According to a report by Tetley out-of-home sales of tea have more than doubled from 1.6 per cent to 3.6 per cent in 2016, while the speciality tea category has grown 2.8 per cent.
At the same time sales of coffee have slumped from 6.7 per cent growth to 1.2 per cent.
The out-of-home tea market is now worth £3.4bn, with cafes (£790m) and workplaces (£810m) seeing the largest profits.
Independent restaurants (£140m) sell more tea than fast food outlets (£122m) and chain restaurants (£72m), while hotels flagged behind other channels with just £63m worth of sales.
However, pubs have reported a strong growth with sales rising 8.8 per cent to £76m.
Opportunity to boost sales
Tetley said that the success of Starbucks’ Teavana brand showed businesses that consumers were willing to pay more for tea sold as a premium product.
Teavana made its debut in the UK this year, with new drinks such as the Green Tea Latte retailing for £3.00.
In contrast a ‘normal’ full leaf tea at the chain costs just £1.80, while a Vanilla Latte coffee sells for £3.55.
Tetley also suggested that operators exploited a decline in cold drink sales by offering a range of healthy tea blends as an alternative.
Graeme Karavis, managing director UK&I at Tata Global Beverages, said: “Whilst the coffee sector has changed beyond recognition since the explosion of café culture some fifteen years ago, with seemingly every nook and cranny of the high street packed with popular café chains and artisan coffee offerings, the once loved ‘tea house’ has all but disappeared from popular culture.
“However, despite this seismic shift, the purchase of tea out of home is rising in the UK, with nearly 20 billion cups of tea served each year.”
Tea is the most popular drink in the UK, with 29 per cent of consumers in Tetley's report naming it as their favourite beverage.
And despite the dominance of coffee culture, a growing number of London-based tea operators are eyeing expansion in response to growing consumer demand.
Restaurants are also getting increasingly creative with tea by using it to flavour dishes, cocktails, and to match with food.