The Australian tea
market may be dying a slow death.
According to scan data quoted in the Retail World Annual Report, the Australian
tea market is worth A$314.5m, a figure that declined by 1.1% in 2015.
That’s quite bad, but
the market for black tea (all those Earl Greys and English Breakfasts etc) is
declining far faster. Retail Worldfigures in January 2016 showed black tea down 7.7%! Black tea is doomed!
Green teas and “herbal
and fruit infusion teas” are doing quite well, but it doesn’t seem to be
enough.
And the reason is
obvious: tea’s demographics have a very senior skew.
Now when a category
like tea has such a senior skew there can be two reasons.
The first is that it’s
a food or a drink that people seem to naturally appreciate more as they get
older, maybe for health reasons or because they have now retired and have more
time to sit back and an enjoy the product.
Products such as these have a fairly bright future; as the Australian
Baby Boomer generation retires, the number of potential consumers is only
likely to grow.
The second is that it’s
a generational thing. The generation
grew up with the product, consumed it all their lives, but their kids and
grandkids have never really embraced it themselves. So when their generation dies... there is no
one to replace them.
Tea is probably
benefiting from the first effect, but more importantly, it is suffering from
the second.
Let me hit you with
some facts and stats.
Here’s some stats from
the ABS’s Australian Health Survey, showing what proportion of Australians
enjoy a cup of tea on an average day; that figure being 37.6%.
Breaking the figures
down by age group though and it’s suddenly obvious that not all age groups
enjoy tea equally.
Here’s a graph!
By way of comparison,
let’s look at tea’s far more popular compatriot: coffee.
Consumption of coffee starts far earlier,
with over 60% of Australians hooked on coffee by the time they are in their
30s.
The two beverages aren’t
perfect substitutes of course. You think
of coffee and you think of getting an instant caffeine injection so that you
can cope with your day. You think of tea
and you think of relaxing in the garden.
However, the reason
for elderly Australians preferring tea far more than other generations is most
likely historical. Which is why the tea
industry should get worried.
Elderly Australians –
known by demography nerds as the “Silent Generation”, the kind of generation you would expect to unwind with a lovely cup of tea – grew up in the Menzies era, when
Australia was still a nation of genteel tea-drinkers. Before instant coffee appeared in the 1950s, as well as the Italians who introduced the nation to “proper
coffee.”
And whilst the rest of the
nation gradually switched to coffee, the “Silent Generation” never quite let go of their love for jiggling a tea bag.
And whilst tea found a
following in subsequent generations, it was never quite the same. Which suggests that once the “Silent
Generation” becomes forever silent they will leave an unfillable hole in the
middle of the Australian tea market.
All is not entirely
hopeless however. I don’t want to finish
this post on a downer. As The Guardian reportedthis week, a burgeoning “craft tea” movement is emerging. In other words, the hipsters have discovered
tea.
Will “craft tea”
movement will manage to rescue the overall Australian tea market by bringing in
new consumers? Sadly the answer is, probably not. Craft beer for example, despite all of the
hype it has received, has not increased the overall per capita consumption of
beer, which in fact continues to decline.
What’s more, craft beer still only makes up a few percentage points of
the total Australian beer market; not nearly enough to single handedly save the
entire industry. It seems unlikely that “craft tea” would do the same.
Much depends on
whether Woolworths and Coles follow the “craft tea” trend, and how much shelf
space will be allocated to it.
In my next post I’ll
have a look at who it is that is winning the tea market wars. Based on my commentary above you should not
be surprised that it is not Lipton.
In my next post I’ll
have a look at who it is that is winning the tea market wars. In the meantime, here's a little preview.
