue to pop up in the marketplace, these time-honoured beverages are enjoying a renaissance of interest from consumers seeking innovative new tastes and product features. The question that comes up immediately for producers: Which flavour innovations will be the ones to excite existing and new customers alike, and foster repeat purchases? These days, amid a bewildering array of new botanical flavours, functional ingredients, plant proteins, sugar challenges and sustainability concerns – all of which must factor into development efforts – the profusion of product combinations and permutations is enough to leave even seasoned product creators with more questions than answers.

Flavours and ingredients provider, Kerry, follows global traditional and emerging flavours and functional ingredients as they attract rising public interest. Its latest research, detailed in the company’s Taste and Nutrition Charts reveals key flavour trends for tea and coffee beverage product developers to keep in mind for 2023.

Florals are favourites

Lavender’s future, for one, seems assured. This floral favourite holds growing global appeal as a gentle flavour that supports mental physical and emotional wellness. Dataessential projects lavender inclusion to rise by 108 percent on US restaurant and bar menus in the next four years. Lavender has all sorts of possibilities, augured by its ability to combine well with other tastes; white chocolate is one of many exciting examples. White chocolate lavender latte, anyone?

Chamomile, traditionally used in tea, is perceived as warm, uncomplicated and comforting. Its appeal is also driven by the health benefits it’s believed to deliver.

Among the choices is another floral favourite, hibiscus, an engaging botanical flavour in beverages, and growing in sweet yogurt, and guava, a rising tropical flavour for beverages and sweet snacks, yogurt and frozen desserts. Guava’s exciting profile is also thought to include immunity support and digestion benefits.

New flavours combined with familiar favourites

There are all kinds of interesting emerging flavours able to mix and match with traditional favourites. Aside from the entrancing lavender and white chocolate pairing noted above, Kerry’s 2023 Flavour Insights highlight matcha tea as an emerging choice in hot beverages. Rose, turmeric, horchata, crème brulée and cardamom… the list goes on. Pumpkin spice is also well established, as are blueberry, mango and mocha.

Mixing flavours judiciously to create appealing new beverages drives consumer interest. However, the winners in the market are the brands that are combining novel flavours such as the above with fan favourite flavours already loved by consumers to create a beverage that is both familiar and nostalgic but also exciting and new.

Sugar reduction

Sugar has overtaken fat, salt and calories as the key health concern for consumers in Europe when eating out-of-home. Some 87 percent of consumers want to reduce their sugar consumption or are aiming to use sugar in moderation (per Consumer First, 2018). Since 2015, there has been a 44 percent increase in reduced-sugar drinks launches according to Mintel (2018).

Sugar reduction is a key flavour influencer that must be implemented carefully. Why? Well, sugar delivers more in taste than just sweetness: It also builds in all-important texture and mouthfeel. Any sugar-reduction strategy must include ingredients to counteract any perceived loss in taste.

Adding functional ingredients

Today’s beverage producers have the option of adding in valuable functional ingredients, addressing the ever growing demand for health, especially in the area ProActive Health functional ingredients, which are designed to address the most common health needs of consumers, across areas such as gut health, cognitive heath and immunity. Ingredients like ashwagandha are gaining prominence in markets around the world for their support of sleep and stress management, which are key components of cognitive wellbeing, and ingredients that work well in beverages.

Sustainability is an important consumer concern

Consumers gain from a ‘feel good’ factor when they purchase sustainable products, and it is a state of mind that shows no signs of abating. In fact, 89 percent of global consumers now expect companies to invest in sustainability; this is up from 65 percent in 2018, per Innova Market Insights (2019). Kerry’s Consumer First study revealed that 83 percent of consumers would consider the environment when making a purchase. This is not just for at-home purchases either with 71 percent of European consumers saying that sustainability is now important to them when choosing where to eat and drink out-of-home. Quite simply, consumers want to do something for the environment and to fight global warming, so a strong focus on sustainable ingredients can be a key differentiator for in today’s ultra-competitive environment.

However, ‘sustainability’ refers to much more than just environmental concerns. Consumers today want to know the provenance of the beverage ingredients they consume and know they were procured in a responsible manner. They want the growers to be compensated properly and farming communities to be sustainable over the long-term. Beverage producers need to not only ensure they know the origins and full sustainability of their ingredients, but also work on communicating this to end-consumers through your marketing and menu as our research shows that 81 percent of consumers believe foodservice outlets should do more to communicate what they are doing to protect people, the planet and society.

These sustainability and new flavour questions are hard to answer on your own. Human intelligence and experience can play a vital role, and product developers can apply it to their advantage by including ingredient suppliers in early-stage planning discussions. Harnessing their expertise and brainpower for use by the formulation team is the type of targeted help that can lead to market success in a crowded field. Fortunately, as consumers become more discerning, the efforts expended to draw their attention hold potential to be richly rewarded.

• John Kelly is strategy director for beverage at Kerry. Kerry is a world leader in taste and nutrition for the food, beverage and pharmaceutical market, innovating with customers to create great tasting products with improved nutrition and functionality, while ensuring better impact for the planet. Kerry’s consumer insights, global RD&A team of 1,100+ food scientists and extensive global footprint enables the company to solve customers’ complex challenges with differentiated solutions. As a valued partner of customers, Kerry is driven to creating a world of sustainable nutrition and will reach over two billion consumers with sustainable nutrition solutions by 2030. For more information, visit.www.kerry.com.

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Depending who and where you ask, kombucha ranges from a niche beverage that people have heard of but do not know what it is, to a beverage and lifestyle staple. However, there is no argument that, globally, it is a growing category, situated in the ready-to-drink (RTD) tea market, which is also growing. This growth is driven by four macro trends, according to London-based Momo Kombucha’s co-founder, Josh Puddle, which are “gut health, low sugar, alcohol alternatives and vegetarianism/veganism.”

Consisting of fermented tea, using a live culture of bacteria, known as a SCOBY (symbiotic culture of bacteria and yeast), fruit flavours are often then added to create a naturally low-sugar, lightly sparkling probiotic drink, sometimes with a naturally occurring ABV of around 0.5 per cent, however many manufacturers remove this alcohol content to bypass possible restrictions.

Thought to originate in China, one of the largest markets for kombucha is currently the United States. A 2015 Mintel report found that nearly one quarter of US consumers were drinking kombucha, half of which were aged 25-34. However, the market has grown significantly since then so the figures are now likely higher — and it is still growing. Future Market Insights Kombucha Market Outlook report forecasts kombucha to globally experience a CAGR of 17.4 percent from 2022 to 2033, or a rise from USD $3.4 billion to $17.1 billion.

The US is one of the most developed kombucha markets, and therefore is experiencing innovation in the category, such as Caffe Luxxe’s coffee kombucha, brewed from the company’s own coffee as a base rather than tea, to “provide the energising effects of coffee in combination with the probiotic benefit of kombucha,” said Gary Chau, co-founder of south California-based Caffe Luxxe. Kombucha is highly popular among Californians, which Chau credits to the regional trend of lifestyle wellness and holistic health.

California was also the host state of Kombucha Kon, which saw its third annual installment in April. This conference and expo is targeted specifically at the kombucha industry, offering networking across the kombucha supply chain. “Medium-large and better-distributed US brands were represented, including Brew Dr., Bambucha, Flying Embers and Local Roots,” commented Jason Walker, marketing director of Firsd Tea North America, who attended the conference.

Where the US market is reaching maturity, in Europe, in particular the UK, whilst showing strength, the category is still establishing itself and growing its popularity base, with companies mostly trying to make themselves known and educate consumers on what kombucha is and the health benefits it offers, since this is what draws most consumers to the products, and then draws them back. One company already has an advantage in this respect; Yorkshire Tea, a household name in the UK for everyday black tea, is launching a line of kombucha in collaboration with kombucha brand, HOLOS Kombucha, brewed from its own tea. It is still in its trial phase and not yet available to consumers, however, attendees  at the London Coffee Festival, which took place in April, were able to sample the new line. Several other kombucha companies also exhibited at the annual event.

Millennials drive category growth

Kombucha is heralded as the ultimate functional beverage, serving as a probiotic, which contains live microorganisms intended to contribute to healthy levels of good bacteria in the gut, supporting digestion and boosting immunity. Kombucha companies are tapping into the wellness trend that strengthened during the Covid-19 pandemic, and offering a healthy, alcohol-free beverage that also tastes good.

Momo’s Puddle said that the main consumer demographic of its kombucha are millennials, primarily 25 to 45 year olds, which concurs with Fact.MR’s report detailing millennial’s rising adoption of bottled tea. However Caffe Luxxe’s Chau shared that its kombucha is sold generally to those “interested in an overall health and wellness lifestyle.”

That statement is supported by Anna Dominey, UK general manager at Remedy Drinks, an Australia-based kombucha company that dominates in its origin country as well as in the UK market, who says that it appeals to “those who are rejecting processed foods and drinks in favour of more natural alternatives and by those who are looking to cut down on alcohol or drink more mindfully.”

It is evident that the main driver of the kombucha category is its health benefits as well as the offering of an alcohol alternative. “Around 20 per cent of Remedy is consumed in the evening, suggesting consumers are enjoying it as a tasty and satisfying alternative to alcohol,” commented Dominey, further indicating the growing partnership between the low and no alcohol trend, and the functional/wellness beverage trend.

Beverage companies are tapping into this demand, according to Puddle, “more brands are creating products specifically for this segment, eg, kombucha in champagne-style and beer-style bottles.” An example of this is Mighty Brew, which, alongside its core range which retails at a price point of approximately £5.66 (USD $7.08) for 750ml, it offers a more premium ‘Heritage’ format at approximately £11.00 ($13.76) for 750ml which is housed in a champagne-style bottle, complete with cork and cage. Mighty Brew’s Heritage range is marketing itself as an alternative to alcoholic bubbly beverages at celebratory occasions.

Tapping into current trends

This functional/wellness and low and no category overlaps significantly with those incentivised by sustainability claims, therefore, most kombucha brands cite accolades accordingly, such as Momo achieving certified organic and B Corp status. Further, Remedy endeavours to source high quality, all natural ingredients; “This was the way Sarah and Emmet [Remedy’s founders] did it when they started on the kitchen counter, and they still take an active role in sourcing the best ingredients from trusted suppliers,” revealed Dominey. “We know where every single ingredient in our drinks comes from, right down to even our live culture,” she continued. Similarly, Caffe Luxxe builds sustainable relationships with its coffee farmer partners to provide consistent and fair prices.

Looking ahead, Future Market Insights (FMI) Kombucha Market Outlook report finds that it is “unlikely that consumer demand for fermented goods may decline anytime soon,” with the millennial generation’s focus on healthy eating fuelling the demand. However, to increase its consumer base, the kombucha market needs to actively promote its health benefits to attract the older consumer, as well as work on becoming more cost-effective, as it currently sits in the more premium category in most markets. FMI’s report also details that the category can take advantage of novel flavours to attract consumers and tap into the increasingly adventurous flavour palates of the consumer.

• Kathryn Brand is an associate editor on T&CTJ, while still writing for several of Bell’s other magazines. She joined Bell Publishing as an editorial assistant at the beginning of 2022 after graduating from the University of East Anglia with a degree in English Literature and Creative Writing. She may be reached at: kathryn@bellpublishing.com.

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Consumer fears over climate change have intensified globally over the last year. New research from the 2022 Mintel Consulting Sustainability Barometer reveals that the number of global consumers citing climate change as a top three environmental concern has risen from an average of 39%, to 46% between 2021 and 2022. 

Mintel’s research finds that concern over water shortages (up to 31% in 2022 from 27% in 2021) and food shortages (up to 23% in 2022 from 17% in 2021) have also made the biggest gains in terms of environmental priorities in the past twelve months as extreme weather events and the conflict in Ukraine evidence these realities. 

Climate change remains the world’s highest environmental priority with nearly half (46%) of the respondents citing it among their top three concerns. Air quality (36%) and plastic pollution (33%) round out the world’s top three environmental concerns. However, concerns about plastic pollution are down from 36% in 2021. 

Rising awareness is evident as approximately three in five (58%) consumers globally agree that extreme weather events (eg, flooding, heatwaves) in the country where they live encourage them to personally do more activities to protect the environment. Subsequently, it seems helping the planet brings with it a ‘feel-good factor’ as 68% of consumers globally say doing things that benefit the environment makes them feel happy. Unsurprisingly, social media comes into play as Mintel finds that 38% say they want to ‘show other people’ how they are doing good for the environment. Another 24% say they have researched their annual carbon footprint. 

Although environmental priorities have shifted in the last year, Mintel reports that consumers’ sustainable behaviours remain focused on simplicity and frugality. For instance, recycling packaging (59% in 2022 versus 60% in 2021), meal planning to avoid food waste (53% in 2022 vs 52% in 2021) and reducing clothes buying (50% in 2022 vs 52% in 2021) remain the top global sustainable behaviours in 2022 and 2021. Global consumers’ optimism is essentially flat with 55% believing that if we act now, we still have time to save the planet, compared with 54% who said the same last year. 

Commenting on the findings, Richard Cope, senior trends consultant, Mintel Consulting, said, 

“The fact that concerns around climate change and water and food shortages are being prioritised ahead of previous preoccupations with waste and plastic pollution points towards the emergence of a more informed and hardened global consumer. Soaring temperatures, extreme weather events and disruptions to food, water and energy supply chains have given consumers a harsh reality check, hurting their health and wallets, and activating them in the process.” 

He added that escalating activism, regulatory reaction and the sheer scale of the challenges ahead and solutions required have educated global consumers enough to sniff out greenwashing campaigns. “This means companies will increasingly need to assert – and clearly communicate – the truly impactful actions they are taking to reduce emissions, rather than simply offset them or dip their toes into populist ‘plastic free’ campaigns,” explained Cope. “This growing awareness around resource inputs and emission and waste outputs will also spell the end for ‘environmentally friendly’ as a credible marketing term.” 

Noting that most consumers surveyed continue to see recycling and mitigating waste as important sustainable behaviours, Cope said, “This tells us that simple, frugal behaviours are the most popular among consumers, which underlines the fact that brands’ sustainability initiatives need to deliver on value and convenience.” 

Looking ahead to 2023, Mintel expects to see resource (food, water, money) conservation ascend higher up the agenda, and the use of economising technology refurbishers and urban peer access sharing economies to grow. “For consumers, the connections between saving the environment, its resources and their money will strengthen,” shared Cope. 

The second annual Mintel Consulting Sustainability Barometer features research and insight on consumers’ sustainability attitudes, behaviours and purchase preferences across 16 countries (Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, South Korea, Spain, Thailand, the United Kingdom, and the United States). The April 2022 survey included 1,000 internet users aged 16/18+ compared with 500 internet users aged 16/18+ surveyed in March 2021 with Indonesia and Mexico replaced by Poland and Ireland.

• Vanessa L Facenda, editor, Tea & Coffee Trade Journal.
  Keep in touch via email: vanessa@bellpublishing.com Twitter: @TCTradeJournal or LinkedIn: Tea & Coffee Trade Journal

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Mintel’s coffee report for 2018 estimated that 1 billion capsules will be consumed by British drinkers in 2019, with  70% (700m) of these, mainly plastic and aluminium (95%) headed for landfill, taking up to 500 years to degrade. 

Sales of coffee capsules in the UK continue to rise, now making up 17% of the total coffee market with capsules being the ‘the main contributor to the volume growth’ of coffee. The volume of capsules now stands at 9 million kg per year with less than a third being recycled.

The Mintel report also highlighted that only 41% of UK coffee launches in 2018 made an environmentally-friendly packaging claim. This was supported by Halo’s own independent research study among 2,000 UK coffee drinkers which revealed that two thirds of coffee drinkers (66%) felt that brands don’t provide enough information on how to recycle capsules correctly.  Consuemrs are confused about where to put the spent capsules; do they go into the normal bin, food waste, recycle bin or home compost? 73% of capsule drinkers admitted to having no idea what happens to them once disposed.

Nils Leonard, co-founder of Halo Coffee said: “We’ve written to government as part of its consultation on reforming the UK packaging producer responsibility system, urging much stronger action to ensure less plastic and aluminium ends in landfill and to end the confusion for consumers who are often unwittingly failing to recycle properly.

“This is about more than just the coffee industry, it’s about the UK recognising the power the coffee has to either help or harm our environment. This country needs to do a lot more to prevent billions of coffee capsules going into landfill in the UK and globally respectively. The problem is educational, and the market must face up to the responsibility it has to enable consumers to make responsible choices when purchasing capsules.   

“If a small company like Halo produces a capsule without aluminium, plastic or bioplastic, then other larger manufacturers should follow suit. We’ve laid down the challenge, for the sake of the planet we hope they take it up.”

Halo coffee capsules are made from a 100% natural blend of sugar cane and pulp paper that can simply be thrown in the normal home bin, food bin or compost when it’s finished. Each capsule will break down, depending on the atmospheric conditions, in approximately four weeks and isn’t a contaminant.

Halo Coffee is available to purchase from https://halo.coffee/ with prices starting at £7.00 for a box of ten.

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