Tea Consumption is on the Rise as a Younger Demographic Looks for Functionality

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Sep 23, 2020, 10:58 ET

NEW YORK, Sept. 23, 2020 /PRNewswire/ -- The global beverage market can be segmented into non-alcoholic and alcoholic categories. The non-alcoholic beverage market includes products such as soft drinks (soda), fruit juices, syrup, caffeinated drinks, sports drinks, coffee, and tea. Meanwhile, the alcoholic beverage market includes categories such as brewing, distilled spirits, and wines. By region, the Asia-Pacific region reigns supreme; according to a report by PipeCandy, the high consumption in Indian and Chinese markets drive growth for the non-alcoholic beverage industry in the APAC region. Previously, the carbonated soft drinks (CSD) segment was the main driver for revenue in this region. But, in recent times the consumption of CSD has declined as young consumers are preferring healthier alternatives. In the U.S, growth in the segment is also driven by changing trends as subcategories such as are fresh juices, enhanced water, RTD coffee and tea, as well as probiotic drinks are becoming more popular. Overall, the global non-alcoholic beverages market is projected to grow with a significant growth rate of 4.61% from 2019 to 2024 and reach a market value of USD 1073.9 Billion by the end of 2024, according to data by Market Research future. Urban Tea, Inc. (NASDAQ: MYT), DAVIDsTEA Inc. (NASDAQ: DTEA), Starbucks Corporation (NASDAQ: SBUX), Dunkin' Brands Group, Inc. (NASDAQ: DNKN), The Coca-Cola Company (NYSE: KO)

The broader Restaurant, Food & Beverage Market are also influenced by a continuously tastes and trends. For example, commercial restaurants and cafes have emerged as convenient locations for teenagers, families, and young professionals to socialize and relax. Moreover, development of e-commerce/online platforms and on-the-go food services coupled with innovations in packaging, introduction of low-fat beverages, gluten free products, etc, are also contributing significantly to the growth of the market. Currently, with the pandemic still hurting major segments of the economy, it is the e-commerce segment of the market which has emerged as an alternative. The global food and beverage e-commerce market is expected to grow from $14.9 billion in 2019 to about $22.4 billion in 2020, a report by Research and Markets indicates.

Urban Tea, Inc. (NASDAQ: MYT) just announced breaking news this morning that, "it has entered into a share purchase agreement (the "Agreement"), pursuant to which the Company agreed to pay $400,000 in cash to acquire 80% of the equity interest in Guokui Management Inc. ("Guokui"). Guokui is incorporated under the laws of New York State and has been operating CROP CIRCLE, a casual street food restaurant in New York City, since August 2020. The Agreement also includes details of how the two parties may collaborate in the future.

Upon closing of the transaction contemplated by the Agreement, MYT will own the registered trademark of "CROP CIRCLE" in the United States and operate the Crop Circle restaurant, which features guokui, an oval shaped baked flatbread with various filling selections, a popular street snack originating from northern China's Shaanxi Province. CROP CIRCLE also provides other meals combining classic and modern styles. MYT currently owns the trademark "MENO" and operates MENO, a modern tea and coffee shop with a small curated food menu. The ownership of these two restaurants marks the implementation of MYT's initial brand strategy in the United States. Going forward, the Company plans to deepen its roots in the US market based on the restaurants' operating performances.

Ms. Kan Lu, CFO of Urban Tea, commented: "The signing of the Agreement enables the Company to better navigate the casual food and drink market in NYC. Through building brand awareness and launching new restaurants, the partnership with Guokui shareholders will take our expansion plan on an exciting journey. We remain committed to our common core values of providing culturally inspired food that is loved by customers in America. With Guokui's management team, we look forward to opening more restaurants and bringing traditional Chinese cuisine to more guests across the U.S."

About Urban Tea, Inc. - Urban Tea, Inc. is an emerging specialty tea product distributer and retailer headquartered in Changsha City, Hunan Province, China. Through its wholly owned subsidiary, Mingyuntang (Shanghai) Tea Limited which controls Hunan Ming Yun Tang Brand Management Co., Ltd. and Hunan 39 Pu Tea Co., Ltd., the Company currently market a wide range of trendy tea drinks, light meals, and pastries targeting China's new urban generation in Hunan province. Our products are focused on not only their taste but also their aesthetic presentation and health benefits. Our products are currently being offered via our own stores. For more information, please visit: http://ir.h-n-myt.com/investor."

DAVIDsTEA Inc. (NASDAQ: DTEA) reported this week its second quarter results for the period ended August 1st, 2020. All dollar amounts are expressed in Canadian dollars. "Second quarter results reflect the solid performance of our online retailing and wholesale distribution activities as we accelerate our transformation towards a digital first strategy. We are very pleased by the momentum experienced in the first quarter carrying over to the second quarter, resulting in sequential sales growth of 35%. Consumers are responding positively to the online experience we offer and continue to enhance. We are confident that we are well-positioned to execute our business plan and to sustain a return to profitability once the ongoing CCAA process and our transformation is complete," said Frank Zitella, COO and CFO.

Starbucks Corporation (NASDAQ: SBUX) announced earlier in July financial results for its 13-week fiscal third quarter ended June 28th, 2020. GAAP results in fiscal 2020 and fiscal 2019 include items that are excluded from non-GAAP results. Please refer to the reconciliation of GAAP measures to non-GAAP measures at the end of this release for more information. "Since the beginning of the COVID-19 outbreak in January, we have taken a principled approach to navigate the crisis, true to our mission and values. Every step of the way, we have thoughtfully addressed the needs of Starbucks stakeholders and are particularly proud of the industry-leading investments we have made to support our partners while creating a safe, familiar and convenient experience for our customers. Starbucks partners have risen to the occasion, and our near-term focus is to recover sales safely and responsibly by offering our customers the comfort and care that differentiate the Starbucks Experience," said Kevin Johnson, president and CEO.

Dunkin' Brands Group, Inc. (NASDAQ: DNKN) reported this week on the national coffee day. "For so many Americans, Dunkin' equals coffee, and coffee equals Dunkin'… there is simply no other coffee choice. We're declaring National Coffee Day as National Dunkin' Day to highlight how much our coffee means to people, and create an opportunity to raise a cup to everyone across the entire country who understands and appreciates how important that daily cup of Dunkin' can be to keep running," said Drayton Martin, Vice President, Brand Stewardship at Dunkin'. The brand will also be delivering the exclusive care packages to select fans who do not currently live close enough to a Dunkin' store to celebrate National Dunkin' Day. The company has more than 13,100 restaurants in 41 countries worldwide.

The Coca-Cola Company (NYSE: KO) reported back in August strategic steps to reorganize and better enable the Coca-Cola system to pursue its Beverages for Life strategy, with a portfolio of drinks that are positioned to capture growth in a fast-changing marketplace. Innovation, marketing efficiency and effectiveness are top priorities for the company. The Coca-Cola Company is conducting a portfolio rationalization process that will lead to a tailored collection of global, regional and local brands with the potential for greater growth. To drive these initiatives and support the operating units, the company is reinforcing and deepening its leadership in five global categories with the strongest consumer opportunities: Coca-Cola, Sparkling Flavors, Hydration, Sports, Coffee and Tea, Nutrition, Juice, Milk and Plant and Emerging Categories.

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