• by Karlene Lukovitz  @KLmarketdaily, July 5, 2007

Iced tea is hot-and Dunkin' Donuts isn't about to miss out on the latest beverage craze.

America's No. 1 coffee retailer (selling nearly a billion cups per year) has now introduced freshly brewed iced teas in its restaurants throughout New England and upstate New York, and plans a nationwide rollout for early next year.

The teas are available made to order, sweetened or unsweetened, in three flavors: original, raspberry and peach. Suggested retail prices range from $1.69 for small to $2.09 for large.

Marketing support for the regional introduction will include 30-second and 15-second TV spots, two radio spots, billboards and bus wraps, online banners on targeted Web sites, and out-of-shop sampling, according to Dunkin' Brands spokesperson Michelle King.

The chain, which has previously tested iced teas in markets such as Charlotte, N.C., and Portland, Maine, reportedly also plans to offer special sweet iced teas in southern markets beginning next year.

The iced tea launch is part of a broader menu expansion, as Dunkin' Donuts continues a nationwide growth initiative that will triple its U.S. franchise restaurants to 15,000 by 2020.

Dunkin' Donuts joins a growing list of major fast-serve chains that have introduced or expanded their iced tea offerings in recent years.

Starbucks, which acquired Tazo teas in 1999, began offering Shaken Black and Shaken Passion varieties in 2003, subsequently added a Zen (green Chinese tea) variety, and this summer launched Shaken Blueberry White. Tea is Starbucks' smallest but fastest-growing offering, according to Nation's Restaurant News.

Sonic introduced fresh-brewed iced teas last summer. Meanwhile, McDonald's, in addition to the Nestea fountain tea it offers through its alliance with Coca-Cola, has experimented in a few markets with canned AriZona tea as a menu upgrade, points out Gerry Khermouch, editor of Beverage Business Insights.

Iced tea "has been a very strong segment in packaged/ready-to-drink form, buttressed by a lot of health news on green tea, white tea and the like," Khermouch says. "Now, fast-food chains are realizing that it can be a very fertile market."

Just how fertile becomes clear in reviewing some of the latest stats on the category from The NPD Group and its CREST Services:

* Iced tea sales in fast-food and casual-dining restaurants have grown by 12.5% (to 4.5 billion servings) since 2001, or at about the same rate as coffee.

* For the year ending last November, iced tea was actually tied with traditional coffee in terms of overall coffee and tea servings in all restaurants-each accounting for 37%, versus 19% for specialty coffees and 6% for hot teas.

* In the year ending April 2007, iced tea servings in U.S. quick-service restaurants rose by 8%, to 2.3 billion. Five percent of all quick-serve occasions included an iced tea.

Moreover, IRI scanner data for the four-week period ending May 20 shows carbonated soft drink volumes continuing to decline (down 7.2%, on top of a 5.3% decline in the same, prior-year period) and bottled water volume slowing (up 11.3%, versus 23.9% in the previous year), while iced tea sales shot up 32.7%, even as their prices rose by 2.4%.

NPD analysts attribute iced tea's booming popularity (which has been particularly notable among teens) not only to health and calming benefits, but to its ability to lend itself to seemingly endless varieties while at the same time being a familiar beverage.

Moreover, they note that the category has taken off in restaurants with very little marketing support and could well see even greater growth once the public is steeped in promotions.

Citrus sales should also get a boost. Dunkin' Donuts expects to serve more than 10 million lemon wedges, or over a million lemons, with its iced tea drinks this year alone.