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The herbal tea market size is forecast to increase by USD 848.1 million, at a CAGR of 4.6% between 2023 and 2028. The growth trajectory of the market hinges on multiple factors, notably the abundant availability of substitutes, escalating raw material expenses, and a dearth of consumer awareness. As consumers are presented with a wide array of alternatives, ranging from products to services, the market contends with the challenge of differentiation and value proposition. Moreover, the upward trend in raw material costs exerts pressure on profit margins, prompting businesses to explore cost-effective solutions and sustainable sourcing practices. However, perhaps the most critical factor impeding growth is the limited awareness among consumers regarding the product or service offerings, necessitating concerted efforts in marketing, education, and outreach initiatives to bridge this knowledge gap and unlock the market's full potential.
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The market is being driven by a surge in demand for natural and healthy beverage options, fueled by growing consumer awareness of the benefits of herbal ingredients. Tea farming practices are increasingly adopting sustainable and ecological methods, promoting biodiversity and soil health. However, challenges such as ensuring consistent taste and quality, maintaining organic standards, and addressing environmental concerns persist. Additionally, competition in the retail market and the need to meet stringent food safety regulations pose challenges. Yet, the industry continues to innovate with diverse flavors like Honey Flavored, offering alcohol-free options rich in licorice, apple, cinnamon, star anise, dandelion, chamomile, ginger, and turmeric. Our researchers analyzed the data with 2022 as the base year, along with the key drivers, trends, and challenges. A holistic analysis of drivers will help companies refine their marketing strategies to gain a competitive advantage.
The wide availability of substitutes is notably driving the market growth. The demand for herbal teas is increasing due to the increase in health-conscious consumers. It improve blood pressure and circulation, increase good cholesterol and lower bad cholesterol. Herbal teas are often marketed for their perceived health benefits, such as reducing stress, improving sleep, and boosting immunity. Consumers are looking for more convenient ways to consume teas, including ready-to-drink formats and single-serving tea bags.
Moreover, herbal tea makers are experimenting with new flavour combinations and ingredients to create unique and varied blends that cater to the diverse tastes and changing preferences of consumers. As consumers are becoming more conscious of the environmental impact of such products, they seek out herbal teas that are sustainably sourced and made without the use of harmful chemicals. The demand is increasing, which will boost the growth of the market during the forecast period.
Rising demand for products with health benefits is a key trend influencing market growth. Changing consumer preferences for online sales channels are having a positive impact on the growth of the market. The prevalence of online distribution channels in Tier 2 cities in emerging markets such as India and China is creating opportunities for companies in the market to expand their product range. As consumers become more health-conscious, the demand is expected to grow. Online channels offer consumers a wide range of products at discounted prices. Demand for herbal products in online sales channels has increased steadily in recent years. This trend is driven by several factors, including the growing interest in natural and alternative medicines, the convenience of online shopping, and the increasing availability of quality herbal products online. Online sales of these products increase as consumers have access to a wide variety of products from around the world, including rare and hard-to-find herbal teas.
Further, another advantage of buying such products online is that they are often cheaper online than in traditional brick-and-mortar stores. With less overhead, online retailers can offer lower prices and often offer promotions and discounts not available in brick-and-mortar stores. It also improves convenience by allowing consumers to pick up their orders or have the product delivered to their doorstep. This is especially beneficial for consumers living in areas with limited access to products. Overall, demand in online sales channels will continue to grow as consumers increasingly turn to natural and alternative medicines and online retailers continue to improve their products and services. Therefore, the growing popularity of e-commerce will have a positive impact on the growth of the market during the forecast period.
The rapid growth of e-commerce is challenging the herbal tea Market growth. Due to the availability of several prominent alternatives, such as regular milk/tea, fruit-infused water, energy drinks, juices, and other healthy beverages, companies can face challenges. These alternatives are readily available in the market in a variety of forms at affordable prices. Despite the growing popularity of herbal teas, consumer awareness of the potential health benefits and uses of the various herbs used in such teas is still limited. Consumers should be educated about the benefits of tea and the different blends available to drive demand.
In addition, millennials are expected to be the major customer base for the market as they make up the bulk of the current workforce. Also, the market lacks standardization regarding the quality, purity, and potency of the herbal ingredients used. This can lead to fluctuations in tea quality and affect consumer confidence in the product. It also faces stiff competition from other beverage categories, such as coffee, energy drinks, and flavored waters. Manufacturers must find ways to differentiate their products and appeal to health-conscious consumers. Therefore, the availability of numerous alternatives will hamper the growth of the market during the forecast period.
The market research report includes the adoption lifecycle of the market research and growth, covering from the innovator’s stage to the laggard’s stage. It focuses on adoption rates in different regions based on penetration. Furthermore, the report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their market growth and forecasting strategies.
Customer Landscape
Companies are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market.
BARRYS TEA: The company offers different types of tea products, such as loose black tea, green tea, fruit and herbal tea, and other types of tea.
The report also includes detailed analyses of the competitive landscape of the market and information about 15 market companies, including:
Qualitative and quantitative analysis of companies has been conducted to help clients understand the wider business environment as well as the strengths and weaknesses of key market players. Data is qualitatively analyzed to categorize companies as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize companies as dominant, leading, strong, tentative, and weak.
The herbal tea industry thrives on principles of sustainability and natural goodness, intertwining with ecological processes to cultivate teas rich in flavor and health benefits. Through sustainable agricultural practices, tea farming harmonizes with nature, preserving biodiversity and enriching soil health. As the working population increasingly values wellness, retail markets witness a surge in demand for clean label foods and pesticide-free commodities, driving the preference for organically grown herbal tea. With a focus on environmental and human wellbeing, offer not just taste but also promote food safety and holistic health. Varieties like Honey Flavored Herbal Tea beckon with their blend of natural ingredients like licorice, apple, cinnamon, star anise, dandelion, chamomile, ginger, and turmeric, promising an alcohol-free indulgence in nature's bounty.
The market share growth by the green segment will be significant during the forecast period. Green tea holds the highest share of the market. Consumption of functional teas and herbal teas has gained momentum in recent years as young consumers opt for health and wellness products like herbal teas. companies in the market offer innovative products with new ingredients.
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The green segment was valued at USD 1.53 billion in 2018. Consumers prefer high-quality green tea with natural or organic ingredients that provide the health benefits they need. Premium herbal tea products carry quality seals from certification bodies such as the United States Department of Agriculture (USDA) and other certification bodies that ensure product quality standards. In addition, as lifestyles change around the world, consumers are becoming more health-conscious and prefer high-end beverages such as to improve their health. Therefore, wealthy consumers will choose premium herbal tea products even if they are expensive. Therefore, the change in consumer lifestyles will increase the demand for green herbal teas, which will lead to growth during the forecast period.
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APAC is estimated to contribute 38% to the growth of the market during the forecast period. Technavio’s analysts have elaborately explained the regional trends and drivers that shape the market during the forecast period. APAC dominated the market with a high market share in 2023. Consumers in APAC are health conscious, driving demand. Due to the increasing disposable income of consumers in this region, there is a clear bias towards premium products. Global and regional suppliers are growing their consumer base in APAC by increasing their e-commerce presence, especially through third-party online companies such as Amazon.com Inc (Amazon). The rise in internet penetration and the rising trend towards online shopping in the region have also contributed significantly to the growth of the market. In developing markets such as China and India, e-commerce companies are offering discounts to boost sales of various food and beverages, including herbal teas. Therefore, such factors are expected to drive herbal tea sales in APAC, boosting the growth of the market during the forecast period.
The market research report provides comprehensive data (region-wise segment analysis), with forecasts and estimates in "USD Billion" for the period 2024 to 2028, as well as historical data from 2018 to 2022 for the following segments.
The market flourishes amidst growing consumer interest in holistic health and natural wellness. Leveraging plant biodiversity and natural ingredients, it offers a refreshing escape from synthetic chemicals, providing pesticide-free commodities and alcohol-free options. From invigorating blends like Tulsi Detox and Peppermint Refresh to soothing choices like Simply Chamomile and Soothing Sleep, herbal teas cater to diverse health needs, promoting cognitive health, gut and digestive health, and aiding in weight loss. With offerings such as Moringa Hibiscus and Sea Berry Tea, these teas are increasingly available through online stores, providing access to organic and natural teas like Cherry, Hibiscus, Orange Detox, Tropical Turmeric, and Chamomile Lavender for a holistic approach to wellbeing.
Further, embracing a lifestyle free from artificial additives, they opt for alcohol-free herbal teas, often preferring loose leaves for a customizable brewing experience. With rising concerns over obesity and overweight issues, herbal teas like Gut Goodness Tea gain popularity for their potential health benefits. Accessibility is enhanced through the convenience of purchasing these teas from an online store, where a wide array of options awaits. Some consumers also integrate herbal teas into their wellness routines as dietary supplements, further driving the market's growth toward holistic health and wellness.
Market Scope |
|
Report Coverage |
Details |
Page number |
153 |
Base year |
2023 |
Historic period |
2018- 2022 |
Forecast period |
2024-2028 |
Growth momentum & CAGR |
Accelerate at a CAGR of 4.6% |
Market growth 2024-2028 |
USD 848.1 million |
Market structure |
Fragmented |
YoY growth 2023-2024(%) |
4.17 |
Regional analysis |
APAC, Europe, North America, South America, and Middle East and Africa |
Performing market contribution |
APAC at 38% |
Key countries |
US, China, India, UK, and Germany |
Competitive landscape |
Leading Companies, Market Positioning of Companies, Competitive Strategies, and Industry Risks |
Key companies profiled |
Associated British Foods Plc, BARRYS TEA, Bigelow Tea, FAVA TEA CO., Full Leaf Tea Co. LLC, Green Earth Products Pvt. Ltd., Harney and Sons Fine Teas, Lake Missoula Tea Co., MB Holding GmbH and Co. KG, Mother Parkers Tea and Coffee Inc., Mysooru Tea Co., Nestle SA, ORGANIC India Pvt. Ltd., Tata Consumer Products Ltd., The Boulder Tea Co., The Hain Celestial Group Inc., The Mark T. Wendell Tea Co., Vahdam Teas Pvt. Ltd., Veda Tea Co., and Yunnancraft |
Market dynamics |
Parent market analysis, Market growth inducers and obstacles, Fast-growing and slow-growing segment analysis, Market growth and Forecasting, COVID 19 impact and recovery analysis and future consumer dynamics, Market condition analysis for forecast period |
Customization purview |
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1 Executive Summary
2 Market Landscape
3 Market Sizing
4 Historic Market Size
5 Five Forces Analysis
6 Market Segmentation by Type
7 Market Segmentation by Distribution Channel
8 Customer Landscape
9 Geographic Landscape
10 Drivers, Challenges, and Opportunity/Restraints
11 Competitive Landscape
12 Competitive Analysis
13 Appendix
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