US tea market intelligence

A venture capital-backed agribusiness was considering launching a loose-leaf tea brand into the US grocery market.

Management’s knowledge of the market was limited. Historically, they had focused more on the supply chain than the market so this would be their first foray into branded products.

We were approached to collect market intelligence on premium in-home beverages in general, and tea in particular. From this, we were asked to identify market opportunities for the business.

Research the market thoroughly and resourcefully

By talking to trade associations, beverage solution providers and marketing agencies, we were quickly able to identify the key trends in premium in-home beverages.

Researching premium teas, though, proved much more challenging. It is a niche category in the US and still very much in development. Since published information is scarce and inconsistent, we conducted an extensive programme of interviews and store visits. As it became clear that demand varied by region, we made sure to cover a broad cross-section of the country.

Prospective competitors are normally reluctant to discuss the market but in this case turned out to be very open. Given the immaturity of the market, most executives were in fact keen to brainstorm how it might develop over time, as well as to discuss the status of the market today. It also helped that we had conducted other interviews first in order to be well informed for the more sensitive interviews.

US market too immature for now so consider supplying ingredients instead

The depth and reach of our research was far better than expected. Consistently, market players had warned us that the premium loose leaf tea market was still very niche. Given we had also been asked to research other geographical markets that now appeared more attractive, we re-classified the US market as low priority.

However, through our interview programme, we had also discovered there might be an alternative route to market in the US: to supply botanical ingredients to food and cosmetics manufacturers. The market is large and established, and the margins are generous.