LONDON, March 25, 2015 /PRNewswire/ --
- The purpose of the tea bag is rooted in the belief that for tea to taste its best, the leaves ought to removed from the hot water at the end of a specific brewing period. Then there is the added benefit of convenience
- a removable device means that tea can be made as easily in a mug as in a pot, without the need for a tea strainer, and that tea pots can be kept clean more easily. But the earliest examples of removable infusing devices for holding tea were not bags. Popular infusers included tea eggs and tea balls - perforated metal containers which were filled with loose leaves and immersed in boiling water, and then removed using an attached chain.
- It is generally accepted that tea bags were first developed around 1908 in the USA although some patents as early as 1903 are claimed to exist. Thomas Sullivan, a New York tea merchant, started to send samples of tea to his customers in small silken bags. Some assumed that these were supposed to be used in the same way as the metal infusers, by putting the entire bag into the pot, rather than emptying out the contents. It was thus by accident that the tea bag was born! Responding to the comments from his customers that the mesh on the silk was too fine, Sullivan developed sachets made of gauze - the first purpose-made tea bags. During the 1920s these were developed for commercial production, and the bags grew in popularity in the USA. Made first of all from gauze and later from paper, they came in two sizes, a larger bag for the pot, a smaller one for the cup. The features that we still recognise today were already in place - a string that hung over the side so the bag could be removed easily, with a decorated (branded) tag on the end.
- While the American population took to tea bags with enthusiasm the other tea drinking nations were wary of such a radical change in their tea-making methods.
- The material shortages of World War Two also stalled the mass adoption of tea bags and it was not until the 1950s that they took off in Europe. The 1950s were a time when all manner of household gadgets were being promoted as eliminating tedious household chores, and in keeping with this tea bags gained popularity on the grounds that they removed the need to empty out the used tea leaves from the tea pot. The convenience factor was often more important than the desire to control the length of infusion time, hence the appearance of tea bags that did not have strings attached.
- As Western culture spread further afield at the end of World War II with the Allied armies to Asia it took the tea bag with it to heart of the tea drinking world – China (and Taiwan).
- The retail tea market in Taiwan is currently composed of three main segments (see table): Tea Bags, Loose Tea and Tea Powder. This makes it significantly different frommost other developed tea markets where Tea Bags dominate.
- Tea Powder, with milk tea comprising the bulk (78%) of the sector, is a significant component of the market particularly, in volume terms where it accounts for 56%.
- One inference that can be drawn from the relatively low of penetration of tea bags compared to loose tea in the market is that the Taiwan tea consumer is more of a connoisseur than is found in other markets. This would be consistent with its heritage as a tea producing and exporting country throughout most of the 20th century.
- Looking at the generally accepted model of a product life cycle it would be reasonable to conclude that the tea bag market in Taiwan has progressed past the launch and early adopter phases and is currently still in a period of growth. It has not yet reached maturity which precedes decline. However, it will require more marketing stimulus to drive further change from loose tea to tea bags and we would speculate that the large share of the market held by Tea Powder was in some part responsible for this as it offers many of the benefits of convenience that are the prerogative of tea bags in other markets.
- In terms of price Tea Bags command a premium over Loose Tea. Chi nese Tea is more expensive than Black Tea and Tea Powder, particularly Milk Tea Powder, is substantially cheaper than all other teas except Loose Black Tea.
- Tea bags arrived in Taiwan around 1950 when they were introduced by American soldiers stationed there who made (or had them made for) them in the image of the bags they were used to at home. These bags were hand made and the quality was variable. There was little or no knowledge of tea bags among the general Taiwanese population.
- The first machine made tea bags were manufactured and distributed in 1968 by the Kennan Tea Company and the Taiwan Tea Company. They were encouraged to move into the manufacture of tea bags by the Government which was increasingly concerned that Taiwan was losing its tea export markets because it was not producing tea in the format the developed world wanted – tea bags.
- Kennan was a private company and Taiwan Tea was a Government enterprise. Kennan manufactured for private domestic consumption and export whilst the Taiwan Tea Co. made tea bags for the railways, government offices, schools etc.
- There was resistance to change in the initial stages of tea bag development in Taiwan. First there was the expected cultural resistance to change and in common with developed markets there was scepticism over the quality of tea put into the tea bags. In 1976, again as a result of Government action, there was a switch to putting better quality tea into the tea bags using whole cut leaf rather than dust or off cuts from the loose leaf production. This resulted in an improvement in the image of the quality of the tea bags at home and also in their export markets.
- In 1979 the next significant change took place in the market with the entry of new major tea bag makers.
- The most recent major development in the market took place in 1993 with the introduction of another quality initiative, the introduction of bigger, different shaped bags to allow greater diffusion of the flavour in the tea. More recently different flavours and herbal teas with health benefits have also been added to the product line up to continue development of the market.
- Many of these initiatives are steps that have also been seen in other markets e.g. UK which have developed more quickly that the Taiwan market. At the present time we estimate that the split in the Taiwan retail market is around 46% Bags to 54% Loose Tea whereas in HK we estimate it at 80:20 and in the UK (where Tea Bags have been established since 1953) 95:5.
The factors that drove the successful adoption of Tea Bags as a regular consumption habit can be classified under several headings and some overlap. Similarly while some factors will drive adoption and trial those same factors can be barriers to other segments of consumers. e.g. Young people will want to try new products and adopt them whilst older more conservative individuals will resist cultural changes viewing them as invasions from Western society.
The convenience of the product and usage format met the new demands generated by a dynamic growing economy. New packaging formats in terms of large and small bags for different serving occasions and different shapes to "get more out of the product". New types of tea to increase drinking occasions e.g. cold water tea bags for hot weather.
Introduction of inert bag materials such as nylon (Japanese idea) to reduce contamination of the taste of the tea by the bag material.
As the Tea Bag market entered the Growth Phase economies of scale and increasing competition from new market entrants drove the prices down making the product more affordable to a wider range of consumers
The rapid growth of the economy in the second half of the 20th century when Taiwan was one of the first "Asian Tigers" provided an increased number of consumption opportunities. This also caused a change in lifestyles, as Taiwan industrialised factories, shops and offices grew in size and structure providing more opportunities for consumption. Similarly the increasing affluence led to greater use of outlets in HORECA and Transport (trains, boats and airlines) where tea bags were a better commercial option than loose tea. Growing affluence (increasing per capita GDP) meant that the price premium between tea bags and loose tea was more affordable to the average consumer. (As Per Capita Income increases the amount of disposable income available for basic purchases like food and beverages becomes a significantly lower proportion and thus purchases in this area trigger less resistance even when there is a price differential).
The emergence and development of modern trade in the form of supermarket and convenience store chains from the mid 1970's led to greater distribution and marketing promotions on packaged items such as tea bags which stimulated market growth.
Initial trial of new products from the West (tea bags) by early adopters followed by increasing acceptance as the product became more widely accepted. Tastes began to broaden encouraging the trial of different beverages and preparation and presentation styles. Increasing customer acceptance of tea bags along with the increasing internationalisation of society, the economy and influence and knowledge of foreign culture. Increasing concern for health in the last 20 years has led to an increase in the consumption of Green Tea which has been imbued with healthy connotations from the anti-oxidants it contains to mop up free radicals in the body and thus prevent cancer.
Government policy stimulated the adoption and consumption of tea bags by producing them in a government owned enterprise (The Taiwan Tea Company) and mandating their consumption through direct supply to government offices and enterprises, schools, railways etc. The reason for the action by the government was to try and retain Taiwan's position as a leading tea producer, manufacturer and exporter. The demand in the developed world, the key target market for the exports, had shifted to tea bags rather than loose tea and Taiwan had to adapt it's product offering if it was to retain market share.
Awareness of tea bags in the launch and growth phase was driven by the manufacturing companies stimulating demand through advertising, in store promotions, sampling etc. Improved the image of tea bags by countering the perceived problems with quality by launching whole cut leaves in the bags instead of tea dust (the waste tea from the making of loose leaf tea) and by increasing the size and shape of the bags to improve the brewing capability of the tea in the bag. Increased the range of teas available in tea bag format to ensure that all sectors of the tea market were enfranchised. Tea bags became a beverage option at new "trendy" fast food restaurants such as McDonald's.
Improving the packaging by introducing foil sachets to keep out moisture and inserting inert gas (nitrogen) to keep the product fresh. The Barriers to growth can also be categorized under the same headings as the Drivers. Significantly there are far fewer Barriers but given the relatively low proportion of the market taken by tea bags in Taiwan compared to other developed markets they are obviously significant.
Quality of tea in tea bags was initially perceived as being of low quality. This is a common phenomenon as in the West the tea used in tea bags has an industry name - it is called fannings or "dust" and is the waste product produced from the sorting of higher quality loose leaf tea. It is commonly held among tea aficionados that this method provides an inferior taste and experience. The paper used for the bag can also be tasted by many, which can detract from the tea's flavor. Because fannings and dust are a lower quality of the tea to begin with, the tea found in tea bags is less sensitive when it comes to brewing time and temperature. These concerns, or very similar opinions were also evident in Taiwan during the launch period of tea bags but were countered through putting whole properly cut leaves into the bags.
Additional reasons why bag tea is considered less well-flavored include:
- Dried tea loses its flavor quickly on exposure to air. Most bag teas (although not all) contain leaves broken into small pieces; the high surface area to volume ratio of the leaves in tea bags exposes them to more air, and therefore causes them to go stale faster. Loose tea leaves are likely to be in larger pieces, or to be entirely intact. This problem has been solved in Taiwan by the use of foil pouches filled with nitrogen to preserve freshness.
- The small size of the bag does not allow leaves to diffuse and steep properly. This problem has been solved by increasing the size of the tea bag to allow the tea to diffuse more "naturally".
- Breaking up the leaves for bags extracts flavored oils.
There was no evidence of this reason emerging in the interviews we conducted.
Initially tea bags were relatively expensive but the relative differential has declined and the situation today the retail price differential per kg is circa 7.5%. To mitigate or remove this barrier it will need some action to demonstrate the higher economic efficiency of tea bags over loose tea. This should not be too big a hurdle given what has happened in many other markets. Demonstrating the economic efficiency over Tea Powder may prove a bigger hurdle.
Only of the economy goes into severe recession and Per Capita GDP declines substantially would the price differential between tea bags and loose tea become an issue.
The tea market in Taiwan is quite fragmented and a substantial volume of tea is still sold through specialist outlets (i.e. tea shops). These are less easy to infiltrate with promotions for tea bags and thus will continue to impede the development of the tea bag market.
Cultural factors are probably the greatest detriment to the growth of the tea bag market. Taiwan has a culture of tea drinking and the traditional way has survived very well. The culture of tea drinking initially limited the potential usage occasions as tea bags were viewed as an inferior product and it would not be polite to serve guests an inferior product.
- This view has probably been largely overcome by the development and improvement in the quality of tea bags.
Tea bags were seen as a Western consumption format and thus alien to Taiwan.
- Whilst this view will still be held by traditionalist and conser vative segments of the population the increasing spread of globalisation will undoubtedly have eroded its impact to a low level today. Similarly there will be some segments which resist change and have a habit of only or primarily consuming loose tea but these are likely to be relatively few and declining in importance.
There was no evidence of any regulatory or Government initiatives which would be a barrier to the development of the tea bag market.
The only marketing barrier to the trial and adoption of tea bags was low awareness in the early stages and this has been countered through the product life cycle by the advertising and promotional activities of the major manufacturers, marketers and retailers.
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