In recent years, tea has entered an era of value creation. Long considered a low-priced commodity, when compared with coffee and soft drinks, it has now become a very versatile product, and an increased demand for premium speciality teas is driving value growth.

Loose tea, which has traditionally been the arena of small, specialised producers, is now perceived as a good fit for a shift towards premium teas by mainstream brands. We find out what is drivingy this shift is happening, of and what is driving today’s consumers to demand for premium loose leaf tea.

Potential of premium

Hot tea is second only to bottled water in terms of global consumption, according to Euromonitor. And iIn Europe, the premium tea market is especially flourishing, as consumers look for healthier, natural and authentic products, as the trend towards clean eating and drinking continues apace.

Tea producers are realising the value sales potential of premium tea, with new offerings of functional, healthier and flavourful tea blends. An August 2015 report from Mintel noted that while sales of ordinary teabags in the UK fell by 13%, from £491m in 2012 to £425m in 2014, sales of alternative teas – including loose leaf and herbal teas – went from strength to strength.

"Tea has entered an era of value creation."

“Signalling that consumers are becoming more adventurous in their choice of tea,” explains Emma Clifford, senior food and drink analyst at Mintel, “is that sales of fruit or herbal teas, specialty teas and green tea continue to post impressive performances. Reflecting a growing ‘foodie’ culture in the UK, people are branching away from standard teabags and toward these more interesting alternatives.”

Lifestyle trend

Edinburgh-based eteaket has tapped into this ‘foodie’ culture, recognising this desire among UK consumers to branch away from standard tea back in 2005. Founder Erica Moore decided to “rekindle Britain’s love affair with proper leaf tea”, and in December 2008 opened the door to the eteaket tea room in Edinburgh.

In her search for the best tea leaves, Moore’s journey has taken her on a tea pilgrimage to China, India, Sri Lanka and Japan. and, a As the demand for specialty loose tea has swiftly continued, eteaket has continued to grow, and the company now exports tea across Europe, and as far afield as Japan.

Like Moore, many others across Europe have realised that tea drinking has become ‘cool.’. Specialty tea is attracting affluent, young, educated and health-conscious consumers who like to experiment with unique and organic flavours. This is, in part, thanks to what food writer Christine Muhlke described in a December GQ article as the “coffee-ization of tea”; because cult coffee has gone mass market, Muhlke noted, tea is having its moment, as “matcha replaces the macchiato”.

Health benefits

For health-conscious European consumers seeking an alternative to coffee, the benefits of tea – and in particular loose leaf tea – speak for themselves. Tea can help prevent certain cancers, lower blood pressure and cholesterol, aid in weight loss and boost the immune system.

Since loose leaf tea consists of larger leaves, it retains more of its powerful catechin antioxidants (which are disease-fighting flavonoids), as well as being full of plant polyphenols, which play an important role in maintaining health and wellness.

"Many others across Europe have realised that tea drinking has become ‘cool.’ ."

Helped by manufacturers who highlight the presence of these antioxidants, as well as theanine – an amino acid in green tea that elevates mental awareness – on tea packaging, consumers increasingly consider tea to have impressive health benefits. Adopting these specialty drinks as part of a healthier lifestyle, European consumers are turning away from coffee and towards tea, as they can still get the caffeine kick they need – but with added benefits.

Sustainable and traceable

Another driver behind the popularity of specialty loose leaf teas is a growing concern among consumers about the traceability and sustainability of the food and beverages they buy. Today’s consumers are becoming more knowledgeable and interested in the kind of tea they drink, as well as its origins, which is driving a demand for a premium product with a traceable story and sustainable credentials.

There is also an increasing demand for transparency in the food and drinks sector, both from consumers and the industry. Consumer health and safety concerns are major drivers here, however so is the ethical argument. Transparency is quite easily managed in the tea sector, as the supply chain is relatively short. Still, specialty tea makers are big on integrity, and as consumers become increasingly aware of the importance of issues such as workers’ wages, welfare and the wider ecosystem, they seek out brands that champion sustainable and ethical credentials.

As European consumers continue to look for pure, authentic products with a naturally distinctive taste, the demand for high quality, specialty loose leaf teas will continue to grow. Affluent, younger tea drinkers are happy to spend money when it comes to hot drinks like tea and coffee, and so brands will continue to benefit from marketing premium products with a price tag to match.

Though it is possible that inconvenience may hamper growth in the sector – unlike coffee, specialty tea requires some involvement for consumers – it is unlikely that European consumers will grow tired of searching for the perfect brew.