The Rise of Premium Tea and What is Driving This Segment

tea-talk-3aThe demand for premium tea has seen considerable growth in the last few years, with the trend holding true not just for the Western part of the world but also for India. Guess who is fuelling this rise in demand for premium varieties of tea hitherto left largely unexplored?

The increasing demand largely comes from health-conscious ‘millennials’ (individuals born between 1980’s and 2004), who on their quest to lead the good life are increasingly taking to natural, organic and pure ingredients in their daily lives. With standards of living higher than the preceding generations, the millennials are the ones driving this spectacular growth in the ‘sharing economy’ trend; this generation is making the shift from ownership to renting and instead spending big on consumer products that ensure a healthy, disease-free life.

Naturally, the big premium tea brands are now targeting this micro-premium segment of buyers that is comfortable spending on high-end, organic products that promote healthy living. Indian brands have also jumped on to the bandwagon and are making concerted efforts to cater to this segment by importing superior varieties of tea and marketing these to the health-conscious millennials with cushy corporate jobs and solid cash flows.

However, we often see brands casually throwing the word ‘premium’ around. So what exactly does ‘premium’ tea mean and how can you ensure your tea is, indeed, premium?

Tea comes roughly in three varieties – Bulk, Brand and Premium.

Bulk tea is harvested in a mechanical fashion, because of which the leaves and sprigs get grinded together. This results in the leaves getting damaged, which might cause a bitter flavour. This type of tea is often described as ‘dust’. Tea plantations separate the high quality leaves from the dust and grit, pack them in tea bags and use these for bulk tea. The costs involved in its production are minimal.

Tea brands, such as Lipton and Twinings, sell through their huge marketing activities. These days, we see an increase in the number of brands entering this segment, distinguishing themselves through marketing, design and perception (biological, Ayurveda etc.). Mostly, branded tea are mixes or teas given their unique aroma and taste profile with synthetic flavoring. However, the quality of the leaves is low-grade. By the time tea reaches your cup, it is almost 2-3 years old. Again, the costs involved in this segment are low.

Premium tea is the segment offering high quality tea – popularly known as specialty or orthodox tea. This tea is carefully cultivated and usually handpicked, which results in superior quality. The best locations for cultivation are picked based on altitude, light, temperature, humidity and soil. Different terrains and soils result in different flavor profiles, much as it is with wine. This explains why teas grown in high altitudes are the most expensive and unique. The costs in this segment are high – similar to premium wine or an expensive bottle of single malt, which explains the bulk of demand coming from the segment with high disposable incomes.

What makes premium tea all that special? According to Euromonitor, in 2015, tea outperformed all other hot beverages in total volume terms. In developed markets, tea’s perceived health benefits and a growing crop of premium tea specialists are driving higher consumption. We also see this trend catching up in India where upcoming tea specialists have generated renewed interest in premium tea.

We at Love for Tea believe that the increasing demand for specialty tea is only the beginning of something of a revolution. With greater awareness and accessibility will come greater acceptance for this segment of tea. We hope tea lovers around the world make the right decision, drink right and nourish their love for special brews.

2 thoughts on “The Rise of Premium Tea and What is Driving This Segment

  1. “It is unfortunate but the word ‘Premium’ is a meaningless term. Pretty much everyone uses it across the board. How to accurately describe more ‘specialty’ teas is a major challenge as whatever term used will eventually be hijacked.

    Interestingly the major growth (as I see it) is in fancily packaged products that claim to be healthy but in fact are often teas of unknown origin with added flavourings. These are what generally engage the ‘millennials’.” – Geoff Hopkins, Hatvala Tea and Coffee, Vietnam.


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