Amidst the cost of living crisis and an inflationary environment, tea in Asia Pacific remains a resilient category, owing to its inelastic demand. Nevertheless, stiff competition from other beverages remains, and this report seeks to analyse the various innovation strategies adopted by tea players to thrive in the long term. This includes responding to consumers’ health concerns, such as stress relief, mental wellbeing and boosting the immune system.
This report comes in PPT.
While the cost of living crisis has posed challenges to the prices of fast-moving consumer goods, the price of tea has not experience many of the shocks, with price rises typically below the overall rate of inflation. Nevertheless, the surge in commodity prices and labour costs, owing in part to ageing populations, has resulted in an increase in production costs.
While tea has traditionally been a volume-driven category compared to coffee, rising disposable incomes across Asia Pacific are set to provide opportunities for premiumisation in tea. Furthermore, with the effects of inflation softening, global tea players have the opportunity to seek value growth in Asian markets, while local brands can expand their footprint.
As consumers prioritise wellbeing, such as lower stress levels, better sleep, a good immune system and physical wellbeing, this provides tea players in Asia with an opportunity to respond to consumers’ health concerns by tapping into health functionalities in their products, such as stress relief, aiding sleep and boosting the immune system.
Milk tea is widely popular in Asia Pacific, especially among young consumers, and its presence has spilled over into retail, where ready-to-drink milk tea is widely available. Despite growing concerns over sugar content and obesity, consumers continue to indulge in milk tea, due to its taste, and it is typically consumed after a meal.
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