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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It’s a new era for tea and coffee. As exciting new flavour innovations continue to pop up in the marketplace, these time-honoured beverages are enjoying a renaissance of interest from consumers seeking innovative new tastes and product features. The question that comes up immediately for producers: Which flavour innovations will be the ones to excite existing and new customers alike, and foster repeat purchases? These days, amid a bewildering array of new botanical flavours, functional ingredients, plant proteins, sugar challenges and sustainability concerns – all of which must factor into development efforts – the profusion of product combinations and permutations is enough to leave even seasoned product creators with more questions than answers.

Flavours and ingredients provider, Kerry, follows global traditional and emerging flavours and functional ingredients as they attract rising public interest. Its latest research, detailed in the company’s Taste and Nutrition Charts reveals key flavour trends for tea and coffee beverage product developers to keep in mind for 2023.

Florals are favourites

Lavender’s future, for one, seems assured. This floral favourite holds growing global appeal as a gentle flavour that supports mental physical and emotional wellness. Dataessential projects lavender inclusion to rise by 108 percent on US restaurant and bar menus in the next four years. Lavender has all sorts of possibilities, augured by its ability to combine well with other tastes; white chocolate is one of many exciting examples. White chocolate lavender latte, anyone?

Chamomile, traditionally used in tea, is perceived as warm, uncomplicated and comforting. Its appeal is also driven by the health benefits it’s believed to deliver.

Among the choices is another floral favourite, hibiscus, an engaging botanical flavour in beverages, and growing in sweet yogurt, and guava, a rising tropical flavour for beverages and sweet snacks, yogurt and frozen desserts. Guava’s exciting profile is also thought to include immunity support and digestion benefits.

New flavours combined with familiar favourites

There are all kinds of interesting emerging flavours able to mix and match with traditional favourites. Aside from the entrancing lavender and white chocolate pairing noted above, Kerry’s 2023 Flavour Insights highlight matcha tea as an emerging choice in hot beverages. Rose, turmeric, horchata, crème brulée and cardamom… the list goes on. Pumpkin spice is also well established, as are blueberry, mango and mocha.

Mixing flavours judiciously to create appealing new beverages drives consumer interest. However, the winners in the market are the brands that are combining novel flavours such as the above with fan favourite flavours already loved by consumers to create a beverage that is both familiar and nostalgic but also exciting and new.

Sugar reduction

Sugar has overtaken fat, salt and calories as the key health concern for consumers in Europe when eating out-of-home. Some 87 percent of consumers want to reduce their sugar consumption or are aiming to use sugar in moderation (per Consumer First, 2018). Since 2015, there has been a 44 percent increase in reduced-sugar drinks launches according to Mintel (2018).

Sugar reduction is a key flavour influencer that must be implemented carefully. Why? Well, sugar delivers more in taste than just sweetness: It also builds in all-important texture and mouthfeel. Any sugar-reduction strategy must include ingredients to counteract any perceived loss in taste.

Adding functional ingredients

Today’s beverage producers have the option of adding in valuable functional ingredients, addressing the ever growing demand for health, especially in the area ProActive Health functional ingredients, which are designed to address the most common health needs of consumers, across areas such as gut health, cognitive heath and immunity. Ingredients like ashwagandha are gaining prominence in markets around the world for their support of sleep and stress management, which are key components of cognitive wellbeing, and ingredients that work well in beverages.

Sustainability is an important consumer concern

Consumers gain from a ‘feel good’ factor when they purchase sustainable products, and it is a state of mind that shows no signs of abating. In fact, 89 percent of global consumers now expect companies to invest in sustainability; this is up from 65 percent in 2018, per Innova Market Insights (2019). Kerry’s Consumer First study revealed that 83 percent of consumers would consider the environment when making a purchase. This is not just for at-home purchases either with 71 percent of European consumers saying that sustainability is now important to them when choosing where to eat and drink out-of-home. Quite simply, consumers want to do something for the environment and to fight global warming, so a strong focus on sustainable ingredients can be a key differentiator for in today’s ultra-competitive environment.

However, ‘sustainability’ refers to much more than just environmental concerns. Consumers today want to know the provenance of the beverage ingredients they consume and know they were procured in a responsible manner. They want the growers to be compensated properly and farming communities to be sustainable over the long-term. Beverage producers need to not only ensure they know the origins and full sustainability of their ingredients, but also work on communicating this to end-consumers through your marketing and menu as our research shows that 81 percent of consumers believe foodservice outlets should do more to communicate what they are doing to protect people, the planet and society.

These sustainability and new flavour questions are hard to answer on your own. Human intelligence and experience can play a vital role, and product developers can apply it to their advantage by including ingredient suppliers in early-stage planning discussions. Harnessing their expertise and brainpower for use by the formulation team is the type of targeted help that can lead to market success in a crowded field. Fortunately, as consumers become more discerning, the efforts expended to draw their attention hold potential to be richly rewarded.

• John Kelly is strategy director for beverage at Kerry. Kerry is a world leader in taste and nutrition for the food, beverage and pharmaceutical market, innovating with customers to create great tasting products with improved nutrition and functionality, while ensuring better impact for the planet. Kerry’s consumer insights, global RD&A team of 1,100+ food scientists and extensive global footprint enables the company to solve customers’ complex challenges with differentiated solutions. As a valued partner of customers, Kerry is driven to creating a world of sustainable nutrition and will reach over two billion consumers with sustainable nutrition solutions by 2030. For more information, visit.www.kerry.com.

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These 12 winning solutions — broadly categorised into innovative cup liners, new materials, and reusable cup service models — have the potential to turn the 250 billion fiber to-go cups used annually from waste into a valuable material in the recycling system.

“This is a notable milestone to achieve our aspiration of sustainable coffee, served sustainably which is a particular passion for our over 350,000 Starbucks partners,” said John Kelly, senior vice president of global public affairs and social impact at Starbucks. “We’re a founding partner of the NextGen Consortium because we believe it will take the scale and influence of many global companies to make recyclable, compostable to-go cups an industry standard rather than the exception.”

Many of the largest players in the food and beverage industry have united within the NextGen Consortium, making it a unique pre-competitive collaboration, including Starbucks, McDonald’s, The Coca-Cola Company, Yum! Brands, Nestlé and Wendy’s. The World Wildlife Fund acts as an advisory member of the Consortium, and OpenIDEO is an innovation partner.

“McDonald’s is proud to work with such an unprecedented number of brands to address the issue of fiber to-go cups,” said Marion Gross, senior vice president and chief supply chain officer, McDonald’s USA. “Collaboration is what we need to truly move the needle, amplify impact and bring solutions to scale quickly.”

The NextGen Challenge solutions are advancing the transition to a more circular economy where materials are continuously cycled and reliance on raw materials is reduced.  “By working across the entire value chain and engaging key stakeholders, winners of the NextGen Cup Challenge are tackling a complex problem in a holistic way, sending valuable material back into the supply chain – benefiting people, the planet, and businesses,” said Erin Simon, director, sustainability R&D, World Wildlife Fund.

Challenge winners will be awarded a portion of up to $1 million in funding and up to six will receive extra support to prepare for real-world use.

The 12 Winners of the Challenge

Category One: Innovative Cup Liners – these companies are rethinking the polyethylene plastic liners in cups that can currently make to-go cups difficult to recycle.

• C.E.E.R. SCHISLER, France, creates a 100% paper cup that is home compostable and recyclable.
• Colombier Group, Netherlands, Finland, creates a recyclable and compostable barrier for paperboard cups.
• Footprint US, USA, creates cups, lids and straws that are fully formed fiber-based solutions, with an aqueous-based coating that is recyclable and compostable.
• Kotkamills Oy, Finland, creates plastic-free, recyclable and compostable cupstock material that can be processed into cups at existing cup making machines.
• PTT MCC Biochem Company Limited, Thailand, creates a coated paper cup that is recyclable and home compostable.
• Solenis LLC, USA, Belgium, creates a barrier coating that is recyclable and compostable.
• Sun Chemical Corporation, USA, creates inks and coatings that are recyclable and compostable.
• WestRock Corporation, USA, creates a recyclable and compostable paperboard solution to cups.

Category Two: New Materials – these companies are using cutting edge, plant-based materials in their cups so that they are compostable.

• Solublue Ltd., UK, creates plant-based, food grade and non-toxic products that biodegrade after use.

Category Three: Reusable Cup Service Models – the cups made by these companies aren’t single-use, they just keep cycling – remaining in service by harnessing the power of technology and design.

• CupClub, UK, operates a returnable cup ecosystem, providing a service for drinks. Think bike sharing, but for cups.
• reCup GmbH, Germany, operates a deposit system for reusable cups. Rent their cup and return it to any participating partner shop. No cleaning of the cup or carrying around required.
• Revolv, Indonesia, Hong Kong (China), operates a deposit-based platform for smart, reusable beverage packaging, connecting their cups–and third party products–to Internet of Things technologies.

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