Iced teas, cold-brewed teas, and ready-to-drink teas are undergoing a strategic transformation, evolving beyond their traditional roles as refreshment and caffeine delivery to serve a broader array of health and wellness goals. | Summer 2025
The idea of “food as medicine” has made transparency, natural sourcing, and function-driven formulation core expectations. Iced tea drinkers are actively seeking fewer ingredients, no synthetics, and recognizable superfoods.
Key Cold Tea Trends
- Teas are increasingly embracing functionality beyond just energy and alertness, with 45% of shoppers indicating a desire for immune-supporting varieties. A Datassential insight report found that 43% of US shoppers seek antioxidants in their tea refreshers, 32% seek probiotics, and 6% seek B vitamins.
- Younger consumers are opting for flavorful and functional tea refreshers and tea lattes instead of coffee to reduce their caffeine intake later in the day. Matcha lattes account for a significant portion of matcha’s five-year growth spurt, driven by convenience and the health benefits associated with this Japanese tea. A cup of matcha has about 70mg of caffeine, which is double that of a brewed cup of tea and half the 100-140mg found in a cup of coffee.
- An increasingly conscientious consumer base associates ethical production with product quality. Although the price premium for sustainability has decreased in dollar terms, iced tea brands with strong social and environmental credentials continue to command higher trust and loyalty, leading to repeat purchase behavior and non-price-based competitive advantages.
- Consumers—particularly Gen Z and younger Millennials—expect brands to show measurable social impact. This encompasses support for smallholder farmers, living wages, community reinvestment, and carbon offset initiatives. Marketing emphasizes its support for sustainable farming practices and water stewardship in its sourcing regions.
Inherently good
Naturally functional teas, including green, black, and oolong, are prized for their hydration benefits and high concentration of polyphenols, catechins, and EGCGs.
These compounds help combat oxidative stress by neutralizing free radicals in the body, thereby supporting cellular health and potentially reducing the risk of chronic diseases such as heart disease and cancer. Catechins, a type of flavonoid polyphenol, exhibit anti-inflammatory, antiviral, and antimicrobial properties, promoting immune function and metabolic regulation. Among them, EGCG is the most biologically active and well-researched, known for enhancing fat oxidation, improving brain function, and supporting cardiovascular health.
Retailers can safely inform customers that regular consumption of tea rich in antioxidants may also contribute to improved gut health, healthy aging, and reduced blood pressure when combined with a balanced lifestyle.
Botanical Benefits
Formulation innovation is accelerating. Ingredients like echinacea, elderberry, matcha, turmeric, ginger, and adaptogenic herbs are being integrated to support immunity and reduce inflammation.
Teavana features botanical blends in recyclable PET bottles, positioned around wellness and ethical sourcing narratives. Craft brands now highlight the inherent polyphenol content of tea, enhanced with botanicals, and fermented blends to deliver added functional benefits.
Product labeling and claims are becoming more specific and science-driven, with terms like “antioxidant-rich,” “probiotic-infused,” and “vitamin-enhanced” now featured prominently on the front of packaging rather than in fine print.
This evolution aligns with a broader consumer movement toward preventive health, where beverages are expected to do more than hydrate or caffeinate.
Cold-brewed benefits
Cold-brewed tea offers a smoother, more refined flavor profile compared to hot-brewed tea, primarily due to the gentle extraction process that occurs over several hours in cold water. This slower steeping method minimizes the release of bitter tannins and astringent compounds, resulting in a naturally sweeter, cleaner taste with well-rounded notes. Cold brewing enhances floral, fruity, and umami characteristics in high-quality teas, allowing delicate flavors to shine without the overpowering edge that heat can sometimes bring. The result is a crisp, refreshing tea with low bitterness and a silky mouthfeel—ideal for showcasing premium loose-leaf teas and nuanced blends. This makes cold brew particularly appealing for unsweetened or lightly flavored RTD (ready-to-drink) formats, where ingredient transparency and natural taste are central to consumer preference.
In addition to functional and taste benefits, cold-brewed tea is increasingly positioned as a craft beverage, similar to specialty coffee. Consumers are responding to an emphasis on terroir, leaf grade, and minimal processing. Single-origin teas are popular, often marketed as transparently sourced and direct-trade products by brands like Nepal Tea Collective.
Just Ice Tea, co-founded by Honest Tea’s Seth Goldman, explicitly markets its products as Fair Trade Certified, organic, and climate-friendly, with complete transparency on sourcing and production ethics. The brand is the successor to Honest Tea, founded by Goldman in 1998. Just Ice Tea is now available in 12,000 outlets and expanding at a triple-digit rate. The brand highlights its founding mission post-Honest Tea and shares the regenerative agricultural practices of its supply partners. Sales were $23 million during its first calendar year and are projected to reach $30 million in 2025.
RTD overview
Market research firm Statista forecasts that the at-home ready-to-drink (RTD) tea market will reach $75 billion. Revenue from restaurants and bars adds $39 billion, bringing the total to $114 billion in 2025. Volume is projected to reach 27.6 billion liters globally, with an average volume of 3.5 liters per person.
China accounts for $26 billion of the at-home total. Growth is driven by local government policies, beginning in 2018, with the Healthy China 2030 strategy aimed at reducing blood sugar, blood pressure, and cholesterol nationwide. Weight management is the theme in 2025.
Asia and North America dominate the global ready-to-drink tea market, accounting for 46% and 26% of 2023 revenue, respectively. European and North American suppliers are experiencing a 6% sales growth, according to Cognitive Market Research. However, the Asia-Pacific region remains the fastest-growing market, with an 8.5% growth rate in 2022-23.
Refrigerated ready-to-drink tea
In the RTD iced tea category, reduced sugar, recyclable packaging, and carbon-neutral production are now more prevalent across mainstream and premium brands.
SPINS reports that revenue from refrigerated and cold-brewed tea and coffee grew to $1.3 billion in natural and specialty grocers over the 12 months ending in November 2024. Unit sales in the sector increased by 4.6%, and overall sales rose by 6.5% last year.
Boba tea brands are expanding into grocery. Popular in bubble tea shops, several brands now offer the tea in bottles and cans. Boba tea chain Bubbleology sells a kit to make boba at home, with flavor sachets and a wide straw.
Sustainability price gap
US consumers paid a 40% premium for sustainably produced FMCG products in 2018, according to Circana, a Chicago-based market intelligence firm. By 2024, the gap had declined to 27% between regular and sustainable products with claims such as Fair Trade, Sustainably Sourced, USDA Organic, non-GMO, Rainforest Alliance, or B Corp on their packaging.
Beverage Daily writes that these highly desirable claims can be found on nearly 25% of SKUs, with the highest incidence in yogurt, natural cheese, milk, fresh bread, coffee, and soup, according to Circana. In coffee, “Fair Trade” and “Sustainably Sourced” had the highest profit potential.
US retailers are underserving high-potential markets for sustainable products by stocking more eco-friendly options in areas dominated by liberal, affluent shoppers, according to a new study published in the Journal of Marketing.
“Retailers may be missing a trick when making stocking decisions – by targeting a narrow consumer group based on pre-existing biases around race, income and political beliefs rather than profit-driven economics, the study found,” writes Beverage Daily. “This rationale could be holding back the entire US category, which is still much smaller than in the UK (37% unit share of the market) and Germany (42% market share).
As sustainability claims become more standardized, especially among large beverage manufacturers, the perceived value-add is diminishing, compressing the price differential.
Sustainable practices are now more normalized in the RTD iced tea category; simply being organic or Fair Trade Certified is no longer a unique selling proposition. Instead, brands are evolving their messaging to emphasize deeper value narratives that resonate with discerning and values-driven consumers.
Bollinger, B., Kronthal-Sacco, R., & Zhu, L. EXPRESS: Sustainable Product Profit Potential and Availability. Journal of Marketing. https://doi.org/10.1177/00222429251343823
Jiang Z, Jiang W. Health Education in the Healthy China Initiative 2019-2030. China CDC Wkly. 2021 Jan 22;3(4):78-80. doi: 10.46234/ccdcw2021.018. PMID: 34595007; PMCID: PMC8393088.
