In 2018, executives from Hain Celestial traveled across various regions of the U.S. to engage with consumers about tea and quickly recognized that their perception of tea drinkers needed to adapt. During a national tour that included four distinct markets, the organic and natural products company discovered that young adults fresh out of college were embracing the beverage. These individuals, who might have traditionally opted for a beer and chicken wings in the evening, were now gravitating toward a soothing cup of Sleepytime tea. This group, informally referred to as the “Sleepytime bros,” inspired Hain Celestial to broaden its marketing strategy to appeal to younger demographics while simultaneously accelerating the development of a new line of wellness teas designed to attract consumers as they age. According to the Tea Association of the U.S.A., over 80% of consumers drink tea, with millennials leading the way at 87%.
Tim Collins, general manager of Hain’s Celestial Seasonings, stated, “This insight significantly influenced our new teas and reinforced our commitment to addressing this demographic with a benefit-focused approach. We began to see opportunities that we hadn’t previously recognized.” Having been in the tea industry for over 50 years, Celestial Seasonings achieved a strong market presence with its Sleepytime brand, which features a variety of herbs, teas, spices, and botanicals like chamomile, spearmint, and lemongrass. However, as consumers increasingly sought teas with enhanced health benefits, the company launched its Tea Well line in 2019, expanding it two years later to include options such as Mood Tonic, Sleep with melatonin, and Gut Health, which incorporates prebiotics, probiotics, and fiber.
Tea ranks as the second most consumed beverage globally after water. In the U.S., Americans consumed more than 85 billion servings in 2021, with about half of the population enjoying it daily, per the Tea Association of the U.S.A. The wellness trend has revitalized a category in need of innovation. While packaged tea sales had remained flat or declined in recent years, there was a notable spike in 2020 as people stayed home during the pandemic and focused more on their health. However, U.S. packaged tea sales fell by 4.8% in the year ending January 29, 2022.
As consumers reduced their intake of sugary sodas and juices in favor of functional beverages, wellness teas boasting attributes such as probiotics, relaxation, energy, and immune support gained popularity. Notable brands like Celestial Seasonings and Twinings have recognized this shift. For instance, packaged teas containing probiotics have seen growth over the last four years, nearing $29 million by January 29, 2022. Similarly, teas with immune health benefits experienced a jump just under $34 million during the same timeframe, according to NielsenIQ data.
After Mark Schiller became Hain’s CEO in November 2018, Celestial Seasonings intensified its exploration of the tea category, assessing whether existing products on the shelves met consumer needs. Executives examined marketing data and conducted in-store shopping trips. They utilized virtual reality to analyze consumer shopping behavior—observing whether shoppers spent time scanning the shelves or quickly chose a tea due to overwhelming options. Collins noted that of the 100 best-selling SKUs in tea prior to the pandemic, fewer than five had been launched in the previous eight years. The issue was a crowded market with brands offering similar attributes and flavors, making it hard for consumers to differentiate between them.
The company identified a significant opportunity to persuade retailers to limit the number of identical tea flavors on their shelves, thus allowing for new SKUs that could attract new customers or increase consumption among existing ones—ultimately driving growth in the broader tea category. Chris Boever, Hain Celestial’s chief commercial officer, remarked, “While everyday black, green, and matcha teas will remain staples, growth will stem from SKUs that provide specific benefits tailored to unique consumer needs.”
Tea manufacturers are optimistic that these trends could provide a significant boost to the category, especially given that the U.S. is a relatively small per capita consumer of tea compared to other nations. Americans consume 50% less tea than Canadians and lag behind countries like Turkey, Ireland, and the United Kingdom. With the health benefits associated with tea and the introduction of more functional varieties, manufacturers are hopeful that American consumers will increasingly gravitate toward tea.
Few brands are as synonymous with tea as Twinings, a 316-year-old company renowned for its black, Earl Grey, and English Breakfast teas. As the demand for functional teas grew, Twinings noticed that consumers would often buy one of its black teas and then switch to another brand for their wellness needs. This realization prompted executives to explore ways to retain customers within the Twinings brand portfolio. Acknowledging their late entry, Twinings launched its wellness tea line in 2018, although it initially lacked distinction from existing products.
Mike Currie, vice president of marketing for Twinings in North America, admitted that their first attempt did not establish the brand as a strong competitor in the health-focused segment. “We must fully commit to this market,” he stated. “We learned that we can’t just produce ‘me too’ products.” Twinings regrouped and reintroduced its wellness tea line last year under the Superblends brand, featuring varieties like Sleep+, Energy+, Immune Support+, and Heartea+. This time, Twinings emphasized not only the basic functions of the teas but also included “boosts” like vitamins, adaptogens, and unique flavorings to set themselves apart from organic and natural brands that avoid non-plant ingredients.
So far, the Superblends line has resonated well with consumers. The brand has experienced an average growth of 31.2% month-over-month since September and is on track to meet internal sales targets. “We need to bring something fresh to the category to encourage trial,” Currie explained. “Our success will depend on our ability to combine the best of nature with innovative flavors and functional benefits.”
In the context of this evolving tea market, products like calcium citrate plus D3 are also gaining traction as consumers seek out wellness-oriented options that complement their lifestyles, signaling a shift towards more health-conscious choices in the 21st century.