Evaluating the Potential of Sharp’s Tea Maker in Asia Pacific
Years after rising to prominence, the global obsession with matcha – or powdered green tea – shows no sign of abating. Trendy matcha cafés continue cropping up across North America, Western Europe and Asia, inspiring a wave of new culinary creations. The release of Sharp Corp’s Ocha-presso in April 2014 (marketed as the Sharp Tea-Ceré in North America) seemed perfectly poised to ride on the coat-tails of the green tea revolution. However, two years after its release, the Ocha-presso is only available in Japan and North America, and remains virtually unknown outside of its home market. Despite the surge of interest in matcha, Sharp may still be hard pressed to introduce its innovative product to new markets in Asia Pacific.
The Ocha-presso is part of Sharp’s line of appliances targeted at health-conscious consumers. As its name suggests, the Ocha-presso draws inspiration from automatic espresso machines and cleverly subverts the trend of bean-to-cup coffees by offering a leaf-to-cup parallel for the tea market. Sharp’s tea maker first reduces whole tea leaves to a fine powder with a ceramic mill, and the resulting powder can then be transferred to the brewer to make a cup of tea or a latte (if milk is added).
Success in Japan was immediate. The Ocha-presso sold out within days and the company revised monthly production figures from 4,000 units to 5,000 units. To date, Sharp has reported cumulative domestic sales of more than 150,000 units since its launch. The tea maker was subsequently introduced to North America in July 2015 – a logical choice given the unprecedented growth of tea in the region and the receptiveness to powdered green tea. North America is expected to post the highest 2015-2020 CAGR for off-trade tea in volume terms, followed by Latin America and then Asia Pacific.
Global Off-trade Volume Sales of Tea by Region: 2015
Source: Euromonitor International
Identifying new markets in Asia Pacific
Asia Pacific is by far the world’s largest retail market for tea, and the third most promising market in terms of forecast volume growth, making it an attractive target for geographical expansion. Within the Asia Pacific region, Malaysia, Hong Kong, Taiwan, Vietnam, India, Indonesia and China stand out as predominantly tea-drinking, rather than coffee-drinking, markets. Of these markets, the Ocha-presso is likely to be a poor fit for both Malaysia and India, as green tea accounts for less than 5%of off-trade tea consumed in 2015.
Off-trade Sales of Coffee and Tea, Total Cups Volume in 2015
Source: Euromonitor International
While the per capita consumption of off-trade tea is highest in the emerging markets of Indonesia, China and Vietnam, low purchasing power is expected to hinder sales of premium appliances in these developing markets, with the exception of China. The retail price of the Ocha-presso is comparable to entry-level espresso machines, a category predicted to record double-digit growth in China over the forecast period. In contrast, volume sales of espresso machines in Indonesia and Vietnam trail those of Hong Kong and Taiwan, indicating that a similarly-priced machine may struggle in these developing markets.
Retail Volume Sales of Espresso Machines in 2015
Source: Euromonitor International
It is China, Taiwan and Hong Kong, therefore, which hold the greatest potential for the Ocha-presso. For one, a vibrant tea culture endures in these markets. Brewing and drinking tea is still very much part of life, and high-quality loose leaf teas are common. These factors are crucial to the success of Sharp’s Ocha-presso because only the highest-quality tea leaves are picked for processing into powdered green tea. The Ocha-presso is, by nature, designed to be used with high-quality tea leaves. Premium tea leaves are easily available in the tea-producing countries of China and Taiwan, and tea-drinking habits are still alive and well in these markets, laying the groundwork for Sharp’s tea maker.
While the demand for tea may be heavily driven by oolong and pu-erh tea in these markets, perhaps it is here that the Ocha-presso has a chance to shine. The novelty of powdered green tea has long worn off for consumers in Asia Pacific, but the Ocha-presso can be used with any type of tea, including the oolong and pu-erh teas favoured by Chinese consumers. In the same way that matcha became a fad in North America and Western Europe, the Ocha-presso could breathe new life into Chinese teas by providing consumers with a novel way to appreciate teas that they have always known and enjoyed.
Lessons from the coffee industry
To broaden its customer base, Sharp could go a step further in taking a leaf out of its predecessor’s book – the espresso machine. Espresso machines have been growing steadily across all markets in Asia Pacific, buoyed by a burgeoning café culture and increasingly sophisticated consumer tastes. The allure of automatic espresso machines lies in the promise of a café-style cup of coffee at home. Manufacturers of espresso machines and pod coffee machines have already set the gold standard in catering to consumers chasing the perfect cup of gourmet coffee. However, in its attempt to position itself to the health conscious, the Ocha-presso has perhaps placed too much emphasis on the health benefits of powdered green tea, and too little on the “gourmet” factor. Matcha lattes are already all the rage at upscale speciality cafés, yet Sharp fails to capitalise on the trend. Instead, Sharp showcases its tea maker in the same way that slow juicer companies market green vegetable juices – packed with nutrition, but with little in the way of taste.
Along the same lines, Sharp could benefit from aggressively targeting young millennial consumers. In its domestic market, active seniors are a key target market for the Ocha-presso, with a significant proportion of buyers in their 50s and 60s. However, in most markets, the consumers driving the matcha trend are the young and trend-savvy millennial consumers, who are already invested in living active and healthy lifestyles. Nevertheless, it is precisely these millennial consumers who may be Sharp’s toughest customers. The explosive popularity of matcha could be a double-edged sword as ready-made tins of powdered green tea can now be found in many grocery stores, where, before, it was only available through health food stores or online retailers. As the demand for powdered green tea rises, it is only a matter of time before ready-to-drink matcha beverages become available to consumers in Asia Pacific as well.
Despite its recent fortunes, Sharp Corp has evidently not lost its edge as an innovator in the consumer appliances industry. The Ocha-presso is truly the first of its kind – a rare occurrence in an industry where innovation comes slowly and incrementally. But with convenience and on-the-go attributes becoming increasingly important to the perpetually busy yet health-conscious consumer, Sharp not only needs to convince consumers that they should be drinking matcha, but that they should buy a machine that makes it for them.