Dairy processors should be tempted to formulate with tea, and not just iced tea beverages, but other tea-infused dairy foods including cultured products, frozen treats and milk-based drinks. After all, when something catches on with mainstream America, consumers are typically willing to explore the flavor concept in other products—both food and non-food (think pomegranate.)

There’s no doubt that tea drinking is on a roll in the United States. There are about 2,000 tea houses nationwide, up from 200 just 10 years ago. And tea sales reached $6.2 billion in 2005, more than quadruple their level in the early 1990s, according to the Tea Association of the USA, New York. Even mega-coffee chain Starbucks sells tea—both hot and cold—and lots of it. One big reason: Recent research shows that tea, particularly green and white teas, is loaded with antioxidants that can help ward off ailments such as heart disease and cancer.

All sorts of product developers are making the most of America’s fascination with this ancient beverage, from candle makers to bath and body cosmetic companies. In the food category, innovation is starting to pick up. For example, Stir Fry Tea Oil from The Republic of Tea, Novato, Calif., is cold-pressed, extra-virgin oil made from tea plants in China.

“Tea has crossed all categories as an ingredient,” says Susan Brady, sales manager, Templar Foods Products, New Providence, N.J. “Dairies can add value to current products by fortifying them with tea, either as a health and wellness ingredient or for flavor innovation.

“Soluble tea ingredients are easy and efficient for dairies to use,” adds Brady. “Adding tea to yogurt has been popular in Europe for some time. We are starting to see a great deal of interest in adding tea to yogurts and yogurt drinks in the States.”

A variety of non-dairy tea beverages are available including some brands of chai, as well as green tea soy milk from Kikkoman International Inc., San Francisco.

Dairies could score twice with Chai, a beverage featuring milk and tea. Stonyfield Farm turns it into an ice cream flavor.

“Tea, most notably green tea, is already in U.S. ice cream; however, dairies are yet to embrace chai, a milk, tea and spice beverage,” adds Brady. “Numerous beverage marketers are selling ready-to-drink (RTD) chai, made with either milk or milk substitute, and are quite successful selling these drinks in convenient stores and other on-the-go venues. Dairies could sell more milk if they started selling chai in their single-serve bottles.”

Of course, iced tea has a long history with dairies, and more are getting involved as tea’s popularity increases. For example, Milo’s Tea Co., Bessemer, Ala., opened its doors in April 1989. Founder and owner Milo Carlton had quite the reputation in his family’s restaurant for his freshly brewed sweet iced tea, which was his motivation to manufacture and distribute the tea in gallon jugs for sales through grocery stores in the greater Birmingham, Ala., area.

Today, with the help of some dairies, Milo’s is more than just sweet tea in gallon jugs in Alabama. There are unsweetened and sugar-free varieties, in all sizes, including the very popular single-serve 16-oz bottle. And distribution is throughout most of the northeast.

“We were using a direct-store-delivery system to serve most of Alabama, but were interested in growing our business outside of our feasible distribution range,” says Jay Evers, v.p. and COO. “We believed dairies were a logical fit for our all-natural products.”

Milo’s does not use any preservatives or additives in its beverages (except for the sugar-free variety, which is sweetened with sucralose.) “Additionally, we brew from leaf—not concentrates or essence,” says Evers. “We were not comfortable handing our ‘child’ off to anyone who wasn’t versed in handling time-sensitive products, which is what dairies know very well.”

In 2003, Milo’s teamed up with Luvel Dairy Products Inc., Kosciusko, Miss., and Barber’s Dairy, Birmingham, Ala., to distribute the tea. A year later, Milo’s joined forces with Purity Dairy out of Nashville, Tenn. This year Milo’s added Mayfield Dairy, Athens, Tenn., and Brown’s Dairy, New Orleans, La., to its partnership.

“Dairies are well suited to manufacture high-quality iced tea, as they have the processing equipment, the packaging and the refrigerated distribution systems,” concludes Evers.

Non-dairies recognize the opportunity in tea. “The premium and superpremium segments of the RTD iced tea market are the fastest growing in the category,” says Gloria Garrett, v.p. of the hydration business unit at Coca-Cola North America, Atlanta. “The category is ripe for a new premium brand with classic iced tea taste.”

Dairies: get on board. This is an opportunity you do not want to miss.

Sidebar: Beyond Iced: Frozen

Tea is getting frozen by some marketers. For example, Stonyfield Farm uses real Honest Tea® in its Vanilla Chai ice cream. Turkey Hill blends green tea with mango to make a frozen, scoopable smoothie.

Sidebar: Iced Tea Comes in Many Forms

Dairies are well suited to manufacture iced tea beverages, and many do. Soft drink manufacturers are also hopping on the iced tea bandwagon.

Most recently, Coca-Cola North America, Atlanta, rolled out Gold Peak™, a premium ready-to-drink (RTD) iced tea. With its fresh homemade taste, Gold Peak comes in five flavors: sweetened, unsweetened, lemon, diet and green tea. Gold Peak’s unique 16.9-oz carafe-like, single-serve glass bottle bears a label featuring a tranquil lakeside scene.

Juice marketer Apple & Eve LLC, Port Washington, N.Y., has a popular half lemonade and half iced tea drink; while dairy HP Hood LLC, is very successful with its sweetened iced tea in pints.

Johanna Farms Inc., Flemington, N.J., uses aseptic technology to market Ssips® iced tea in single-serve drink boxes. The company also sells refrigerated, resealable gable-top cartons.

Conestoga, Pa.-based Turkey Hill Dairy is quite the innovator when it comes to iced tea flavor and ingredient combinations. A recent introduction is Blueberry Oolong.

Snapple® has expanded beyond its traditional RTD flavored black teas to get involved in the health and wellness trend. From Cadbury Schweppes Americas Beverages, Plano, Texas, comes Snapple Green and Snapple Whites Teas.

Who’s Your Daddy Inc., San Diego, introduces a green tea-based energy drink under the brand: Who’s Your Daddy Green Tea King of Energy™ Drink.