The past few years have seen a steady rise in global demand in the functional and wellness tea market, and as consumers’ quest for health and vitality continues, market players expect this trend to kick into full gear.

The Covid-19 pandemic has become the biggest game-changer in the global market of functional drinks, according to analysts. “Following the Covid-19 pandemic, consumers face increased burnout due to a lack of separation between work and personal lives, leading to increased stress,” said Nathanael Lim, insights manager at Euromonitor International, a global market research firm. “At the same time, the pandemic has caused consumers to be more health conscious, looking after their own physical and mental wellbeing. This provides tea players an opportunity to launch functional ingredients in their tea products, appealing to consumer needs.”

According to the Whole Foods 2022 Trends predictions, functional drinks sales will continue to soar, doubling in the next decade. The analysts explained that consumers, especially those from Gen Z, are looking for healthier options than the traditional sodas their parents grew up on, and many are also interested in sober living.

Functional beverages include ingredients such as herbs, mushrooms, electrolytes, vitamins, minerals and probiotics. Some elements, like vitamins, consistently enjoy strong popularity, while others only start unravelling their potential.

In 2022, the retail value sales of immune support tea globally account for USD $2.7 billion globally. This is set to grow by 4 percent year on year, reaching USD $3.2 billion in 2027, Lim said. In Europe, retail value sales of immune support tea account for $77 million and are set to grow by 4 percent year on year, reaching $93 million by 2027, he added.

According to Market Research Future, another global market research firm, the functional and wellness tea industry has achieved a valuation of $7.2 billion as of 2022. Their projections indicate that by 2032, the industry is expected to reach a value of $12 billion.

“The demand for natural and organic production is rising, driven by concerns over synthetic additives and chemicals. The focus on preventive healthcare is increasing, with consumers taking proactive measures to maintain their health,” Market Research Future stated.

Science as a beacon

The list of functional ingredients available on the market today is long and diverse, but as an average customer grows more knowledgeable, businesses need to keep an eye on the science to make sure their products are appreciated by customers.

“Consumers are being more careful with how they spend their money, leading them to actively seek high-value ingredients – for 60 percent, this means those ingredients that are science-backed,” said John Kelly, strategy director for beverages with Kerry, an Irish food ingredients firm. He shared that “where immune health is concerned, this rises to 78 percent, while ‘clinically proven’ is the most sought-after claim for more than 80 percent of consumers. This echoes Kerry’s own research, which has found that 79 percent of consumers research ingredients for themselves.”

It is increasingly important to be able to provide high-quality research supporting the efficacy of the ingredients in your products, Kelly continued. Consumers are becoming much more discerning about which ‘healthy’ ingredients are actually supported by science. “Our own research last year showed that 79 percent of consumers say they conduct their own research into ingredients. Formulators need to ensure functional ingredients match expectations because, in the digital era, information travels fast,” he said.

Functional tea manufacturers agree that the science behind the offered functional ingredients remains the key to winning customers’ hearts.

Image: Smith Tea

“People are looking to improve their own health and well-being through the ever-increasing choices available in an expanding market,” commented Anish R Patel, a spokesperson for the UK-based functional tea manufacturer NutraTea Ltd. “Our NutraTea blends are created using only ingredients that have known health benefits, and nothing else.

The 8.8 percent increase in herbal tea consumption up to last year demonstrates that the market is on the rise, showing how the public is becoming more health conscious. This is especially true of the relaxation and pregnancy sectors where we have seen an evidential increase in demand for our products, Patel said.

“What sets apart the ingredients in our ProActive Health portfolio is the quality and quantity of the science supporting them. For example, BC30 TM, our patented probiotic ingredient, is backed by over 25 published papers, with research showing that it can help support digestive health, immune health, and may support protein absorption. Similarly, Wellmune® is the only ingredient of its kind supported by over a dozen published, peer-reviewed clinical studies,” Kelly said.

Stress-relief & immune-boosting teas are top performers

Different market players focus on their own niches, but the general consensus is that functional tea helps mitigate stress and fortify the immune system.

Stress relief, sleep aid and immune boosting features are key trends in the functional tea market for the future, Lim pointed out.

“With the stresses of everyday life, consumers want an easy way to support their wellness goals, and the demand for wellness teas will continue to increase,” commented Niya Vatel, founder and CEO of Tea and I, who also underpins the importance of the science behind the offered products.

“Social media and technological integrations have played a pivotal role in propelling the industry forward, attracting a fresh wave of functional tea enthusiasts from a younger demographic. As a result, the market has experienced a significant boost. Influencer marketing has amplified the popularity of wellness teas beyond the detox and weight loss niche,” explained Vatel.

Covid-19 undoubtedly was the main factor driving the consumer demand in the functional beverage market. Although the pandemic is officially over, its aftermath is still present.

“The big ‘mega-trend’ is increasing consumer proactivity when it comes to health and an active interest in everyday beverages as the vehicle for benefits. This has undoubtedly been accelerated by Covid-19,” Kelly said.

One of the findings of Kerry’s most recent global consumer survey was the increased scale of the impact of the pandemic on the demand for everyday beverages with functional benefits. Teas benefit from this demand as teas have a traditional positioning as wellness beverages.

“Their benefits in areas like stress relief have been enjoyed by people for thousands of years and are supported by a wealth of science. This inherent ‘health halo’ makes tea a great fit for functional products because consumers are most likely to expect benefits in categories that are traditionally associated with health,” Kelly said.

The list of reasons why customers opt for functional drinks is long. One study by Kerry, for instance, discovered both men and women attribute beauty support as the top reason they consume beverages with high nutritional value and are willing to pay a premium even amid global inflation. Men and women are both drawn to gaining beauty support from fortified beverages.

Image: Kerry

Skin is the top concern, with 51 percent when it comes to purchasing beverages fortified with nutrients. Skin support was essential to 58 percent of women versus 44 percent of men globally, revealing a small gender gap regarding the interest in beauty support.

Immune support, adaptogenic teas, and functional herbal blends are currently the main segments in the functional tea market, according to tea and herbal supplier, Hälssen & Lyon. The German-based company stated that “consumers are seeking beverages that offer health benefits beyond hydration, making functional and wellness teas an appealing choice. As consumers look for ways to proactively manage their health, functional teas, which are attributed to various health benefits, such as immune system support or stress reduction, are in high demand. The ageing population also contributes to this but is more focused on maintaining health and vitality.”

Emerging segments

The functional tea market is also expected to evolve fast, especially as the science behind more ingredients becomes increasingly convincing.

Hälssen & Lyon, for instance, expects nootropic teas to be among the fastest-growing segments in the following years. Nootropics are substances believed to improve cognitive function and may be included in tea blends. Ingredients like ginkgo biloba, lion’s mane mushroom, and adaptogens may enhance mental clarity, focus, and memory.

In addition, the company anticipates strong demand for plant-based functional ingredients, and sustainability and regenerative agriculture will stay at the centre of public attention.

“Immune-boosting tea continues to remain relevant for consumers, especially with many unknown diseases expected in the future. With features such as vitamins and botanicals like ginger, this serves to strengthen consumer’s immune system and protect them from infections,” Lim said.

New technologies also let tea manufacturers explore new niches. Probiotics are a particularly exciting area, partly because of the growing awareness of their benefits but also because the emergence of spore-forming strains has created opportunities for tea manufacturers to create innovative new functional products, Kelly said.

Market Research Future reported that a collaboration between functional tea manufacturers, ingredient suppliers and retailers foster innovation and market expansion, noting these collaborations enable knowledge sharing, distribution network enhancement and the development of new product lines, ultimately benefiting both industry participants and consumers.

• Vladislav Vorotnikov is a Batumi, Georgia-based multimedia B2B freelance journalist writing about the tea and coffee industry since 2012.

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While organic tea and coffee has been readily available on the market for some time, the category has seen, and is expected to see, continued growth as more consumers opt for products, they believe to be more sustainable and even healthier for them, and producers seek to improve their sustainability credentials and market positioning.

Nandini Roy Choudhury, client partner of food & beverages at global market research firm, Future Market Insights, writes in a report that the organic tea market holds a value of USD $1.24 billion in 2023, and is expected to reach a value of USD $2.69 billion by 2033, at a CAGR of 8 percent during the forecast period. Meanwhile, the organic coffee market has a projected CAGR even higher, at 12.5 cent for the forecast period 2023 to 2028, according to a report by Mordor Intelligence.

Consumer interest in organic tea and coffee has been gaining especial traction since the pandemic, when wellness became a priority, and organic is often believed to be a cleaner and healthier option over regular products, due to the lack of chemical fertilisers and pesticides. The sustainability benefits are also undeniable and consumers are seeking to make more mindful and conscious purchasing decision. Meanwhile, producers are heeding to this consumer pressure, and wanting to offer tangible sustainability claims to differentiate themselves from their competitors, and perhaps even justify a higher price point of their product.

Image: Equator Coffee

In terms of consumer demand and purchasing of organic tea and coffee, the geographical distribution is similar, with Europe dominating, particularly Germany, France, and the UK, according to FMI, and North America seeing similar figures in both organic tea and coffee. In organic tea specifically, parts of Asia, including China, are witnessing significant growth in consumption, said a spokesperson from Hälssen & Lyon. Whereas in organic coffee, global insights firm, Mordor Intelligence revealed Latin America is seeing the fastest growth.

Notably, the biggest producers of organic tea are similar to the biggest global producers of tea in general, countries such as China and India, however, the case is not the same for organic coffee. Samuel Klein, green coffee buyer, Partners Coffee, explained that, while Brazil produces a third of the world’s coffee, “Only a handful of Brazilian exporters are offering certified organic coffees.”

Ted Stachura, director of coffees, Equator Coffees, concurs; “Although there is some organic coffee cultivation in Brazil, Vietnam, and Colombia, the world’s largest coffee-producing countries are not typically associated with organic production.” This is largely due to growers in such countries producing coffee on a mass scale, and the farming methods necessary to do so. Smallholder farms using semi-forested coffee cultivation, are often organic by default, in countries such as Ethiopia, Peru and Mexico, said Stachura, as well as Honduras, Guatemala, Rwanda, Burundi, and Uganda, added Klein.

Organic farming is broader and more thorough than a lot of consumers realise; it is about more than just limiting or eliminating chemical fertilisers, herbicides and pesticides. “Consumers who support organic farming practices are voting to not support the petrochemical industry. Producing chemical-based fertiliser has a negative environmental impact,” detailed Stachura. “Shipping these fertilisers internationally, as coffee producing countries typically do not produce this kind of fertiliser, incurs added environmental costs. Handling chemicals poses potential health risks to farmers and, in situations where producers lack training, application of too much fertilisation may result in runoff of these chemicals making its way to water sources.” The soil itself benefits from the lack of chemicals in the long term, increasing its biodiversity, structure, fertility, and resilience to environmental influences, leading to healthier eco systems.

“Organic farming also has the potential to sequester carbon dioxide in the soil,” noted Hälssen & Lyon’s spokesperson, “This can contribute to mitigating climate change by reducing greenhouse gas emissions.”

Organic’s financial & health benefits

Choudhury stated that consumption of organic beverages can help to support farmers on a smaller scale, in addition, “Sales of organic tea are projected to have a higher price realisation thereby improving the socio-economic situation of tea producers.” The organic certification encourages and even necessitates fairer, safer and more equitable trading for the producer that supports the tea or coffee growing community.

Further, there are evolving beliefs, especially among consumers, that the lack of chemical agents in the process results in a healthier product. “The reduction in chemical residues in organic food may result on long-term health benefits by lowering the potential risks associated with pesticide exposure,” explained Hälssen & Lyon’s spokesperson.

Image: Partners Coffee

The health claims for organic produce are still evolving, especially within the tea segment, with Choudhury stating that “compared to traditional black tea, organically cultivated tea contains more catechins such as epicatechin gallate, epigallocatechin gallate, and epicatechin.”

Roadblocks to organic production

So, if there are all these benefits to the environment, to the producer, the consumer, then why aren’t more tea and coffee companies producing organic? As with such things, the reason is multifaceted. Broadly, it is more expensive, both for the producer and consequently the consumer. The requirements and inspections for the certification are demanding, and costly, and it is by no means a quick or simple switch.

Partners Coffee’s Klein explained, “It begins with a multiyear period where no prohibited fertilisers, fungicides, or pesticides may be used. During that time the farm must develop and implement a documented plan to fertilise and treat the plants with organic inputs.” Throughout this conversion phase, any coffee (or tea) that is grown and produced must still be sold without the organic title, as the transition is not fully complete, with no compensation for the expense of the process or of lost yields.

Spencer Turer, vice president, Coffee Enterprises, added, “when organically grown coffees are not able receive the premium prices for the certification and are sold as non-organic coffee due to quality issues or reduced demand, the expense of producing the organic certified coffee is changed from an actual return on investment ratio to an outright business expense for meeting the social, environmental, and ethical standards of the producer.”

Lower yields are a common side effect of organic farming, especially in the short term, “as organic practices may not provide the same level of nutrient supply or pest control,” said the spokesperson from Hälssen & Lyon, resulting in additional unit costs of production. However, she also suggested that there have been successes where organic sections of farms have outperformed conventional sections, four-to-one, because the soil was more nutrient-rich and microbiologically diverse. But this is a long-term result that doesn’t offer immediate help to farmers in the short-term making the switch.

The added expense of the initial reduced yield is only the beginning, revealed Klein, “After coffee is picked there are strict handling requirements at virtually every stage of production. Different milling and eventually roasting equipment, or costly purge batches, must be used, followed by meticulous cleaning practices. Coffee must be carefully separated and documented with every movement, then production records must be audited frequently to identify accidental contaminations.

“The outcome of all of this is that, in most situations, producing an organic-certified coffee requires more labour and greater expenses while introducing new risk in terms of yields and pest management.”

The higher risk and expense for the producers, translate to higher prices for the consumer, which serve as a barrier for many, especially the price conscientious, and especially when inflation and the cost of living is soaring in many parts of the world.

“Many consumers and businesses demanding certified organic coffees expect them to be price competitive with the cheapest conventional coffees, which is unrealistic. I think for some customers it’s easy to justify a higher price because the value add is more obvious, but unfortunately, I think it means the quality of organic coffees on the market generally tend to be lower to compensate for price sensitive customers,” argued Klein.

Image: Equator Coffee

However, despite organic teas and coffees generally having a higher price point, they are both growing markets with burgeoning consumer interest. Even if consumers do not fully understand the complexities of the organic certification undertaking, they know it is better environmentally, often in quality, and possibly for their health too, so they know there is additional benefits that they are paying that bit extra for. In Turer’s judgement, “the price barrier [only] exists when the quality of the organically certified coffee, specifically the flavour, does not meet the value expectations of the consumer.” In other words, if a consumer purchases organic coffee or tea, and they experience good quality and taste, as well as the moral and environmental associations, then there is value for the money.

Do the benefits outweigh the challenges?

It could be argued that governing bodies ought to be doing more to support organic farming, to take some of the risk and cost off of producers and subsidise the products for consumers. Stachura believes that “governments in affluent coffee-consuming nations have the capacity to play a significant role in supporting and advancing regenerative organic farming practices,” and, perhaps, have the responsibility to do so if their country is the big consumer of that product in particular.

Klein feels, however, the argument that “economic stability and mobility for smallholder farmers is more urgent. I would like to see the two things promoted and supported in tandem.” He continued, “If organic production can support and increase farmers’ livelihoods, it’s absolutely a win. But if it reinforces an exploitative price structure, or expects farmers to bear unsustainable levels of risk, I think that’s a problem that needs to be confronted.”

While there is no doubt that organic farming is beneficial in so many ways, there must be support and incentives for tea and coffee farmers to make that switch for it to be viable to more than just the larger, commercial producers. But there are ways in which this can be mitigated. “Collaboration and innovation in the entire supply chain is key for helping to make organic tea more accessible and affordable for everyone involved,” explained the spokesperson from Hälssen & Lyon.

Not only can farms share knowledge and best practices, but share the costs of certification, particularly for smaller coffee or tea producers, among nearby farms. Klein also added that this challenge presents the opportunity for agricultural innovations. “People [are] learning new techniques of soil management or crop diversification specific to their farms which can improve yields with no or few synthetic inputs. If that innovation continues and expands, we might see significant improvements in the quality of organically produced coffees.”

There may still be challenges for organic farming, but they are seemingly worth confronting as the market reports demonstrate there is clear consumer demand for organic tea and coffee. Consumers may even be willing to pay that bit more for the certified products as it allows them to have a small part of environmental agency and responsibility over the way in which the products they buy are grown and produced. Stachura concluded, “As the world’s population grows, and the demand for food, including coffee, embracing organic and regenerative farming practices becomes imperative for human survival.” Therefore, we must continue to look for ways in which it can be remunerative, accessible, and equitable.

• Kathryn Brand is an associate editor on T&CTJ, while still writing for several of Bell’s other magazines. She joined Bell Publishing as an editorial assistant at the beginning of 2022 after graduating from the University of East Anglia with a degree in English Literature and Creative Writing. She may be reached at: kathryn@bellpublishing.com.

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Helbig’s violin was returned to its untreated state and planted with the fungal mycelium of the reishi mushroom. The reishi feeds on the wood on which it grows and gradually transforms it into its own organism. In Asia, it has for centuries been considered one of the most valuable edible and medicinal mushrooms. Over a period of eight months the violin was transformed into a mushroom. Hälssen & Lyon then “composed” two exclusive tea blends from it:

• ‘Reishi Winter Time‘, an elegant combination of Reishi, various spices and a Pu Erh tea, with a chocolatey, cinnamon and sweetish earthy flavour.
• And ‘Reishi Winter Fire’, aromatic Ceylon black tea and Reishi, subtly tart and slightly smoky with a winterly, fruity orange note, supported by the freshness of eucalyptus.

The cinematic documentation of the transformation process also became the creative focus of Sven Helbig’s music video, which was featured and celebrated by the international platform for classical music The Strad even before its release. The growth phases are artistically presented on various visual levels. Accompanied by the emotional Helbig composition, the audience experiences how the supposedly simple fungal organism absorbs the violin, the symbol of high culture par excellence, and gives it a different purpose.

A limited edition of this “rare cooperation between art and tea culture” will be available to national and international business partners of Hälssen & Lyon.

Dietmar Scheffler, managing director of Hälssen & Lyon commented, “With this exciting
project, we have overcome a boundary in people’s minds. We transformed acoustic enjoyment into a new multiple sensory enjoyment. Music can suddenly be perceived not only with the ears, but also with your other senses – through the tea.”

Sascha Hanke, CCO & co-owner of häppy, the company responsible for the overall creative implementation of the project, said, “I am delighted that we were able to bring together two top innovators from completely different worlds – one of the most exciting composers of our time and one of the major tea companies in the world. The Metamorphosis project takes both ‘How do you promote a music release today?’ and ‘How do you create new innovative B2B conversation starters today?’ to a whole new level.”

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