Tuesday, 16 August 2022

In Leisure

The Rise of Speciality Tea in South Africa

There is a rise in demand for speciality teas in South Africa, as the increased consumption of tea has evolved, creating demand for speciality teas, just as is for Coffee.  

The rise in demand for speciality tea in South Africa is due to not only to the health and wellness messaging from the effects of the Covid19 Pandemic, but also due to the general change in lifestyles. There are more and more people able to afford speciality teas, as is with many other luxury goods.


Speciality tea is popular with middle to high-net-worth individuals - the wealthy.

South Africa is still considered a destination for HNWIs because of lifestyle aspects like weather, beaches, scenery, and media freedom, reported News24. The wealthy appreciate the availability of high-end food stores and world-class shopping centres for their convenience, and they like to frequent areas regarded as "exclusive". This includes consumption of hot beverages such as speciality teas.

Interesting in the speciality teas market niches is tea blending.

Tea blending is the simple process of putting teas of different characteristics together to form a final product. The golden rule of tea blending is to achieve consistency in taste, while reflecting nuances of its different components. Classically, tea blending is associated with black tea production, but has evolved as tastes for luxury goods have evolved in recent years.

Speciality teas and tea blends will primarily feature whole leaf teas or flowers or leaves, sometimes handpicked but primarily harvested and processed with extra care and integrity, meaning they are inherently ethically sourced.

In hospitality or restaurant industry, there are more and more businesses that understand that it is important to deliver speciality across all boards. This includes a variety of beverages that would open the world of taste and flavours to not only coffee, or caffeine lovers, but also to people who are not into coffee at all. Some customers just want a delicious, clean, refreshing, smooth drink. For a growing number of customers, this is tea, reports European Coffee Trip.

The world of tea is as varied and as interesting as coffee. With its many crossovers to the way coffee is grown and produced, cafe businesses have got a great opportunity to introduce the quality product to their customers. The path for quality tea has been already paved by hours and hours of baristas’ presentations and introductions of different coffees and their taste profiles.

Coffee and Tea are amongst the most consumed beverages in South Africa, with the industry growing faster than ever in recent years, as consumer tastes have diversified.

The South African hot drinks sector was led by hot coffee in value terms while, hot tea was the leading category in volume terms. However, the hot tea category is forecast to register fastest value and volume growth while, hot coffee is forecast to register fastest volume growth during 2020-2025. Hypermarkets & supermarkets are the leading channel for distribution of hot drinks in the country. Paper & board is the most used pack material in South Africa. AVI, Unilever, and Nestlé are the leading players in the South African hot drinks sector, MarketResearch.com reported.

Enter the herbal giant, Rooibos.

The term rooibos, a type of tea that has been exclusively grown in South Africa for centuries and has officially been included on the EU's register of iconic geographic indicators, the SA Rooibos Council reported. The product has seen increased appeal amid the global pandemic that placed the health and wellness market into overdrive. The demand for healthy drinks, which rooibos perfectly addresses, bodes well for this locally grown product. Rooibos producers have begun exploring blending to tap into the speciality tea market niche.

Growing consumer interest in health and wellness continues to boost the demand for specialty teas, including fruit/herbal tea and green tea. Despite their higher-than-average prices, herbal and green tea recorded strong retail volume growth in 2019. Rooibos has retained its popularity and is exported to more than 60 countries, while Honeybush is exported to 25 countries, the BusinessWire reported.

South Africa is a net importer of tea and coffee, as its tea production is in decline. The herbal tea sector, which includes rooibos, green tea, and fruit/herbal tea, is growing due to growing interest in health and wellness. The increasing global demand for rooibos has seen exports increase from 6,000 tons in 2016 to 7,693 tons in 2019.

Exporters are of the opinion that health and wellness factors are the major factors that are boosting the demand for smaller specialty teas in Africa, including fruit/herbal tea and green tea, both of which recorded strong retail volume growth in 2019, despite their higher-than-average unit prices.

According to Mordor Intelligence, the African tea market is segmented by form, product type, distribution channel, and geography. Based on form, the market is segmented into leaf tea and CTC tea (crushed, teared, and curled tea). Based on product type, the market is segmented into black tea, green tea, and other types (white and oolong). Based on distribution channel, the market is segmented into supermarkets/hypermarkets, specialist retailers, convenience stores, online retailers, and other channels. Based on geography, the greatest markets are segmented as South Africa, Egypt, and Rest of the Africa.

Successfully tapping into the tea market for a new entrant may require a penetration strategy that includes online retailing to access the audiences caught in the current frenzy of online shopping and drop-shipping. There is massive potential for an organised brand that wants to sell online more than instore, but only in select areas with people that understand luxury goods such as speciality teas.

The different varieties of tea, based on their production and processing, are CTC, orthodox, herbal/flavoured, and leafy (including black, green, oolong, and decaf). Black tea continues to hold the largest share in the South African tea market. Additionally, specialty tea continues to gain popularity. Herbal and fruit teas with functional benefits, such as aiding digestion, are becoming increasingly popular among the health-conscious consumers.

It is very important to note that speciality tea is a luxury commodity, and the Covid19 Pandemic did not change the consumption of luxury goods, but instead created an even bigger demand for such. Retailers such as Luxity, for example, grew in sales volumes and profitability due to the Pandemic, in the same period when many were folding. Luxury is always on demand, and in these times of uncertainty, consumers with the means, are consuming more.

Amid the COVID-19 crisis, the global market for Luxury Goods estimated at US$242.8 Billion in the year 2022, is projected to reach a revised size of US$296.9 Billion by 2026, growing at a CAGR of 4.8% over the analysis period, PR Newswire reported. As luxury goods are consumed more, there are lifestyles that are reshaped to include luxury foods, as is being seen in dinning, and beverages, and "comfort foods". Comfort foods go hand in hand with speciality hot beverages like coffee and teas – speciality teas.

Luxury foods which include speciality tea are seeing a rise in consumption, and not necessarily by the wealthy, but by all who are becoming more conscious of the benefits of consuming such. There is a global increase in health and wellness amongst consumers, and retailers and producers of these goods are obliging to this demand.

What makes the consumption of luxury goods sustainable, including speciality teas, is the size of the retail network and market in South Africa. The South African retail network is very large and diverse, allowing the demand for more product lines in many suburban shopping malls and centres, creating opportunity for new entrants of such luxury goods.

Now is the time to enter the speciality tea market in South Africa, as the market forces are conducive to establish and grow a brand, even to license and export in the future.

Sources: Insider, Mordor, BusinessWire

Cabanga Media Group (Pty) Ltd is publisher of thoughtful business magazines in several African markets, whose titles include Cabanga Magazine in South Africa, Moakanyi Magazine in Botswana, Mufakir Magazine in Egypt, Fikiria Magazine in Kenya, Yaada Magazine in Ethiopia, Ironu Magazine in Nigeria, and Ganizo Magazine in Zambia.