Starbucks isn’t the only company betting on an uptick in tea consumption in the historically coffee-fueled US. At its heart, the wager on growing tea sales is based on US demographic trends. Would-be tea sellers think that as baby-boomers continue to age they will want to downshift their intake of heart-rattling java, and switch to a more healthful alternative. And tea sales have been rising in recent years, including a 2% increase in 2011, according to market research firm Euromonitor.
But Anglo-Dutch consumer products giant Unilever doesn’t plan on taking any chances. In a conference call with analysts after its strong earnings results today, Unilever chief Paulus Polman spotlighted plans to beef up investment in Unilever’s Lipton brand of teas. Lipton is the best-selling tea in the US, with about an 18% share of sales. But its sales have been declining. In 2011, they dropped about 3%.
Frankly we have under supported the Lipton brand – tea brand there, literally under supported in quality and product. And that is never a long-term strategy. We’ve reinvested and continue to reinvest in quality and product and you start seeing the results. So, I am fairly positive that that business—bar a quarter here or there for different reasons—but that business is on the right trajectory.
As to whether the US will ever switch to a nation of tea drinkers, count us skeptical. (It’s something you drink when you’re sick, right?)
Expect to hear a bit more about Starbucks’ vision for tea in the US when it reports earnings on Jan. 24.