Global tea industry outlook stable

Dr N Yogaratnam

United Nations Food and Agriculture Organization (FAO), with tea consumption rising by 5.6% in India and China to 4 million tons, the global tea industry is being driven by the two South Asian nations- India and China, India and China are the top tea producing as well as consuming nations in the world. India is expected to produce around 1 billion kgs (1.1 million tons) in 2011-12. China with 1.4 million tons stands at the top contributing 33% to the global production.

Meanwhile, the tea industry is facing problems over the reduced tea consumption in European region due to the persisting Euro zone crisis. According to FAO, by 2021, Britons is forecast to consume 15% less tea than 15 years earlier, which is concern for the tea industry. Britons are the largest consumers of tea per capita.

Major players

Tea is a natural beverage that competes with other natural and formulated beverages. The five major players in world tea trade in the last eleven years, (2000 and 2011), demonstrate a variable but obvious trends for increasing supply (60 percent) and exports over the 11- year period

The dominance of these five main producers continues. Their contribution to world trade increased from about 81 percent of tea exports in 2000 to 88 percent in 2011. This was, despite the production from new market entrants including Vietnam, Cuba, Argentina, Brazil, Peru, Uganda, Bangladesh, Malawi and Malaysia.

Sri Lanka

As can be seen, Sri Lanka now occupies fourth place in total production volume and is still one of the leading exporters, after Kenya.

However, its declining importance is seen in the statistic that this share of world trade has dropped from 40 percent in 1970 to 27.9 percent in 2000 and to 21.6 percent in 2011.

Furthermore, its 7.5 percent production volume increase in the last 11- year period is far less than the impressive increases of competitors in Asia and Africa, such as India by 21 percent and Kenya by 60 percent.

Issues

Once Sri Lanka's sunshine crop and its top export earner, tea is no longer enjoying this status mainly due to a serious shortage of plantation workers that began with the mass expulsion of 'Indian Tamils' in the 1960s. Among those who remained on the tea estates, the tradition of children of tea pluckers following in the profession no longer exists. With new opportunities available, the children of estate workers go to local universities and embark on careers like medicine. The Regional plantation companies seem to be encouraging such moves by providing financial assistance (scholarships) under their CSR programmes.

"We are not going to send our children to the estate to work. We want them to be happy in better jobs. There is no dignity of labour in tea plantation work.'' This appears to be the attitude of the plantation community in general.

Colonial times were far different from the situation today with strong unionization and greater awareness among workers of their rights - seen in the frequent strikes that young managers find hard to handle.

Each year estates suffer a 10 percent reduction in both middle management and estate labour. There are now only about 400,000 real tea workers in a population of about one million people who work and live on the estates. The number of tea workers in each family living on the estates has statistically dropped from 2.6 workers to 1.9.

Discouraging factors

Many youngsters want to further their education and learn computer skills and become proficient in English at institutes that have sprung up all over the hill country. Youth on estates are also distracted by the new age of mobile phones, satellite television, three-wheelers, easy payment schemes and bikes which have raised their quality of life. Few see the need to lead a life of drudgery on the estates like their forebears.

Garment factories and the migrant worker industry which see thousands going abroad annually have taken workers away from the estates - mostly the women who find jobs in the Middle East and South-east Asia as housemaids. Migrant worker remittances and the garments industry have taken over as the main foreign exchange earners outstripping tea.

Managerial

On top of these issues, the tea industry no longer attracts the best managerial talent. A couple of decades ago the cream of school-leavers from Colombo's most prestigious schools joined plantations as junior managers and lived the high life in sprawling colonial bungalows with plenty of servants and a social life that revolved around the splendid clubhouses left behind by the British. In the absence of such luxuries they too are not comfortable in their profession.

Global tea trends in 2012

The World Tea Media, which also produces the North American Tea Championship, World Tea News and World Tea East, has the following to say:

1. Quality tea on the rise

"The tea industry is educating tea consumers about quality, thus improving their palate and desire for better tea. We're still a bit behind here, but many retailers and manufacturers are making progress, and consumers are increasingly looking to buy better teas; they want to know what makes certain teas high quality rather than relying on the manufacturer's word or enticing packaging," says the World Tea Media. "At the same time, industry members continue to discuss and ask one another, 'How do we internally define quality,' and that's fabulous. We're scrutinizing our own product; we're asking what Fair Trade really means; and we're asking if products calling themselves ready-to-drink [RTD] tea should contain a minimum of tea's total dissolved solids, or if tea-flavored sugar water should be allowed to call itself tea." it adds: "We're also seeing big tea buyers take notice of the high-quality winning teas from the North American Tea Championship, a professionally-judged tea competition. A win here means quality has been assessed by a third party professional, and that's making a significant difference for manufacturers when closing major deals."

2. Tea retail continues its upward trend

The tea retail trend hit a nice stride in 2011, according to World Tea Media, and it will continue to move up quickly in 2012. Last year, for example, tea retailer Teavana launched its IPO and Canadian-based DavidsTea opened two retail stores in N.Y.C., adding to its line-up of 69 locations. Most recently, Starbucks Coffee Company hired tea-retail expert Charles Cain as its new vice president for Tazo tea merchants and operations, which leads to much speculation regarding Starbucks' plans to launch tea retail outlets. "At World Tea Expo, the industry is set to discuss the future growth of tea retail - and what will happen in 2012 - in a session called 'Will Tea Ever Be as Big as Coffee?'" they say. "Right now, in the United States, there are currently more than 25,000 coffeehouses and around 3,500 tea retail locations," they add.

3. Green tea grows in popularity

World Tea Media is also watching green tea move ahead of flavored and blended herbal teas, in terms of popularity. "No doubt due to its association with health and the preferences of ageing Baby Boomers and conscious Millennials, green tea is experiencing a growing consumer base, and that will continue this year," they say . According to Packaged Facts' Tea and Ready-to-Drink Tea in the U.S., 4th Edition, green tea is currently the No. 2 top flavor for U.S. tea product introductions (the No. 1 spot is blended teas). Among households purchasing loose leaf tea, green tea edges out herbal and fruit/spice teas with black tea as No. 1. It appears that green tea is the No. 1 selected specialty tea product selected by customers at restaurants and retail establishments.

4. Tea-enhancing tea wares

Glassware maker Reidel creates some of the finest wine glasses and decanters, and it's said that these special glasses make a significant difference in the taste of vino, bringing out the depth, flavor and balance. And now, as the general populous continues to build a sophisticated palate, innovators are emerging and looking at ways they can enhance the tea drinking experience on a more sophisticated level. "Not only are more and more tea enthusiasts embracing particular tea tools to steep specific tea types, we now have contemporary ceramic tea ware to enhance a particular tea type's taste," it says . "Reidel wine glasses changed the way we drink wine, and World Tea Media suspects that this cup philosophy will begin to change the way we drink tea in 2012." It is noted that this trend is starting with advanced tea drinkers and spreading to the everyday consumer - just how it did with Reidel and wine drinking.

5. Cold brew green tea

Cold brew green tea is expected to be big in 2012 cites World Tea Media. Last year, Japanese manufacturer Yamashiro Bussan Company launched the first cold brew green tea at World Tea Expo. This year, branded cold-brew green tea takes the stage, including Swirl Tea, by Breezy Springs LLC. Breezy Spring products are already sold in Whole Foods Markets and Publix Supermarkets, to name a few. "World Tea Media predicts that with Swirl Tea's cold brewed green tea on grocery store shelves, there will be a larger consumer base and awareness for this product category in 2012," they say. "Imagine the delight consumers will have when they realize they can enjoy green tea without worrying about over-steeping it or water temperatures causing the tea to taste like burnt grass."

6. Matcha Lattes (Real Ones)

Unlike the poor quality Matcha lattes that have "crashed and burned" in the past, there are now superb product offerings in the market, according to World Tea Media. All of these use real and high-quality Japanese Matcha, blended with minimal sugar but packed with flavor, such as AIYA America's Matcha Zen Café Blend. Matcha lattes are already wildly selling in Canadian foodservice establishments, and it is suspected that time has come for American restaurants to catch on in 2012. They are easy to make, require no additional equipment, taste delicious and are packed with the nutritional benefits of Matcha. They're certainly a wonderful alternative to over-roasted coffee after a lovely dinner, they say.

Tea growth in 2012 and beyond

On the whole, tea continues to grow in the marketplace. According to projections from Packaged Facts, in their study Tea and Ready-to-Drink Tea in the U.S., 4th Edition, tea retail market growth will edge up from approximately 6.6 percent in 2012 to 8.7 percent in 2014, reaching $8.3 billion in that year. World Tea Expo presenter David Sprinkle, research director for Packaged Facts, notes, "The horizon for tea indeed looks bright. Factors spurring continued overall growth of the tea market include: the success of refrigerated and RTD tea; the acquisitions of Honest Tea and Sweet Leaf Tea that will continue to expand the distribution channels for these and other organic and specialty brands; the rapid expansion of specialty tea retailers such as Teavana; increased emphasis by Starbucks and other coffeehouses on their tea offerings; the sustained promotion of tea by the big restaurant chains, led by McDonald's; the proliferation of tea rooms and other tea offerings at foodservice; the continued recognition by consumers of tea's healthy properties and their switch to tea from carbonated soft drinks. (Reference; World Tea Media, March, 2012)