Most Indians (78% of the Indians) are tea drinkers, as tea is commonly consumed as part of their daily routine. While regular hot tea is the most popular choice, being consumed by 62% of Indians, specialty teas such as green, botanical, and fruit tea are emerging, with green tea leading this niche category
The convenient RTD tea format forms a very niche segment with only 2% of users, mainly comprising South and SEC A consumers.
“Specialty tea is an emerging segment predominantly consumed alongside regular tea. Specialty tea drinkers actively explore emerging wellness spaces and have a keen interest in flavors. An opportunity exists to elevate the sensorial experience of specialty tea by tapping into their fascination with fruit and floral flavors.” said Anamika Banerji, Food and Drink Analyst, Mintel Reports India.
As per ‘Mintel’s Flavourscape AI’, amla and orange/sweet orange are emerging fruit fl avors, while hibiscus and butterfly pea are emerging floral flavors in Indian tea products. In case of Indian RTD tea, lemon and peach are the predominant flavors, while berry fruit, citrus fruit and spice are novel flavor groups to watch out for.
Functional benefits are the top features of interest, prioritized over plus claims and healthy ingredients in tea. “While relaxation is a fundamental expectation for tea, brands can set themselves apart by offering additional functional benefits like gut health and mental focus. However, these features may not directly translate to premium pricing, as only 12% of tea drinkers are willing to pay more for tea with added health benefits,” Banerji said.
Market size of tea segment in India
In 2021, the Indian hot drinks market boasted a substantial valuation of USD 10.7 billion, with a projected CAGR exceeding 9%. Forecasts indicate that by 2024, the market is poised to attain a revenue milestone of $15.1 billion, with an anticipated annual growth rate of 6.10% from 2024 to 2028.
Tea reigns supreme as the largest segment of hot beverages in India, commanding an impressive 79% share of the market and being the largest category within the hot drinks segment in India.
Euromonitor’s insights reveal that the total Retail Selling Price (RSP) value of Ready-to-Drink (RTD) Tea stood at INR 2.4 billion in 2023. Projections indicate an increase to INR 2.6 billion this year, with a projected ascent to INR 3.2 billion expected by 2026. Simultaneously, Euromonitor reports the total volume of RTD Tea at 0.026 billion liters in 2023, set to escalate to 0.027 billion liters in 2024 and projected to reach 0.031 billion liters in 2026
According to the latest findings from the IMARC Group, the India tea market achieved a substantial size of US$ 11.1 billion in 2023. Looking ahead, IMARC Group anticipates the market to ascend to US$ 14.7 billion by the year 2032, showcasing a noteworthy growth rate (CAGR) of 3.18% during the period spanning from 2024 to 2032.
By 2032, it is projected that the tea market in India will reach a volume of 1.82 million tonnes. However, tea is the slowest-growing category in hot beverages by volume. On all-India basis, tea dominates with a 45 per cent share in the urban market with the west and south regions having almost same market share in this segment. Both the regions also share same monthly per capita tea consumption figures about Rs. 177.
New trends and expansion of tea brands in India
The brands in tea segment are numerous and the list is growing every year. There are many national and local tea brands and each holds a respective market share. Most of these brands have created a niche market for themselves by targeting different consumer segments. The brands and manufacturers have extended their range in tea to suit every taste bud. The emerging segment of green tea and organic tea is providing the segment newness and health benefits.
The increasing consumer awareness about the health and medicinal benefits of tea and shifting consumer preferences for organic tea and green tea variants are among the key factors positively influencing the tea market in India.
The middle class is also willing to experiment more with tea blends, thus, providing impetus to segments like herbal, flavored blends, and other specialty variants.
In addition, the rising focus of the leading players on introducing new flavors with healthy ingredients, such as ginger, lemon, hibiscus, turmeric, and peppermint, is creating a positive outlook for the market in the country.
Furthermore, the expansion of organized retail channels, including hypermarkets, supermarkets, convenience stores, and departmental stores, along with the growing online retailing platforms, is anticipated to drive the market.
With busier lifestyles and a growing workforce, the sales of herbal tea are expected to rise, as consumers seek healthier alternatives to beverages like carbonated drinks. The urban sector is currently a major consumer of herbal tea.
The market will also be driven by increasing innovations in packaging and flavors in the coming years. The consumer demand for wider beverage options and innovations like eco-friendly packaging is compelling manufactures to launch improved product range.
Conclusion
The Indian tea market is undergoing significant transformation, with specialty teas like green, botanical, and fruit teas gaining traction alongside traditional hot tea. While regular hot tea remains the most consumed variant, the emerging preference for specialty teas reflects a growing consumer interest in wellness and novel flavors. Despite its niche status, the RTD tea segment is expanding, driven mainly by consumers in the higher socioeconomic class. Consumer trends indicate an increasing inclination towards health-conscious choices, with a marked preference for green and organic tea. The middle class, in particular, is showing a willingness to experiment with various tea blends, including herbal and flavored options. This shift is driven by greater health awareness and the desire for diverse taste experiences.
In conclusion, the Indian tea market is poised for continued growth, propelled by consumer interest in health benefits, flavor innovation, and convenient retail access. Specialty teas, with their unique flavors and functional benefits, are set to become a significant segment alongside traditional hot tea, catering to the evolving preferences of India’s tea drinkers.
