Investing in Tea Stocks

Beverage stocks have been some of the biggest winners in history on the stock market. In the 20th century, Coca-Cola (KO -0.43%) was one of the best-performing stocks you could own, and PepsiCo (PEP -0.12%) wasn't far behind. More recently, stocks such as Starbucks (SBUX 0.01%), Monster Beverage (MNST -1.68%), and Celsius Holdings have delivered enormous returns.

There's a simple explanation for why these beverage stocks have been such high performers. Beverages lend themselves to branding, which creates competitive advantages, and they are high-frequency consumables as well as consumer staples, meaning that consumers buy a lot of them regardless of the broader economic environment.

But there hasn't been a similar juggernaut in tea stocks. Currently, there are no pure-play tea stocks above micro-cap range, or those valued at $300 million or more. Micro-cap stocks, like David's Tea (NASDAQ:DTEA) have flopped after showing promise earlier. They are considered higher risk and are best avoided by newer investors.

For investors seeking tea industry exposure, the only way to do so without buying micro-caps is by owning larger, diversified companies. Keep reading to learn about three of the top tea stocks you can buy today.

Best tea stocks

Best tea stocks in 2025

1. PepsiCo

1. PepsiCo

PepsiCo is one of the biggest food and beverage companies. In addition to its namesake brand, it also owns Quaker, Gatorade, and Frito-Lay.

It produces a wide range of beverages around the world, and tea plays a significant role in that portfolio.

Through a partnership with Unilever (UL -0.04%), PepsiCo produces ready-to-drink iced tea beverages under brands such as Lipton, Pure Leaf, and Brisk.

Together, those products make more than $1 billion in annual retail sales. That might be a small fraction of Pepsi's revenue, which is close to $100 billion a year, but it makes Pepsi one of the biggest sellers of tea in the world.

2. Hain Celestial

2. Hain Celestial

Hain Celestial owns an array of natural foods brands, including Terra Chips, Garden of Eatin' snacks, and Greek Gods yogurt. But it's probably best known for Celestial Seasonings and its more than 100 different types of tea. 

The percentage of its sales from beverages has steadily grown, reaching 15% in fiscal 2024, which ended June 30, 2024. Hain Celestial's total revenue was $1.7 billion in fiscal 2021; its beverage business generated approximately $253 million in revenue.

The company considers Celestial Seasonings one of its "Get Bigger" brands, part of a strategy to identify its strongest brands with higher operating margins in categories with strong growth potential and invest in them to reinvigorate profitable growth and increase market share.

The company has rolled out a new advertising campaign for the brand, as well new products such as a new line of K-Cups, a high-caffeine tea called Energy Tea, and new organic wellness teas under its TeaWell brand. Those are all positive signs for the tea brand and for Hain overall.

3. Starbucks

3. Starbucks

Starbucks is best known as a coffee brand, but the company has long had aspirations of becoming a leader in tea, first with its Tazo brand and, more recently, with Teavana, which it acquired in 2012. It later sold Tazo to Unilever to make Teavana its sole tea brand.

The Teavana acquisition, however, has mostly disappointed. Starbucks was forced to take a $102 million write-down when it shuttered all of Teavana's stores, recognizing that a mall-based chain selling loose-leaf tea was not a good growth business, particularly in malls where Starbucks already has its own cafe presence and can sell Teavana products.

Starbucks doesn't break out tea sales, so it's difficult to estimate the size of its tea business. But it likely comprises at most a few percentage points of total revenue, which was $29.5 billion in fiscal 2023.

Still, Starbucks is the world's leading cafe chain, giving it an advantage in brewed tea sales, a discretionary category with different economics from packaged tea. If tea becomes trendy or consumption rebounds in Starbucks' key markets, you can bet the company will be ready to take advantage.

Related investing topics

Should you invest?

Should you invest in tea stocks?

There's a simple explanation for the lack of pure-play tea stocks: Tea consumption has been slow-growing in recent years. That means there probably isn't a big appetite to invest in tea companies. Consumers have turned away from tea in favor of other beverages such as coffee, energy drinks, and newer options like coconut water and kombucha. Meanwhile, black tea sales, in particular, have been challenged as tea drinkers choose more herbal teas when they do drink tea.

While those trends could change, investors should be mindful of the challenges facing the category.