Competition and health awareness to power US RTD tea market
A report by IBISWorld predicts that the read-to-drink tea industry will continue to expand at a strong rate in the US, driven by increased consumer health consciousness and competition in the marketplace. According to IBISWorld, though a discretionary good, RTD tea was perceived as an affordable luxury during the recession and did not suffer much from macroeconomic pressures on demand. The industry revenue increased at an annualized rate of 6.1% over the last five years and is expected to jump by 3.3% in 2014. Profit margins also remained high, especially in 2013, when tea prices plummeted to an all-time low. In the next five years, new product development is set to drive demand and revenue growth, although average industry profit margins are likely to decrease due to higher costs of tea and sugar.