Bag or bean: Is tea the new coffee?
"Tea accounts for about 10 per cent of the liquid intake of the average Canadian," says Gary Hemphill, managing director of the Beverage and Marketing Corp. in New York. Even so, the company's 2004 Multiple Beverage Marketplace in Canada report shows coffee still dominates, accounting for 14 per cent of liquid intake.
While Bob Krul, co-owner of Winnipeg-based Cornelia Bean Ltd., acknowledges that "Canada is very much a coffee culture" with java having a 40- per-cent market advantage, he predicts "tea sales will go through the roof, rivalling or exceeding coffee sales."
Research conducted by A.C. Nielsen on behalf of the Tea Association of Canada in 2004 found that 76.6 per cent of Canadians surveyed consume hot tea.
|Wayne Chose, Business Edge|
|Steeps Tea Inc. founder Brendan Waye offers dozens of teas and herbal infusions at his West Broadway store in Vancouver.|
Consumption has increased 50 per cent in the last eight years, according to Statistics Canada. In 2004, Canadians consumed 66.4 litres of tea each annually, compared to 43.4 litres in 1996.
"The switch is going on in western culture from coffee to tea," Krul says. "People are looking for a healthy, alternative beverage to coffee. Older people are saying they can't handle coffee anymore due to acidity and caffeine issues. Their palates are changing and tea is light-tasting."
Brendan Waye, founder of Steeps Tea Inc., sees the same trend occurring. When he started out in Calgary in 1999, "a 'tea-only' concept à la the Starbucks model was unheard of in Canada," he says.
The company, which has since relocated its head office to Delta, B.C., now has three stores in Edmonton and one each in Calgary and Vancouver.
"People are tuning in - there's an overall awareness of tea. Most of the growth in tea sales is in premium teas, like chai, rooibos and matcha. Tea is going the way of coffee, with the introduction of lattes and smoothies," he says.
Plus, the humble cuppa packs a punch.
"Green tea has beta carotene, vitamin C, vitamin E and 70 times the anti-oxidant benefits of orange juice," Waye says. "People who've been drinking coffee for 15 to 20 years must shut it down after noon hour. Tea doesn't affect people the way that coffee does; they can still get a buzz, but not stay awake all night."
Frank Weber, co-owner of Toronto-based The Tea Emporium with wife Shabnam, also thinks health advantages provide a market edge. The company has three stores in Toronto and is considering franchising this year.
"Tea is loaded with antioxidants to combat free radicals and the aging process, pollution and disease, and it has vitamins, minerals and fluoride," he says.
Another factor is that the majority of Canada's population is over 50, says Karen Gold, director of marketing for The Second Cup. "Tea is easier to digest, it's smoother. It has great chugability."
"A tea drinker doesn't have that coffee smell on their breath and tea doesn't stain your teeth as much as coffee does," says Stephen Moleschi, food and beverage manager at the Radisson Plaza Hotel Saskatchewan in Regina, which offers a modestly priced high-tea service in its Victoria Tea Room.
Steve Rice, senior vice-president and general manager at Tetley Canada Inc., says there is "a lot of badge value or smartness associated with drinking tea."
"Consumers of tea with health benefits see themselves as being 'in the know' - they're leading a healthy lifestyle and know what to drink," he says. "Tea has become an all-day beverage of choice, integrating itself into the consumer's lifestyle throughout the day, and health is the core driver."
Growth in green tea sales is up 65 to 70 per cent over the last few years, Rice says. Gold says that "green tea has surpassed black tea over last year in sales. It is the main driver of hot tea sales, either caffeinated for a boost, or caffeine-free."
Gwen Murchie, president of Murchie's Tea & Coffee, says people are "flocking in for green tea," having read about its health benefits. The company, which is based in Richmond, B.C., has been in business since 1894 and has five retail stores in B.C. along with an extensive mail-order business.
Louise Roberge, president of the Tea Association of Canada, says the international tea community started to get more scientific research on the health benefits of tea about 13 years ago. "Green tea wasn't even a category back then. Now, it's a category all by itself."
But factors other than health are driving increased consumption of the world's most widely consumed and cheapest beverage, next to water. "People are investigating different teas and finding themselves rather enjoying something they didn't think they would," Murchie says.
In the past three or four years, Murchie's has seen tea sales surpass coffee sales. "It's amazing, when you think about it," Murchie says. "One pound of coffee yields 70 cups, whereas one pound of tea yields 300 cups."
Rice says variety is largely responsible for that shift. "There's a wider range available, more types and flavours and more consumer interest and exploration among flavour seekers."
Weber attributes the sales growth in tea to a better-educated consumer.
"People understand there's a huge quality difference between loose-leaf tea and a tea bag. It's like comparing a Philly steak to a hotdog," he says.
Companies also are investing in product development and the display of tea on retail shelves, Roberge says. "All the brands have done a lot of research ... and there are places where you can mix and make your own variety, just like with coffee beans and grinders in the grocery aisles.
"We're travelling more and drinking more tea while we're away and wanting to re-enact that experience here," she says. "Also, there's a mix of cultures in Canada from all over the world bringing their (tea) practices with them."
Roberge also notes that restaurants and coffeeshops have their own tea line now as well. "They are looking at what they can offer to have the patron come in more than one time, in addition to their morning coffee," she says.
"You have a good cup of coffee in the morning and you may experiment with a nice tea later in the day," Weber says. "It need not be one way or the other."
"Coffee lovers don't drop coffee, they add tea on," Murchie says.
The Second Cup's Gold says the popularity of coffee has not peaked, however.
"McDonald's and Burger King have relaunched their coffee lines to be more premium in nature, people are being drawn back to brewed coffee."
Waye agrees. "Lots of coffee-only concepts are coming along and new coffeeshop locations are opening up despite the relative saturation out West."
Women continue to drive the tea-drinking market, Krul says. Sit-down tea service, such as that offered at Toronto's Windsor Arms and Fairmont Royal York hotels, is primarily a female treat that is popular for baby and wedding showers.
Christina Korda, director of sales and marketing at the Windsor Arms, says some clients are conducting business during the 90-minute traditional tea service, however.
"A traditional tea service is not a typical one-hour lunch," she says. "There isn't that rushed sense of having to line up in a coffeeshop and then feel like you need to hurry and give up your seat.
"Tea is more relaxing than coffee. There's the mystery and tradition of steeping. It gives you more time," she says.
While Gold says that tea is still a very "feminine beverage," the growth in tea sales is driven at both the high end (the Boomer segment) and the low end (18- to 25-year-olds). Eighteen is the entry point in what Gold refers to as the "ladder of (tea) consumption."
Young adults are accustomed to different cultures in the classroom, so they are willing to try something different, Roberge says.
"High school and university students are drinking tea as a way of bucking their parents' experience," Waye says. "The younger set loves hip tea houses where they hang out, meet friends, study and drink pot after pot and not get completely wired."
Not surprisingly there are regional differences in tea consumption across Canada.
"There are lots of specialty tea drinkers in Ontario (primarily Ottawa and Toronto) and in B.C.," Gold says.
There is "a whole level of sophistication that has not yet been explored or exploited in Alberta, Saskatchewan, Manitoba and northern Ontario," Krul says, although he adds that there are "pockets in northern Manitoba of big herbal tea drinkers, and foreign influences in Jasper and Banff are looking for quality tea products."
Says Roberge: "Out east, more black tea (is consumed) and only a bit of specialty tea. Quebec has the lowest consumption of tea per capita due to its European background. The French drink more coffee."
In fact, A.C. Nielsen's research revealed that more than one-third of Quebecers do not drink hot tea at all.
"If you're going to get into this business," Waye says, "you need to serve loose-leaf tea or patrons will go elsewhere. The margins on it are phenomenal - up to 85 per cent. You charge more for it and gain a reputation for looking after the customer."
But he says it is essential to maintain quality across "your entire selection - not cheap out in a given category and expect to get away with it. Customers are becoming too savvy for that to work. They know when the product offering is not what it was held out to be," he says.
Murchie also says potential tea sellers need to do their homework. "You need to sell an awful lot of cups of tea to make a living."
(Anastasia MacLean can be reached at email@example.com)