South America Aims to Quench European’s Thirst for Tea

As the global economy enters an era of trade conflicts and protectionism, Europe may soon see significant changes in the list of key tea suppliers, with South America poised to expand its sales to the Old World.

The European Union (EU) remains the world’s third largest tea importer, following Pakistan and the United States, with purchases of around 119,000 tonnes in 2024, as estimated by Eurostat. The lion’s share of tea in the European cups originates in Asia, with China accounting for 20 per cent of supplies, India and Kenya both accounting for 18 per cent and Sri Lanka accounting for 16 per cent.

The United Kingdom, which sourced more than 113,000 tonnes of tea from foreign suppliers in 2024, has a similar import geography, as estimated by the UK Tea & Infusions Association. “The UK’s tea sector benefits significantly from strong, long-standing trade relationships with major producers such as Kenya, India, and China,” said Dr Sharon Hall, chief executive of the UK Tea & Infusions Association. She added that these countries “provide consistent supply, diverse tea types, and deep-rooted commercial ties that underpin the stability of the UK’s tea market.”

However, the balance of forces on the global tea market that has remained unchanged for decades may now be poised for substantial changes. US tariffs can now push some tea exporters in South America, first and foremost Argentina, to seek opportunities in the European market. In 2024, Argentina was the third-largest source of US tea imports by value, behind Japan and India, Ilaria Abagnale, an analyst and consultant with Euromonitor International, a marketing research firm, indicated.

“For decades, Argentina has played a pivotal role as a supplier of black tea to the United States, particularly for iced tea blends. However, recent trade tensions have led to rising import tariffs, with Argentine tea now subject to a 10 per cent baseline tariff,” Abagnale explained.

Argentina is possibly looking to diversify its export destinations, due to the uncertainty of tariffs in the US in the near future, agreed Diego Borjas, another consultant at Euromonitor International. “The Argentine president’s affinity with Trump might help them reach a better deal, however, so we may see more exports to the US if this happens,” he said.

On the other side, Europe is also locked into a fierce tussle with China over tariffs for electric vehicles. The tit-for-tat dynamic has rapidly expanded to other industries, and observers warned that trade of commodities, including tea, can also be affected.

Argentine tea is poised to expand its presence in European markets, noted Diego Solleveld, commercial director at Finlays Argentina.

Several factors stand behind this claim. First, Argentina boasts of a reliable supply, with year-round consistency, suitable for RTD beverages or milk blends, Solleveld noted.

In addition, Argentine exporters can take advantage of sustainable production.

“Innovative techniques like livestock-assisted weed management and composting reduce chemical use and support regenerative agriculture,” Solleveld shared. He added that direct routes to Europe avoiding congested shipping channels and ensuring reliability can also help Argentine tea exports to Europe to pick up in the coming years. However, Argentina’s potential to replace Asian tea superpowers remains questionable.

A Mixed Bag

Argentina is the largest tea producer in Latin America and ranks tenth in the list of the world’s largest manufacturers, with output that tends to grow, but the figures are dwarfed by the size of the tea industry in the countries at the top of that list. For instance, annual tea production in Argentina is estimated to be close to 70,000 tonnes, compared with 2.4 million tonnes in China, 1.3 million tonnes in India, and almost 600,000 tonnes in Kenya.

Argentine tea exports to Europe are on a downward trajectory, commented Ian Gibbs, chairman of the International Tea Committee. In 2024, the exports stood at 6,500 metric tonnes, compared to 7,700 metric tonnes in previous years.

Argentine tea exports to the UK were also a mixed bag in the last few years. “2024 saw a slight recovery in volume and value of imports from Argentina from a significant dip 2022/2023, but imports are still lower than those observed in 2020 and 2021,” Dr Hall said.

Besides, Argentina’s potential to expand exports may be further hampered by the rapid growth of domestic consumption. The Argentine tea market is forecasted to reach USD $1.4 billion in 2030 compared with $993 million in 2024, according to Grand View Research, a think tank.

However, analysts believe that as local production is expected to grow, the country can simultaneously meet domestic demand and seek new opportunities overseas.

“Argentina has room to grow its production, so it might not be so much about the redirection of resources, but overall production growth,” Borjas said.

Amid the looming trade uncertainty, import diversification may be the right policy to pursue for the European economies, Dr Hall said. “In an increasingly complex global landscape, it is important to pursue diversification of import sources alongside the strengthening of existing trade routes,” she explained, speaking about the prospects of the South American tea exporters in Europe. “While established suppliers remain vital, expanding the sourcing base can reduce exposure to risks such as climate variability, geopolitical tensions, or logistical bottlenecks in any single region.”

The UK market has already witnessed a growth in supplies from new directions.

“[Import diversification] also enables the sector to respond to new tea trends, and we have observed increases in tea imports from Japan in 2024/25, which is likely to be related to the boom in matcha consumption observed in the UK,” Dr Hall said.

New Game Rules

Latin America tea exports from Europe can get additional growth impetus from the EU–Mercosur trade deal, under which the sides plan to establish a massive free trade area, eliminating tariffs on over 90 per cent of their goods, including granting preferential access for South American agricultural products to the EU market.

Euromonitor’s Abagnale also cited the EU–Mercosur trade deal, which is expected to be finally signed on 5 December, as one of the key factors that could drive the growth in the Latin American tea exports to Europe.

“By streamlining bureaucratic processes and facilitating easier access to agricultural goods, the agreement could open new growth opportunities for Argentine tea exports in the future,” she said.

Argentina is the largest, but not the only, tea exporter in Latin America that could possibly reap the benefits of the new trade agreement. Brazil exports some tea, but its primary export is yerba mate, which is a popular traditional tea in the region and is gaining international recognition. Columbia and Peru also have tea plantations and export some tea, though their production is on a smaller scale compared to Argentina and Brazil.

However, Argentina is still believed to have the strongest potential for expanding tea exports to Europe among South American countries. “Argentine tea is ideal for iced tea, and sales into Europe can be expected to increase for and via this market as iced tea becomes more popular,” Gibbs said.

“Iced tea is gaining popularity in the UK, and warmer summers averaging around 22°C (circa 74°F) are helping boost bottled iced tea sales,” Dr Hall noted. “Argentine black tea is especially valued for staying clear when chilled, which could lead to more imports from Argentina as the trend continues. That said, since iced tea remains a relatively new trend in the UK, there may also be growing appreciation for cloudy options made from teas sourced from a broader range of origins, particularly as flavour is the key driver of consumer choice,” she added.

It remains to be seen whether Argentina and other South American countries can leverage the new tariff situation and ramp up exports to Europe. The current geopolitical landscape presents unique opportunities that may vanish as quickly as they emerge.

Vladislav Vorotnikov is a Batumi, Georgia-based multimedia B2B freelance journalist writing about the tea and coffee industries since 2012.