The Tea Market Is Steaming Hot — Here’s How It’s Expected To Grow

By Jemima McEvoy Tuesday, October 20, 2020

All the coffee lovers out there have competition because the tea market is on the up and up. Over the past few years, the tea market has seen exponential growth and is projected to expand by over 25% in the next seven years. Trends in this steaming hot industry show that its growth isn’t going to slow any time soon.

Unbe-leaf-able Growth

The global tea market generated $55.14 billion in 2019, according to an industry report by Allied Market Research published on September 15. The report, which tracks the industry’s growth and provides future projections, explores the driving factors behind the global tea market’s success.

“Tea has been very popular in the emerging market, owing to the prevalence of tea culture,” reads the report. “Furthermore, growth in health awareness and increase in disposable income has aided the tea market growth.”

Personal care, health, and wellness have gained increasing thought and importance in people’s daily lives, opening the door for many industries to capitalize on the health boom. As people have begun to pay more attention to how they’re treating their bodies—food, drink, exercise—tea has naturally emerged as a core product, filling the space left from a fizzling demand for carbonated beverages.

Tea, an aromatic beverage derived from the Camellia Sinensis plant, is now one of the most popular beverages worldwide. It’s considered extremely healthy due to the potent antioxidants, as well as minerals like potassium, manganese, magnesium, and calcium. Studies show that people who habitually drink tea tend to live longer and healthier lives. "Habitual tea consumption is associated with lower risks of cardiovascular disease and all-cause death," wrote the authors of a study published in the European Journal of Preventive Cardiology in January 2020." The favorable health effects are the most robust for green tea and for long-term habitual tea drinkers."

Proof of increased health consciousness driving the market’s boom is present in a more magnified look at trends within the global tea industry. The green tea segment accounted for the highest market share in 2019, according to the industry report. It’s this segment that’s expected to witness the highest compound annual growth from 2020 to 2027 (9.8%). “This is attributed to health benefits such as better digestion, improved heart & mental health, weight loss, and reduced tumor growth along with direct to innovative advertisements and celebrity endorsements,” per a press release.

Current Challenges: COVID-19 and Coffee

As it has for most industries, the coronavirus pandemic has had an impact on the global tea market. Predominantly, Covid-19 has slowed manufacturing activities due to lockdown restrictions. Additionally, the supply chain has been disrupted by the unavailability of raw materials necessary to produce tea. According to the report, the demand-supply gap widened during this time, especially with supermarkets, hypermarkets, and other specialty stores closing.

The key note here is that lockdown restrictions have resulted in a supply problem instead of a demand problem. People still want tea. In fact, a rise in tea consumption among U.S. households was reported during the pandemic. This means that when restrictions lift, the industry will move quickly toward recovery, and the tea market’s future success likely won’t be impacted.

Outside of the coronavirus pandemic, the tea market’s biggest threat is — surprise, surprise — the coffee market. As expected, that massive choice you have to make whenever deciding whether to buy tea or coffee translates into numbers, and heated competition between the tea and coffee sectors. Coffee consumption has similarly increased as a trend, which Allied Market Research identified as a “major restraint for this market.”

Future Plan(t)s

Nonetheless, the tea market is predicted to reach $68,950 million in value by 2027. That’s a growth increase of over 25% in seven years. The compound annual growth rate is estimated to register at 6.6%.

Supermarkets and hypermarkets accounted for more than one-third of the global tea market in 2019 and are expected to maintain their lead in terms of revenue by 2027, serving as the number one place where people buy their tea. “This is due to the availability of [a] wide variety of products, increase in footfall [(soccer)] in emerging countries, and a one-stop solution provided to them,” according to the report. However, online stores are expected to experience major growth, contributing to the high revenue projections.

Asia-Pacific and Europe are the most prominent regional markets, and the Asia-Pacific region is projected to be the source of major growth going forward.

Current market leaders include:

  • Associated British Foods Plc.
  • Barry's Tea Limited
  • Hain Celestial Group, Inc.
  • ITO EN, Ltd.
  • Mcleod Russel India Limited
  • Nestle S.A.
  • TaeTea
  • Tata Global Beverages
  • The Republic of Tea, Inc.
  • Unilever Group

About the Author

Headshot of Jemima McEvoy

Jemima is a journalist who enjoys reporting on business, particularly small business and entrepreneurship.

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