The Growth of Green Tea

This is a healthy market showing no signs of slowing down.

By Joerg Gruenwald

There is no question that green tea is good for you, but is it good for your business? Absolutely. At a time when consumers are moving toward preventative medicine and a healthy lifestyle, the message of the benefits of green tea is coming across loud and clear. In view of the global obesity epidemic that increasingly draws consumers away from soft drinks and toward slimming solutions, green tea is appealing not only as a healthy beverage, but also as a functional ingredient with proven weight loss activity. But it doesn’t stop there.

The green tea components with the most health benefits—the polyphenols—have since found their way into supplements and even drugs, with various health claims, ranging from “rich in antioxidants” to a prescription drug for the treatment of genital warts. Other areas of green tea research include neuro-protection, cancer and heart health, all important claims that underline the value of this ingredient not only as an alternative to black tea.

In light of these benefits, applications for green tea and its extracts are manifold. There are, of course, the beverages, which include ready-to-drink teas and functional drinks such as energy drinks, as well as the emerging category of “mood foods.” Other applications include dietary supplements for weight loss as well as topical cosmetics and personal care products. Green tea has even found its way into candles and room fresheners.

Market Figures & Dynamics

Estimates of the value of the green tea and green tea extract markets vary. The world tea market is worth between $5-6 billion, of which the European market is worth about $500 million. The regional split between the U.S., Europe and Asia is likely to be even, but here, too, estimates differ. Some sources place the value of the green tea extract market at $300-400 million. Growth rates, depending on the source of the estimate, lie between 15 and 20%. The green tea food market is estimated to be worth about $200-250 million, and the supplement market is slightly smaller with $100-150 million.

Of green tea products launched in Europe, the overwhelming majority are beverages, followed by skin care products such as stretch mark reducing or anti-wrinkle creams. There is also a smaller market for sun protection and anti-cellulite products. Next in number are soap and bath products, which mostly contain green tea as scent components, but also for skin protection or purifying. Health products are next, which are mostly represented as slimming supplements, but also supplements for sun protection. Sugar and gum confectionery also feature green tea, mostly in chewing gum or mints.

Green tea extract can be quite a lucrative business for manufacturers. The growth rate of the market is high, and a variety of components contained in the various green tea extracts can fetch good prices. Among them are the polyphenols, with epigallocatechin gallate (EGCG) being the most prominent, along with caffeine. Extraction of pure EGCG in particular is available at luxury prices and is used in a number of applications such as weight loss and energy products, but also in nutricosmetics.

Organically grown green tea does not play a large part yet, according to industry insiders, but with the global increase of importance of natural substances, this is expected to change.

Of course there are challenges in the green tea marketplace. Cheap imports from China, same as in other markets, are a threat to prices. However, the low prices for Chinese raw material could indicate that quality requirements may not be adequately considered during harvest and primary processing. In particular, contamination is an issue that is also on consumers’ minds, so this will likely drive them toward organically grown products in the future.

Intellectual property (IP) protection and branding are two ways to counteract price dumping, as they allow manufacturers to pursue a non-price-based competitive strategy. At the same time, this allows them to achieve product differentiation that can be carried through to the end consumer. Since consumer awareness about the benefits of green tea is strong, increased in­vestment into value-added technologies resulting in IP protection and ingredient branding is a profitable endeavour.

Green tea is an ingredient with many possible applications, several of which are only just being discovered. With branded extracts and good, proprietary science, this market is a lucrative one worth exploring. NW