Functional Tea Market Analysis North America, APAC, Europe, South America, Middle East and Africa - US, China, Canada, Germany, UK - Size and Forecast 2024-2028

Functional Tea Market Size 2024-2028

The functional tea market size is projected to increase by USD 3.61 billion, at a CAGR of 6.5% between 2023 and 2028. Functional tea offers numerous health benefits, driving a surge in demand for organic variants and prompting the introduction of new products. With its diverse therapeutic properties, functional tea is increasingly recognized for its ability to promote overall well-being and address specific health concerns. The growing consumer preference for organic options reflects a broader trend toward health-conscious consumption choices, further fueling market expansion. Concurrently, the continuous stream of new product launches underscores industry innovation and responsiveness to evolving consumer needs and preferences. These intertwined factors contribute to the burgeoning popularity of functional tea, positioning it as a staple in the wellness and beverage market.

Market Overview

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Market Dynamics

In the dynamic landscape of wellness, Functional Tea emerges as a potent force, driven by organic ingredients and diverse functional tea types like the green tea segment. Renowned for their potent antioxidant properties and abundance of catechins, these teas support heart health, boost metabolism, and aid in weight management. Rich in polyphenol content, they mitigate the risk of health conditions like cardiovascular diseases and osteoporosis, aligning with herbal traditions and natural remedies. With the aid of digital innovations, the market thrives, supported by expanding tea plantation acreage and a growing consumer base seeking holistic solutions for wellness and vitality. Our researchers analyzed the data with 2023 as the base year, along with the key trends, and challenges. A holistic analysis of drivers, trends, and challenges will help stakeholders in the value chain refine their marketing strategies to gain a competitive advantage.

Key Market Driver

One of the key factors driving the market growth is the health benefits of functional tea. The health benefits include improved immunity, hence protection against colds, and better digestion. Some other functional tea products and their health benefits are Yerba mate, Hibiscus tea, Lemongrass tea, and Chamomile tea. Yerba mate is rich in antioxidants and nutrients, boosts energy and immunity, improves mental focus and physical performance, helps to lose body fat and weight, and lowers blood sugar levels and the risk of heart diseases.

Moreover, hibiscus tea is rich in vitamin C and contains flavonoids, reduces blood sugar levels, lowers blood pressure, aids in digestion, helps in reducing menstrual cramps, and keeps the liver healthy. Therefore, growing awareness among consumers regarding the health benefits of functional tea is likely to propel the growth of the market during the forecast period.

Significant Market Trends 

Premiumization of functional tea products is one of the key trends of the market. Premium functional tea products are marked with quality assurance stamps from the USDA and others, which regularize the product quality. Several vendors in the global functional tea market offer functional tea products under the premium category. For instance, Numi offers a product line of Premium Matcha green tea in two flavors called Citrus Matcha and Ceremonial Matcha.

Also, It offers Petite Bouquet, which is a tea box with four different flowering tea products. Flowering tea buds offered in this box include Dragon Lily, Sunset Oolong, Lavender Dream, and Golden Jasmine. Therefore, the premiumization of functional tea products is expected to propel the growth of the market during the forecast period.

Major Market Challenge 

One of the key challenges to the market growth is the availability of counterfeit functional tea products. These types of products lead to an uneven competitive scenario among genuine functional tea vendors. The counterfeit functional tea products lack quality and are priced lower than genuine products. Several instances of manufacturing and sales of counterfeit tea products, including functional tea products, have been seen in the global market.

For instance, a drug processing laboratory was raided by the Malaysian police in the Seberang Prai Selatan district of Malaysia. Drugs and more than 1000 fake herbal tea boxes were seized by the police from the facility. Consumers are often misled by similar product names and packaging as that of products of established brands, especially in APAC countries, such as China, India, and Thailand, and in Middle Eastern countries, such as the UAE, Saudi Arabia, and Qatar. This may hinder the sales of genuine functional tea products during the forecast period.

Customer Landscape

The market research report includes the adoption lifecycle of the market, covering from the innovator’s stage to the laggard’s stage. It focuses on adoption rates in different regions based on penetration. Furthermore, the report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their growth strategies.

Market Customer Landscape

Company Overview

Companies are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market.

• Key Offering - Arteasans Beverages LLC: The company offers functional tea products in different flavors, such as green tea, passion fruit, elderberry, black tea, blueberry, ginseng, white tea, mango, passionflower, yerba mate tea, peach, and rosemary.
• Key Offering - Associated British Foods Plc: The company offers functional tea products such as black tea, green tea, and loose-leaf tea.
• Key Offering - Barrys Tea: The company offers functional tea products such as Berrys tea gold, Berrys tea earl grey, and Berrys tea night time. Also, through this segment, the company offers loose tea, green tea, herbal tea, and more.

The functional tea market report also includes detailed analyses of the competitive landscape of the market and information about 15 market vendors, including:

• ekaterra
• Godrej and Boyce Manufacturing Co. Ltd.
• Harney and Sons Fine Teas
• Herbaty Szlachetne Sp. z o. o
• MJF Exports Pvt. Ltd.
• Numi Inc.
• ORGANIC India Pvt. Ltd.
• PHARMADUS BOTANICALS S.L
• Tata Sons Pvt. Ltd.
• The Hain Celestial Group Inc.
• The Organic Merchants
• The Republic of Tea Inc.

Qualitative and quantitative analysis of companies has been conducted to help clients understand the wider business environment as well as the strengths and weaknesses of key market players. Data is qualitatively analyzed to categorize companies as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize companies as dominant, leading, strong, tentative, and weak.

Market Segmentation

By Distribution Channel

The market share growth by the offline segment will be significant during the forecast period. Offline distribution channels play a significant role in the functional tea market, as they provide consumers with the opportunity to physically see, touch, and sample the products before making a purchase. These channels also allow for personalized customer interactions and the assistance of knowledgeable staff who can provide recommendations and answer product-related queries.

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The offline segment was valued at USD 4.90 billion in 2018. The offline segment of the global functional tea market refers to the distribution and sale of functional tea products through physical retail channels, such as brick-and-mortar stores, supermarkets, specialty tea shops, and health food stores. This segment involves consumers visiting physical locations to purchase functional teas rather than making purchases through online platforms or e-commerce websites. Hence, such factors are fuelling the growth of this segment during the forecast period.

Key Region

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North America is estimated to contribute 31% to the growth of the global market during the forecast period. Technavio’s analysts have elaborately explained the regional trends and drivers that shape the market during the forecast period. The increasing awareness about health and wellness among consumers is also increasing the demand for functional tea in North America. For instance, in 2020, a significant proportion of the total tea consumption in North America was contributed by functional tea, which included herbal tea and fruit tea. Also, the increasing adoption of functional tea in the tea bag format is positively influencing the growth of the market in the region during the forecast period.

Segment Overview

The market research report provides comprehensive data (region wise segment analysis), with forecasts and estimates in "USD Billion" for the period 2024 to 2028, as well as historical data from 2018 to 2022 for the following segments.

• Distribution Channel Outlook 
  • Offline
  • Online

• Type Outlook 
  • Herbal tea
  • Fruit tea
  • Flower tea
  • Others

• Region Outlook 
  • North America
    • The U.S.
    • Canada
  • Europe
    • The U.K.
    • Germany
    • France
    • Rest of Europe
  • APAC
    • China
    • India
  • South America
    • Chile
    • Argentina
    • Brazil
  • Middle East & Africa
    • Saudi Arabia
    • South Africa
    • Rest of the Middle East & Africa

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Market Analyst Overview

In the pursuit of wellness, functional tea emerges as a beacon of health, enriched with natural ingredients and health-promoting properties. Embracing preventive healthcare and reflecting consumer preferences for convenience and portability, it aligns with evolving lifestyle changes and fosters a culture of vitality. Bolstered by industry innovations and supported by reliable ingredient suppliers, Functional Tea comes in diverse forms - from loose leaves to bags and powder - catering to detox, weight loss, and multifunctional benefits. With a focus on functional tea types and forms, it addresses a spectrum of needs, from chronic illnesses like cancer and diabetes to stress reduction and relaxation. From immunity-boosting blends to botanical infusions, Functional Tea stands as a testament to the power of nature in nurturing well-being amidst the complexities of modern life.

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What are the Key Data Covered in this Market Research Report?

• CAGR of the market during the forecast period
• Detailed information on factors that will drive the market growth and forecasting of the market between 2023 and 2028
• Precise estimation of the size of the market size and its contribution to the parent market
• Accurate predictions about upcoming market trends and analysis and changes in consumer behavior
• Growth of the market industry across Europe, North America, APAC, South America, and Middle East and Africa
• Thorough market growth analysis of the market’s competitive landscape and detailed information about companies
• Comprehensive market analysis and report on the factors that will challenge the market research and growth of market companies

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