Specialty Tea Market Drivers, Challengers, Gen-Z & Trends to Watch in 2025

My last tea? Dragonfly’s Cape Malay—a warming, caffeine-free brew, perfect for the winter arc. Up next: an organic loose-leaf apple and cinnamon tea, brought back from an anniversary trip to Copenhagen.

The Market Movement

As my choices reflect, tea is more than a staple—it’s riding the wave of shifting consumer cravings for quality and experience.

And the numbers back it up.

Record sales in 2024 reveal tea’s enduring charm: Kallo Foods, the parent company of Clipper Teas, reported an 8% increase in turnover to £121.7 million ($155.5 million). Meanwhile, Yorkshire Tea owner Bettys & Taylors saw sales soar by 14% to £295.7 million ($375.5 million), and Twinings reached a historic high in after-tax earnings, bringing in £77 million ($97.8 million) under Associated British Foods. Tea continues to reign in British homes.

And, whilst the likes of coffee has gone through three specialty waves and counting, tea has essentially stood elegantly still all bar the increasing additions of the likes of adaptogens, accessible, organic, ceremonial grade matcha and moreish-ness of Forever Nuts from Canada’s David’s Tea. (If you sample the latter, there is absolutely no going back - It’s more than addictive.) 

Market Drivers & Key Trends

So, what are the key market drivers? And where are the challengers amidst an army of legacy brands? Enter Health consciousness, premiumisation, change of beverage preferences among Gen Z, Cold Brews and RTD teas, functional blends and the likes of Mad Tea. Here’s a look at four of the powerful trends shaping the market:

• Health Consciousness: Consumers are drawn to teas designed with functional benefits in mind—supporting immunity, relieving stress, or enhancing digestion—making tea a natural partner in health-focused lifestyles.
• Premiumisation: Rising disposable incomes and refined tastes are fuelling demand for single-origin and specialty teas. In a world where quality and distinction matter, consumers are willing to pay more for unique tea experiences, contributing to market growth.
• Cultural Shifts: Tea has transformed from a household staple into a social experience, especially among Gen Z. Café culture is driving exploration, with younger generations embracing diverse tea types, flavours, and preparation styles.
• Innovation: Formats like ready-to-drink teas and cold brews attract on-the-go consumers. Unique flavour profiles, functional blends, and convenient packaging are helping tea make inroads with new demographics.

Now while a total of 37 percent of Gen Z drink tea the most consistently compared to other generations, millennials are also knocking back the steeped stuff in more ways than one.

But where are the challengers?

It’s more than well known that the flavour of moment is guava, but when you look for loose guava tea made with, say organic, dehydrated guava fruit, you’ll find tumbleweed. Run a quick search for Kenyan specialty coffee and you’ll be hard pressed to narrow yourself down to just one bag of beans as we’re spoilt for choice. 

While 37% of Gen Z drinks tea more regularly than any other generation, millennials are also embracing tea in all forms, from cold brews to kombucha. 

But where are the challengers? As an example, Guava is the flavour of the moment, yet finding loose guava tea with dehydrated guava fruit is like searching for tumbleweeds on 5th avenue. Meanwhile, a quick search for Kenyan specialty coffee reveals a wealth of options—Jason tells me that Comēte’s Kainamui AA beans are exceptional if you're curious.

The Challenger

Meet the latest in tea brewing: tea pods. No more kettles or strainers—just pop a pod into your coffee machine, press a button, and seconds later, enjoy a perfect cup. These single-serving capsules, pre-portioned and mess-free, make brewing as easy as coffee. With flavours ranging from bold blacks to refreshing greens and herbal infusions, tea pods offer the variety of loose leaf without the hassle. Simply pick your flavour, pop it in, and sip—convenience has never tasted so good. Or has it?

Until now, tea pod options have been limited. La Capsuleria, Soul & Soul or The Republic of Tea are all compatible with your machine, but they lack the design and intention that make us reach for that next cup. Enter Mad Tea. 

Genecis Bioindustries has unveiled Mad Tea, a new brand offering 100% compostable tea pods compatible with Nespresso machines. Designed for quick, high-quality brewing, these pods let you enjoy tea in under 30 seconds without compromising flavour. Mad Tea brings a boba-inspired twist with flavours like Matcha, Chai, Jasmine Milk Tea, and Peach Oolong, all vegan and lactose-free, giving tea lovers an indulgent, café-like experience at home.

Launched on August 30, 2024, this fresh challenger has quickly attracted 1,850 Instagram followers. And the pods just aren’t just convenient—they’re crafted from PHA bioplastics that fully break down without leaving microplastics behind, reflecting Mad Tea’s commitment to sustainability. "We believe convenience shouldn’t sacrifice taste, quality, or the tea ritual," says CEO Luna Yu. Mad Tea pods are available online and featured at select W Hotels and Palisociety locations, giving travelers and home brewers alike a sustainable way to sip premium tea.

Tea in 2025: Steeping in the Unexpected

What’s brewing for tea in 2025? Look out for  RTD bone broth, Astaxanthin tea, savoury teas and maybe even the entrance of GLP-1 friendly cuppas boasting metabolism-friendly ingredients like cinnamon. Will Celestial Seasonings debut a Nespresso-compatible line? We shall wait and see. Tea may be timeless, but in 2025, a cup of chai will be anything but predictable.

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