Tea at a crossroad
All images courtesy of author.
T&CTJ’s annual Global Tea Report, reveals that after more than two years of disruptions severely affecting production, supply chain logistics and out-of-home consumption, tea market operators are taking stock to move forward in 2023. By Barbara Dufrêne. All images courtesy of the author.
In spite of global warming and frequent unfavourable weather episodes, output continues to increase within the major tea-producing areas, whilst consumption is not keeping pace, which is generating a gap between supply and demand. This was explained by the International Tea Committee (ITC) Chairman Ian Gibbs during the North American Tea Conference last fall, with an ITC chart covering the past 20 years and showing a well-matched growth of production that was fully absorbed by consumption from years 2001 to 2013. Since then global production continues to grow, but global demand is lagging behind.
With widely acknowledged labour shortage, ever increasing production costs, depressed prices at farm gate level and often adverse weather conditions, the feedback from the various origin countries requires a more focused look at the local economic and topographic conditions. Tea is highly diversified, with its cups ranging from fast moving consumer goods in the mass market segment to highly priced premium leaf in specialty niche markets, and consumer preferences and tea drinking habits vary widely between the continents.
Production continues to rise
The most recent ITC Annual Bulletin of Statistics outlines the developments from 2012 through 2021, with an overall production increase resulting in a world total volume of 6.455 million metric tonnes (mt) of tea, ie, up by 37 percent, since 2012, which is considerable. Since the early 2000s, the world’s three biggest tea producers are China, India and Kenya.
In 2021, China’s output stood at just over three million mt, which represents 47.5 percent of the global volume and shows an increase of 71 percent over the past decade, with a steadily rising domestic consumption calculated to stand currently at 1.78 kg per head.
In India, which had been the world’s number one tea producer until 2006, the 2021 tea output of 1.343 million mt represented 21 percent of the global volume, up 19 percent since 2012. India’s calculated annual per capita tea consumption of 0.81 kg.
Kenya, which has been among the top three global tea producers since it replaced Sri Lanka in 2007, had an output of 0.538 million mt in 2021, had had a growth of 45 percent since 2012. It represents 8 percent of the global volume that is geared mainly to the export market.
The subsequent positions as longstanding major tea producers are Sri Lanka (fourth with 0.299 million mt), Turkey (fifth with 0.282 million mt), Vietnam (sixth with 0.180 million mt, and Indonesia (seventh 0.127 million mt) all data referring to 2021. These seven origin countries have been supplying 88 percent of the global output in 2012, and increased their share of the global supply volume to 90 percent in 2021.
Considering that there are currently 37 countries involved in commercially significant tea production, the figures above show an important concentration. Furthermore, there are countries that continue to lose tonnage like Indonesia, Argentina and Japan, whilst others harvest significantly increasing volume like Uganda and Bangladesh. Political troubles weigh heavily on Sri Lanka’s tea economy and the war between Ukraine and Russia is affecting the traditional trade flow patterns.
Consumption lags production
There are a many changes on the consumption side as well, starting with continued growth of domestic consumption in many producing countries, which impacts the availability of tea for export. According to ITC data, the percentage of the global tea production in volume that is available for export globally dropped from 37.7 percent in 2012 to 29.8 percent in 2021, which is less than one third of the global output. Hence the volume of tea that was traded in 2021 amounted to 1.923 million mt, compared to the total output of 6,455 million mt.
It’s important to note that tea trade is primarily the export to such countries, where tea growing is not possible or only possible in small areas. However, some consumer countries refine some of their imported teas for re-export, often as branded premium, which is the case particularly in the United Kingdom, Germany, France, and in Morocco. In addition, there is also some trade between producing countries and which is on the rise, with China importing from India, Sri Lanka, Vietnam and Kenya mainly, whilst Japan imports from China, Sri Lanka, India and Kenya, and Turkey imports from Sri Lanka, et cetera.
In 2021, the biggest tea importing markets were Pakistan with 247,000 mt, the Russian Federation plus the CIS countries with 236,000 mt, followed by the USA with 115,000 mt, Egypt with 99,000 mt, the UK with 92,000 mt, and Morocco with 71,000mt (the data refers to imports for home consumption). With the pandemic hampering operations and the political conflicts impacting traditional trade flows, some reshuffling is under way to readjust demand and supply.
Recent investments by foreign tea operators, like companies from Sri Lanka and Japan which set up production in East Africa, and Taiwanese companies that invest in China and New Zealand may generate more new developments in the coming years.
Black teas vs green teas vs other teas
Longstanding habits of black-tea drinkers fashioned by British colonial traditions, be it with or without milk, are ingrained in Europe and North America as well as in many African and Central Asian consumer markets. Green tea consumption remains deep rooted and dominant in all the ‘tea cradle countries’: China, Japan, Taiwan, Korea and Vietnam.
The latter have produced 97 percent of the global green tea production, which amounted to 2.094 million mt in 2021. China is by far the biggest producer, consumer and exporter of green tea, with 0.312 million mt exported in 2021, the top customer being Morocco, followed by Uzbekistan, Ghana, Mauritania, Algeria, the Russian Federation, and Germany. The main export product is gunpowder green tea, a tightly rolled leaf of genuine green tea, which the Chinese call “Zhu cha”, aka pearl tea, because of the neatly rolled shape. Originating mainly from Zhejiang, province, where the flat tea estates allow for mechanical harvesting, these teas are then shipped from Shanghai. Twining, the oldest British tea brand, now owned by Allied Foods, operates a green tea factory there.
Although easy-to-brew mainstream green teas have been intensely promoted since the early 2000s, Western consumers have not yet developed any outstanding preference for them. Globally the 2021 green tea volume was 2.094 million mt – 32 percent of the world’s tea output – which demonstrates that black teas, ie, fully oxidised leaf continue to dominate. It’s important to also take into account the additional tea categories that have been introduced to the West by China since the beginning of the millennium. These include dark teas, oolong teas, which are gaining ground in the Western markets’ premium segment, and white teas, although it’s a small share. According to YU Lu, vice president of the China Chamber of Commerce for Food and Life stock (CFNA) located in Beijing, these specifically Chinese tea categories represent approximately 24 percent of the output in China’s domestic tea market, which translates into a volume of around 735,000 mt.
When looking at the various dividing lines, the distinction between black orthodox leaf tea and black CTC tea also offers some market insight, with CTC going mostly to the mainstream tea bag segment, whilst orthodox teas are generally more pricy and more premium. ITC data shows that the black tea output from the main producers in 2021 amounted to a global volume of 3.56 million mt, shared out at 60 percent for CTC and 40 percent for orthodox leaf.
Volume wise, current market data show that black teas represent about 55 percent, green teas about 32 percent and other teas (ie, oolong and dark teas and white teas) about 13 percent of the world tea production today.
Promoting tea globally remains challenging
A significant step forward towards a global promotion of tea drinking was the official introduction of the annual International Tea Day (ITD), which takes place every year on 21 May. This coordinated highlighting of the cup on the same day all over the world, at a time when most of the spring teas have been harvested, was approved by the United Nations General Assembly (UNGA) in 2019.
Tea was celebrated together with coffee and cocoa during the United Nations (UN) Food and Agriculture Organization (FAO) International Food Day on 15 October 2021, during a special session which highlighted the important contribution of the three crops as revenue providing to millions of smallholders, and this was indeed a first.
However, contrary to coffee and cocoa, which both have their product’s markets monitoring enshrined in an International Agreement for more than 50 years, tea has not yet reached that level of attention. The global tea market monitoring is entrusted to the Intergovernmental Group (IGG) Tea, which was established in 1969 within the Rome, Italy-based UN FAO. Dr Jean Luc Mastaki has been handling the IGG Tea since 2017, following the retirement of FAO official Kaison Chang.
The 24th FAO IGG Tea virtual plenary session, which took place in February 2022, concluded that in order to capitalise on emerging market opportunities and pro-actively address upcoming trends, the IGG Tea is invited to “take note of the emerging trends in tea consumption in both new and traditional markets, discuss the possible scope for renewed international coordination of generic promotion for tea, and provide guidance regarding actions to respond to the emerging market trends, including the role of digital solutions.”
The FAO IGG Tea also initiated the first International Scientific Symposium on Tea & Human Health. The first ever event of that kind, which was held in the United States in 2000, did generate significant awareness about the many reported health benefits of tea. Over the years more and more research has been published and the 6th International Scientific Symposium on Tea and Human Health was run as a virtual session, monitored by the Tea Association of the USA, in April 2022, attracting significant and renewed attention to the cup.
Tea may well be at a crossroad, with a need for more global communication about the wealth of benefits which the cups bring along to all consumer groups, whatever their age and their homelands. The many ways to consume tea offers great flexibility, the agricultural side provides income to millions of small holders and alleviates rural poverty, whilst the cups themselves provide hydration, psycho active stimulation, mood improvement and antioxidant effects to consumers all over the globe. During the height of the pandemic and through 2022, most of these important global events were run as virtual sessions, which took away a big share of their impact. One may hope that follow up in life will soon be possible and allow for more lime light to shine on the cup.
- Barbara Dufrêne is the former Secretary General of the European Tea Committee and editor of La Nouvelle du Thé. She may be reached at: b-dufrê[email protected].