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A Primer on
Premium Iced Tea

By David DeCandia


Tea has a rich and storied history, speckled with innovation, change and advancement; from the way it is grown and processed to the way it is consumed.

Few beverage innovations have had the powerful impact that iced tea has had on the U.S. tea market. Although cookbooks dating back to the mid-1800s feature drinks containing green tea and some form of alcohol (that call for the drink being served cold), iced tea as we know it today didn’t exist until the late 1800s. At that time, American cookbooks started to feature recipes for iced tea using black tea and sugar. Iced tea started to become popular in the South and continued to grow in popularity when, on an unseasonably hot day in 1904, Richard Blechynden –– who has been credited with inventing iced tea –– added ice to his hot tea samples at the World’s Fair in St. Louis. The drink was a hit and iced tea has been an American staple ever since.

Growth of Iced Tea
Over the last decade, the tea industry has exploded in the U.S. In 1990, tea was less than a $1 billion industry. In 2004, tea had grown to a staggering $5.4 billion industry. Experts project that by 2010 the industry will exceed $10 billion in U.S. sales. Fueling this growth are results of health studies showing the benefits of tea, and an abundance of articles that help to educate the public about all manners of tea.

One of the fasting growing segments of this market is premium hot tea. This trend follows the same path as the stunning growth of the coffee industry from 15-20 years ago. With more and more premium hot teas emerging, iced teas are now following the same path. Within the last century, it has grown in popularity, and today accounts for approximately 80% of total tea sales in the U.S. This 80% is sold in three primary markets: Ready To Drink (RTD), foodservice and retail.

There are many questions surrounding ice-tea (“iced” tea vs. “just tea that is cold” tea), and the search for a consistent, qualitative cup of iced tea can be a challenge.

“Iced” vs. “Cold” Tea
I have always wondered if drinking the beverage called iced tea actually required the use of ice. Could it be that it is just tea that is cold? I myself enjoy a great cup of premium tea cold, but not over ice. I find that ice takes away from the cup as it was designed –– also diminishing the flavor profile. Then there is always the issue of the water used in iced tea. It can drastically alter the experience to serve tea prepared with filtered water over ice that is prepared with non-filtered water. Further, most bottled teas are served cold. But when they created the RTD tea, did the manufacturer take into account that ice will dilute the beverage?

Using Premium Tea as a Base for Iced Tea
Many people wonder what exactly makes a tea “premium.” Does the size of the leaf and its description – i.e., whole, broken, teabag cut – designate whether it is premium or not?

The origin, elevation, harvesting methods, freshness and grades are factors in its overall designation. Not all premium teas are “designed” to be iced. For example, a Fancy Formosa Oolong shows itself off best as a hot cup. When cold, it loses the fruity and floral notes that make this tea special. Icing premium teas that were not designed for icing does not yield the best cup.

Teas that are grown at higher altitudes (from Sri Lanka, India and China) and plucked by hand, traditionally, ensure a high quality cup for both hot and iced. Even though the tea has the criteria to be designated “premium,” it may lose many of its qualities if served iced, instead of hot.

Typically, fannings, dust and other off-grade teas are found in a standard commercial mass-market iced tea. But there’s a new wave of premium-iced teas that include Black Orange Pekoe (BOP) and BOP fannings, although sometimes they include a full leaf OP. My personal recommendation for a great iced tea is a BOP leaf-base from Sri Lanka or India, flavored lightly with a guava or peach ginger flavoring.

Price/Quality
Usually teas that meet premium standards price themselves out of the foodservice segment of the market. When choosing their products and suppliers, most foodservice and institutional buyers make price a predominant part of their decision. These are self-imposed standards and each supplier must choose whether to enter this arena and attempt to compete against many suppliers providing lower grades of tea for the iced tea market.

To meet the low prices that the foodservice industry demands for its iced tea, major national brands generally buy low-cost teas from tea auctions from the regions around the world to create an iced tea product that can compete in this price-sensitive market.

It’s apparent that companies are promoting iced tea’s origin because we are seeing references to the age or size of the leaf. But the foodservice segment has little opportunity to promote the specialty aspect of the tea (if there is one) and generally rides on the beverage’s overall popularity and simplicity.

Some specialty tea companies have been able to sell premium iced tea to restaurants and retailers who are willing to pay a higher price for this tea. Most want to pay as low a price as possible. As the demand for premium teas continue to grow, so does the desire for the prices to go down.

A supplier can help by purchasing his premium tea directly from the grower and cutting out the middleman. However, this sourcing is challenging, as there are not many companies that can grow, process, package and ship their own tea in addition to providing sales, warehousing and distribution support in the U.S. One such company, Walters Bay Bogawantalawa Estates, offers a fully integrated supply chain from their tea fields directly to their customers. This highly efficient estate-direct model offers premium teas at large volumes for commercially lower prices.

Selling Premium Iced Tea in a Coffee Environment
Many coffee and tea retail outlets sell iced tea, but not many promote this. Usually, the iced tea is offered in short selection and made with syrups. Some offer premium iced tea fresh brewed daily. At The Coffee Bean & Tea Leaf, herbals, fruits and tea are offered as iced beverages. In a coffee culture such as that, which is so popular today, premium tea is starting to see its way to the top. Tea’s versatility is one benefit that customers appreciate. Whether it is hot, iced or a served as a tea latte, the varied selection and quality gives tea a further opportunity for continued growth.

Evidence that the Iced Tea Trend is Growing
Exemplifying the growing trend in premium iced-tea is the “Iced Tea Competition” at the World Tea Expo and at other tea conventions. The World Tea Expo has traditionally focused on premium hot teas, but in 2004 they started a competition for iced teas. The response has been tremendous and only adds more credibility to iced tea as a beverage of choice. The competition has three main categories: freestyle (anything goes), RTD and commercially brewed. The commercial categories reflect the dominant segments of this market: black tea, flavored black tea, green tea and best value.

Other trends emerging as part of the premium movement for iced tea include organics. Flavored and green teas are also seeing a rapid growth across the market from the supermarket shelf to the neighborhood restaurant.

Just Know What’s Best
Whether your favorite cup is hot or cold, the most important thing to know is what’s inside your cup. Whether you are a consumer or part of the industry itself, there is no substitute for having the best tea possible. The additions of green and oolong iced teas have also helped with adding to the growth of iced tea. RTD beverages are leading the way with providing on-the-go iced tea drinks.

About the Author: David DeCandia is the tea buyer for The Coffee Bean & Tea Leaf, a chain of roaster/retailer/café/bars in the U.S. and abroad. He is a featured speaker at industry shows.


Tea & Coffee - February, 2007
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