There's a quiet, and lightly caffeinated, trend brewing in America.
The U.S. market for tea has more than quadrupled during the past twenty-plus years—from just under $2 billion in 1990 to just over $10 billion last year—according to the U.S. Tea Association. Demand for the herbal beverage has now been growing at a healthy clip for decades. By weight, Americans now drink almost 20 percent more of the herbal beverage than they did back in 2000, according to market research firm Euromonitor.
As a result, tea imports, to the benefit of major tea producing nations like China and India, are soaring—they have grown by roughly 40 percent over the past 10 years, nearly 70 percent over the past 20 years, and more than 700 percent over the last 50 years, according to data from the U.S. Department of Agriculture.
Tea has infiltrated most Americans' everyday routine. Some 80 percent of U.S. households have tea in their kitchens, and more than half of the American populace drinks tea on a daily basis, according to the U.S. Tea Association.
There are, however, some quirks to the country's growing love for tea.
Americans are, for instance, much fonder of iced tea than they are of hot tea—more than 85 percent of tea consumed in the U.S. is chilled. They're also partial to ready-to-drink tea bags, which make up the vast majority of tea consumed in the U.S. And Americans appear willing to spend a bit extra on fancier (and pricier) tea bags—dollar sales growth has been outpacing volume sales growth for years.
America's favorite kind is black tea, which accounts for more than half of all tea consumed in the country. Fruit and herbal tea, which accounts for just over a quarter of U.S. tea consumption, is second on the list. But neither has managed to grow in recent years—fruit and herbal tea consumption has risen by 7 percent in the U.S. since 2000, while black tea consumption has fallen by nearly 2.5 percent over the same period.
Meanwhile, green tea, which accounts for just over 11 percent of the tea Americans drink, has been growing much faster—the U.S. downs over 40 percent more than it did in 2000. And other fringe and artisanal teas, like rooibos, oolong, and white tea, are growing fastest—the category has grown by nearly 8,000 percent over the past 10 years alone and now accounts for roughly 6 percent of U.S. tea consumption.
At the same time, coffee consumption has remained fairly stagnant since the 1970s, suggesting that tea might be replacing coffee in some households. But the more prevailing reason for tea's ascent is likely the perception that consuming tea is good for one's health. Green tea in particular has been linked to a number of health benefits.
The country's growing appreciation for tea hasn't been lost onto large American food and beverage-makers. Rather, companies nationwide are throwing billions of dollars into the budding industry.
Starbucks, for its part, is hoping to become a market leader for tea much as it as been one for coffee. "I previously shared our intent to reinvent the tea category, just as we did the coffee category, and we are making meaningful progress against our plan to do so," Chief Executive Howard Shultz told investors in an earnings call this July. Starbucks has been working to expand its tea offerings ever since the company acquired Teavana, which sells high-end teas, for more than half a billion dollars in 2012.
Dunkin' Donuts has referred to iced tea, which the company sells in a number of flavors, as one of its "key products."
And Unilever, the biggest seller of tea products in the U.S., has doubled down on its market share by introducing new tea offerings, like instant tea K-Cups. "Tea continues to post solid growth with a pick up in the U.S. driven by the new K-Cups, and this has really taken us into the one of the faster growing parts of this market," Chief Financial Officer Raoul Jean-Marc Sidney Huët, said in earnings call in April.
The bet is that the domestic tea market will build on its recent momentum, and continue to grow going forward. Tea makers, for one, expect the trend to continue upwards. "The bottom line is that we see continue growth happening in almost every tea sector," said Peter Goggi, president of the U.S. Tea Association. "We still believe that the market is going to hit 15 billion in the next two to three years."
Whether Americans warm even more to the habit remains to be seen, but there's reason to believe Goggi might be right. Despite the country's growing interest in tea, Americans are very much still amateurs on a per capita basis. The average American drinks just over half a pound of tea per year, which is barely enough to crack the top 35 worldwide. Turks, by comparison, drink nearly seven pounds per person per year; the Irish drink just under five pounds per person per year; and the English drink just over four.