Please answer the 2 questions related to the attached case study below (images 1-3).
1. Consider the different tea markets around the world. What are the main growth drivers of the global tea market?
2. Discuss the segmentation of the global tea industry. With more tea products and the varieties being introduced , do you think the sales growth of the industry will sustainable?
CASE 7-2 The "Bubbling" Tea Market Tea has been in the limelight recently thanks to increasing global Tea is regarded as the second most-consumed liquid after water. demand, especially in emerging economies like China and India. The global increase in tea consumption can be attributed to the health China, India, Kenya, and Sri Lanka are some of the largest producers and wellbeing benefits commonly associated with the beverage and of tea in the world. An popular beverage among all socio-economic its popularity as a lifestyle product. Other factors include growing tea- classes, tea is also popular in other Asia-Pacific countries like Thailand, consuming populations, an increase in disposable income, lifestyle Japan, Singapore, Hong Kong, and Australia. In most of these markets, changes, the growing size of the food and beverage industry, a new offering tea to welcome guests is part of cultural hospitality. variety of flavors, innovations in packaging, and industrialization. Teahas also become a specialty beverage due to a global culture of tea increasing industrialization, a rising number of hotels and restaurants, cafes and tea houses, which has also encouraged restaurants to add and increasing penetration of specialty tea cafes. Geographically, the more tea options to their menus. This has propelled tea into the luxury tea market is analyzed across North America, Europe, Asia-Pacific, and segment, with companies like Singapore-based TWG Tea convert- LAMEA (the Latin America, Middle East, and Africa region). ing the high-end teahouse concept into a $120 million business and Based on the type of tea, the market can broadly be classified into expanding their business operations to Europe. black, green, oolong, and herbal (or fruit). Of the total tea production According to statista.com, the global tea market is expected to in the world, the majority produced is black tea, at 60 percent, fol- record significant growth. In 2017, the estimated worth of the global lowed by green, at 30 percent. In terms of revenue, the black tea seg- tea market was $49.46 billion, and it is expected to reach $73. 13 billion ment accounted for the largest market share in 2017, mainly because by 2024, growing at a compounded annual growth rate (CAGR) of 4.5 of its high production and continuous developments within the cat- percent between 2018 and 2024. egory. However, the green tea segment is anticipated to grow at the In terms of revenue, the Asia-Pacific region is expected to lead highest rate between 2018 and 2023 owing to its increasing adoption the global tea market. However, a rising preference for tea has been across the world. The increasing popularity of green tea is based on exhibited in North America as well, where consumer preferences are its supposed health benefits, such as a boosted immune system and shifting from carbonated drinks to healthier options. The Middle East weight loss. Asia-Pacific shows the highest growth rate for green tea, and Africa region is forecasted to show significant growth between followed by North America. 2017 and 2023. The European tea market is also expected to exhibit In the sub-segment of flavored tea, bubble tea, also known as impressive growth, with demand primarily driven by the premium tea pearl tea, boba tea, and tapioca tea, has become very popular around segment and a variety of flavors catering to the preferences of those the world over the last two decades. Created in the 1980s by Liu with more disposable income. Han-Chieh Hien at her Chun Shui Tang teahouse in Taichung, Taiwan, Mint tea is in high demand in North Africa, while black tea is more bubble tea is a fun and interesting drink that uses some traditional popular in the Middle East region. China is the largest tea producer and some very non-traditional tea ingredients, including its signature (worth approximately $11.33 billion) and has an annual consumption chewy tapioca balls. The main drivers of the bubble tea segment are of about 0.57 kg per person. The largest number of tea consumers are its cost-effective pricing and alleged health benefits, though critics in Turkey, Ireland, the United Kingdom, Russia, and Morocco: the Turks are quick to note that it contains preservatives, food coloring, and a consume an average of 3.16 kg per person per year; the Irish, 2.19 kg; high amount of sugar. Typically, it uses black or oolong tea, milk, fruit and the British, 1.94 kg. flavors, a sweetener, and a chewy Taiwanese cuisine ingredient called The global tea market is competitive, and a number of large com- QQ, which become the tapioca balls in the tea. The tea is freshly panies operate in the industry. Big players in the market include Tata made with milk and sugar and then shaken with ice in a cocktail Global Beverages, Kusmi Tea, Davids Tea, and Unilever, but the many shaker, creating the bubbly froth that gives the tea its name. In 2016, small- and medium-sized suppliers constitute a large portion of the the global bubble tea market was estimated to be $1.957 billion and market. The tea market can be segmented in many ways: packaging, was projected to reach $3.214 billion by 2023, with a CAGR of 7.4 users, distribution, and type. There are several different kinds of tea percent between 2017 and 2023. packaging, including loose tea, paper bags, aluminum tins, tea bags, To keep up with this growth and to target a wider customer base, and plastic boxes. Of these, the tea bag segment was the fastest the bubble tea industry spends more on developing new flavors and growing in 2017 and enjoyed a considerable market share. The typical creating more varieties. The aim is to enhance and differentiate the channels through which tea is sold include hypermarkets, supermar- bubble tea-drinking experience and appeal to different tastes. Coun- kets, specialty stores, convenience stores, online channels, and other tries like China and India show a lot of potential for growth of the channels. For tea products, traditional retail channels-supermarkets bubble tea markets. Looking at the huge opportunity in India, Malay- and hypermarkets-are the most popular. Based on types of users, the sian bubble tea company Tealive announced its collaboration with tea market can be divided into household and commercial segments. one of India's leading franchise development companies, World Iconic The commercial segment is anticipated to grow rapidly owing to Brands Hospitality Pvt. Ltd. (WIB), in 2018. WIB was given franchisee rights to open 140 stores in the New Delhi, Mumbai, and Bengaluru between 2018 and 2023. Tealive believes that India, which is primarily a tea-loving nation, is ready for more creative and modern tea-drinking experiences. Along with the international brands, local Indian brands are also entering the bubble tea segment. An example of the successful international expansion of bubble tea comes from the Taiwanese bubble tea brand Coco Fresh Tea & Juice, which is now one of the leading bubble tea brands in the world. Coco was founded by Tommy Hung in 1997 in Taipei, Taiwan, and has since rapidly entered international markets through the franchising model. Today, it has more than 2,500 store locations in China, Hong Kong, the United States, Thailand, Indonesia, Philippines, South Africa, South Korea, and Canada. Although bubble tea is their best-selling item, they also sell fresh tea, milk tea, fruit tea, yogurt drinks, coffee, and other beverages. To ensure more consistency in its brand image, CoCo sup- ports its franchisees around the world through professional training programs, innovative products, evaluation systems, and its experienced Exhibit 7-14 The tea industry continues to grow in developed as well as management team. CoCo believes that the brand must continuously developing markets, expanding into new segments like bubble tea. innovate and update itself to maintain its success and build a sustain- Source: mama_mia/Shutterstock. able, profitable business.The growth in the overall tea market will continue to be fueled by changing demographics and lifestyles around the world. In developed markets, where increasing sales volume is more difficult, premium- ization will contribute to value growth in the industry. In develop- ing markets, a mix of factors like population growth, income levels, affordability, and lifestyle changes will continue to drive growth. As the middle class grows and greater urbanization takes place in emerg- ing markets, adoption of different types of tea will continue, boosting consumption in the overall tea market. The popularity of tea houses and cafes, new formats and flavors of tea, convenience, availability, and versatility have changed the tea-drinking experience. Making tea more "special" and a more premium product creates room for more brands with different propositions to be created. As more and more differentia- tion takes place within the tea market segment, targeting, positioning, and the marketing mix will become more important
