How Functional and Herbal Teas Are Transforming South Korea’s Market

Functional and Herbal Tea Preferences Are Shaping the Next Phase of the South Korea Tea Market

Functional and herbal teas in South Korea have gradually evolved from being the niche products of the country's tea market to taking up a strategically important position. Previously, marketed as a mere wellness product is influencing technical product decisions, investment flows, and brand positioning in the entire industry. However, this change is not only due to trend cycles but also represents a profound shift in the way consumers relate beverages with daily health management.

For tea companies, functional teas are no longer optional extensions only. Rather, they are turning into the core of the portfolio relevance. Firms that do not address this particular segment are unable to justify premium pricing or to retain shelf visibility in competitive retail settings.

Health Positioning Becomes More Specific

Modern functional tea products offer more specific benefits, while consumers of South Korea are increasingly demanding clarity. Digestive health, sleep support, immune strength, and stress management are being positioned as distinct use cases, rather than broad, undefined claims of overall wellness. At the same time, the ingredient lists are getting shorter, and the logic behind the dosage is becoming clearer.

Brands like Dong Suh Foods are expanding the herbal tea line of barley, corn, and grain blends to promote digestion and hydration. These products are marketed as items for daily use rather than just being occasional remedies. As a result, this way of presenting products has facilitated regular purchases through grocery and online stores.

Ingredient Sourcing and Supply Chain Discipline

Functional tea growth has attracted more attention to ingredient sourcing. Companies are focusing on consistency, traceability, and safety. Ginger, jujube, and citron, which are herbal inputs, are now being subjected to even more stringent quality controls.

Some manufacturers have even enhanced their ties with the local agricultural cooperatives to ensure a stable supply. It helps in reducing the company's exposure to import fluctuations and, at the same time, enhancing local sourcing narratives, which are appealing to South Korean consumers. Additionally, it leads to better margin predictability in an area where the quality of inputs has a direct impact on the brand's credibility.

Brands that focus on imports are also following the trend. Instead of sourcing from a variety of regions, they are limiting their supplier bases in order to provide consistent bioactive profiles. This strategy decreases the short-term adaptability, but it establishes long-term trust, which is essential in the functional categories.

Product Formats Expanding Beyond Traditional Tea

Functional teas are leading the way for companies to discover new formats. Loose-leaf and tea bags are expected to maintain their relevance, but ready-to-brew sachets, liquid concentrates, and stick packs are becoming more popular. These formats are in line with the current consumption habits and also make it easy to have precise portion control.

It has been noticed that stick packs have been especially popular among working professionals. The use of stick packs is enabling functional teas to compete with supplements and health drinks, while remaining within regulatory boundaries. Keko Group revived herbal tea heritage at THAIFEX 2025, launching modernized blends targeting wellness consumers and regional export opportunities growth, in June 2025.

From a production perspective, such formats need updated blending and packaging technology, which involves significant investment.

Retail and Online Channels Reinforce Functional Credibility

The way functional teas are evaluated is heavily influenced by where they are placed within the retail environment. If the product is located next to supplements or health foods, it will be more strongly associated with the functional aspect. Tea shelves in South Korea are increasingly being organized by health benefit rather than flavor, reflecting a growing shift among local retailers.

The impact of product positioning is further increased by online distribution channels. E-commerce channels open up the opportunity for brands to elaborate on the functional benefits with the support of usage instructions and consumer reviews. Those brands that produce educational content are experiencing higher conversion rates and less price sensitivity.

Regulatory Awareness Shapes Product Development

South Korea’s regulatory environment influences how functional teas are positioned. Companies must carefully balance benefit communication without making medical claims. This trend is encouraging more disciplined messaging and product design.

Brands that navigate these constraints effectively gain credibility. Those that overreach face reputational risk. As a result, functional tea development has become a cross-functional effort involving legal, R&D, and marketing teams.

This discipline is raising the overall quality bar within the segment. Products that succeed in the market tend to be well-researched, clearly positioned, and operationally sound.

Explore the South Korea Tea Market Report for insights on functional tea strategies and market positioning.

Outlook for Functional and Herbal Teas in South Korea

Functional and herbal teas are no longer a secondary category. They are shaping how tea companies think about relevance, resilience, and growth. Demand is steady, use cases are clear, and pricing power is improving.

Future growth in the market is expected to be led by companies that treat functionality as a system rather than a feature. Those investing in sourcing integrity, format innovation, and disciplined communication are expected to build durable positions. In a market where consumers are becoming more intentional, functional teas offer stability that few other segments can match.