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Tea sector growth greater outside traditional markets

07 August 2010

A report from the FAO predicts that export markets for green tea will grow faster than export markets for black tea in the next ten years and that ‘markets in major importing countries are unlikely to expand further’, given their current saturation level. ‘World black tea exports are projected to grow by 1.8% between now and 2019. Green tea exports are expected to grow as much as 5.5% per year.’ The FAO Composite Price for tea ‘increased by 13% in 2009, pushing prices to record levels last year,’ contributing to ‘a 7% increase in export earnings at the global level.’ This was a result of ‘drought in some of the major tea-producing regions of Asia and Africa’. Prices however have now stabilised.

According to the FAO, Kenya is the world’s second largest tea exporter behind China, ahead of Sri Lanka and India. In Kenya, ‘receipts from tea cover the country’s entire food import bill’, accounting for 35% of total agricultural export receipts, according to FAO. Commodafrica noted that the price for Kenyan tea was up 30% for the first semester of 2010, following the droughts of the previous two years.

The supply of black tea is expected to be in equilibrium by 2019, with this promoting ‘relatively stable prices at slightly higher than the average over the past decade.’ In terms of consumption trends, it was suggested at the 19th session of the intergovernmental group on tea in May 2010 that the global tea industry ‘seemed to be currently in a very good position and poised for a period of unprecedented growth as a result of: health benefits; consumer relevance; natural image; fighter of obesity; and exotic appeal.’ However concerns over pesticide residues needed to be continually addressed, if these good prospects were not to be blighted.

The Nouvelle presse du thé, according to Commodafrica, notes that France now has ‘a mature and high-quality’ market for tea. French tea imports, while still low compared to coffee, have increased threefold over the last 25 years, with the emphasis now on factors such as traceability, employee working conditions on plantations and sustainability, as well as production from specific regions.

Editorial comment

Given the saturation of traditional black tea markets, ACP tea producers may need to increasingly look beyond the EU market for export growth. Within the EU, increased marketing efforts may be needed to increasingly target the ‘luxury purchase’ components of the tea market, with strategies being developed to clearly differentiate ACP teas on the grounds of quality and to assist ACP tea producers in moving up the value chain: trends in France towards greater consumption of green, black and other speciality teas are already moving in this direction. Potentially ‘aid for trade’ support could play a useful role in the development of such enhanced marketing strategies by assisting in the identification of key consumption trends, and the elaboration of operational programmes for ACP tea exporters to tap into these major market trends.

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