newsletterteasrilanka.org/download/3q2019.pdf · rtd tea gre w 3.9 perc ent. page 6 tea exporters...

N E W S L E T T E R3Q 2019

Tea Exporters Association Sri Lanka

(SLTB)

3Q 2019

SRI LANKA TEA PRODUCTION – JANUARY TO AUGUST 2019Sri Lanka tea production of 210.8 million kgs registered for January-August 2019 period shows a growth of 7.2 million kgs against the volume of 203.6 million kgs of January-August 2018. The low grown elevation shows the highest increase followed by medium and high grown elevations.

The tea crop figures of some leading tea producing countries for the period of January to July / August 2019 are furnished below (in million Kg).

(FW Tea Report)

World Tea Crop

January-August 2019 cumulative CTC Production of 15.4 million kgs, however, shows a marginal decrease of 0.13 million kgs vis-à-vis 15.6 million kgs of January-August 2018. On a cumulative basis, only medium grown sector has shown a growth.

The summary of category wise tea production for the January - August 2019 period with comparative figures of last year is appended below. (In MT)


(SL Customs)

3Q 2019

SRI LANKA TEA EXPORTS – JANUARY TO AUGUST 2019

The relevant export figures for first eight months of 2018 and 2019 are appended below (In MT).

The cumulative exports for the period January-August 2019 of 196.2 million kgs records a gain of 9.6 million kgs compared to 186.6 million kgs of January-August 2018. All main categories (i.e. Tea bags, Packets and Bulk tea) have shown a growth YOY. Meanwhile, total revenue for the period January-August 2019 of Rs. 162.5 billion too records a gain of Rs. 10 billion against Rs. 152.5 billion registered during the same period last year. Consequently, the FOB value of Rs. 828.38 per kg has recorded a gain of Rs. 11.34 per kg vis-à-vis Rs. 817.04 per kg of January-August 2018.

When analyzing the major importers of Ceylon Tea for the period January-August 2019, Iraq has maintained her position as the No.1 buyer followed by Turkey and Russia. Iran is placed 4th, whilst Libya, China, Azerbaijan, Syria and UAE are the other noteworthy importers. It is also relevant to note that destinations such as Germany, USA and India too have imported a significantly higher volumes compared to the corresponding period of 2018.


experience with a fashionable product and integrating the gourmet quality tea into their life style. The growing retail sector is innovatively catering for new preferences through a diversity of tea origins and flavours.

3Q 2019

TEA holds 20th Annual General Meeting

“Many Japanese people love Ceylon tea. Statistically, Sri Lanka’s tea export to Japan accounts for about 20% of the total export to Japan,” stated HE Akira Sugiyama. “By embracing the spirit of this new era, I wish to further strengthen the bond of friendship between Sri Lanka and Japan. I believe that the T.E.A. will continue to play an important role in bridging the two countries and promote our shared love for tea.”

HE Akira Sugiyama, Ambassador of Embassy of Japan in Sri Lanka was the Chief Guest at the event. Mr. Rohan Karr, Managing Director of Hayleys Leisure Holdings (Pvt) Limited delivered the Key Note Speech sharing his experience in the leisure sector.

Mr. Sanjaya Herath, Chairman, Mr. Ravi Gunaratne and Mr. Mahinda Karunanayake, two Vice Chairmen and Mr. Lushantha De Silva, Treasurer were appointed as the new office bearers of the association for 2019/2020 period. Mr. Jayantha Karunaratne will continue as immediate past Chairman of the association.

The Tea Exporters Association conducted the 20th Annual General Meeting on Friday, 6th September 2019 at the Grand Marquee of Taj Samudra Hotel with the participation of around 450 guests comprising of members of Diplomat Corp, senior government officials and tea trade members etc.

Chief Guest, HE Akira Sugiyama stated, “I commend the commitment and sincere efforts of Sri Lankan tea producers and tea exporting companies to maintain and upgrade the quality of Ceylon tea – abiding by the international food safety requirements. I am also deeply impressed by the Tea Exporters Association’s CSR programs, its longtime contribution to the development of the tea industry and its overall key interest in furthering the inclusive development of the Sri Lankan society.”

The Keynote Speaker of AGM - Mr. Rohan Karr said, “The way we do business and the way we think about tea should be a paradigm shift. If we want to nobly put Ceylon Tea on the global map again, we have to totally think out of the box”. He further commented, “We need great leaders, thinkers and strategists to come together, put their personal interests aside and create a road map that will provide the industry with recovery, followed by success in years to come. This will only be possible if everyone works selflessly towards a common goal – the Ceylon Tea goal.”

2. Forecast for MENA Region – 2017

Page 4Tea Exporters Association Sri Lanka

3Q 2019

TEA rewards outstanding Tea Producers

The Tea Exporters Association (TEA) rewards the outstanding tea producers for the third consecutive year at its’ Annual General Meeting held on Friday, 6th September 2019. This annual event has been introduced to encourage, recognize and reward Sri Lankan tea manufactures who have excelled in tea manufacture. The quality of tea is the most important factor when determining the price of tea. Hence the concept is based on “Total Excellence in Tea Production” covering all aspects of tea manufacturer. The 2019 event was focused on seven agro-climatic regions – Nuwaraeliya, Dimbula, Uva, Uda Pussellawa, Kandy, Ruhuna and Sabaragamuwa. A special award was given for the outstanding CTC tea producer covering all three regions.

HE Akira Sugiyama, Chief Guest at the AGM gave away the awards for winners and first runners up while the second runners up awards were presented by Mr. Jayantha Karunaratne, outgoing Chairman of TEA. The list of winners is given below.

Tea Exporters Association Sri Lanka3Q 2019

TEA presents 32 Scholarships to School Children

Members Evening – 2019

World Tea Facts- 2018

TEA added another set of scholarships to its CSR project by presenting 12 scholarships to the school children in Madawachchiya, Anuradhapura District making the total number of scholarships awarded by the association to 32. Since last AGM 20 students from families in the tea industry are receiving monthly scholarship payments from TEA. The CSR project was appreciated by the Chief Guest, HE Akira Sugiyama in his speech at the AGM. TEA appreciates the support received from the members and the sponsors of the AGM to continue with the scholarship program.

TEA plans to have the 2019 Members Evening on Saturday, 23rd November 2019. Further information of the event is to be notified soon. Please make a note of the date.

• World Tea Production reached 5.89 million MT in 2018, an increase of 3.5% when compared with the volume of 5.69 million MT registered in 2017.

• As per the available data, China (44.3%), India (22.7%), Kenya (8.4%), Sri Lanka (5.2%), Turkey (4.3%) and Vietnam (2.8%) are the leading producers of tea in world.

• The production of green tea however has gone up by only 2% from 1.92 million MT to 1.96 million MT over the 2017 / 2018 period. The green tea sector now accounts for 33% of the world tea production compared to 30% in 2009.

• The global tea export volume has reached 1.85 million MT in 2018 against the volume of 1.79 million MT recorded in 2017. This reflects an increase of 3.35%. The share of exports of the world tea crop remained at the level of 31.4% last year compared to 40.2% in 2009. The green tea exports accounted for 20.7% of the total world tea export volume in 2018.

• Kenya (26%), China (20%), Sri Lanka (15%), India (14%) and Vietnam (7%) are the largest exporters of tea in 2018.


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Page 6 Tea Exporters Association Sri Lanka3Q 2019

World Tea Import Values-2018

The Global purchases of imported tea totaled US$7.4 billion in 2018. Overall, the value of imported tea for all buyer countries rose by an average 3.2% since 2014 when tea purchases equaled at $7.2 billion. Year over year, the value of tea imports increased by 4.8% from 2017 to 2018.

From a continental perspective, Asian countries bought the highest dollar worth of tea imported during 2018 with purchases valued at $3.4 billion or 45.7% of the global total. Close behind in second place were European countries at 29.1% while 13.5% of worldwide tea imports were delivered to customers in Africa. North America’s imported tea amounted to a 8.7% share.

Smaller percentages went to customers in Oceania (1.8%) led by Australia and New Zealand, and Latin America (1.2%) minus Mexico but including the Caribbean.

By value, the listed 15 countries purchased 61.9% of all tea imports in 2018.

(International Research Reports)

Five countries posted declines in their imported tea purchases namely: United Arab Emirates (down -52.3%), Russia (down -23%), Egypt (down -7.7%), Japan (down -4%) and Germany (down -3.2%).

Among the above countries, the fastest-growing markets for tea since 2014 were: China (up 93.1%), Afghanistan (up 85.9%) and Pakistan (up 74%).

Below are the 15 countries that imported the highest dollar value worth of tea during 2018 (USD).


Heavy metals are a broad variety of high-density elements. They have a scary image since they include mercury, cadmium, arsenic, and lead, not exactly recommended parts of a daily diet. Plants absorb them from the soil. Today – the emphasis is added – heavy metals do not seem a problem for tea that is anywhere near the equivalent risks from pesticides.

They are likely to become more and more part of the discussions of tea health and safety, given their growing spread and contamination of more and more areas of the environment, through industrialization. Already, there is an expanding minimarket for heavy metal detox herbal teas and supplements.

Heavy metals are toxic but often necessary nutrients: Toxicity is defined as the degree to a substance can cause damage to an organism and is dose-dependent, with a wide range of measures. Even water is toxic if drunk in large enough amounts. Six liters (13 pints) in a single dose is enough to kill a 170-lb male, through “water intoxication.”

Many heavy metals are required micronutrients for humans and organisms, with published National Research Council RDAs (Recommended Daily Allowance), These are the level of intake of a nutrient that maintains good health. Other figures are listed by agencies to indicate safe levels.

Just about every study has found that the levels of the metals of most concern remain well below the body’s safety limits. A typical instance is an analysis of 12 tea brands in Central Europe. The World Health Organization’s (WHO) safety limit for arsenic is 1.0 milligram per kilo. The samples ranged from 0.01 to 0.25. For cadmium, the limit is 0.3 and the actual 0.001 to 0.01 mg/kg.

Long brewing times release more of the concentration. Older leaves have higher amounts, as much as 20 times that of young buds, as do most organic teas. Tap water can raise them, through their higher mineral content and, in some instances, contamination from older lead pipes. Even fine china may add toxicants.

Here is the dilemma. Tea drinkers are at risk not from what they consume but the environment that surrounds it. Auto exhaust is a far larger source of risk than tea. Today, at least, tea is not a worry.

A 2010 comprehensive analysis of puerh teas examined both soil, leaf and brewed tea and surveyed drinkers to identify risk factors. Concentrations were measured for aluminum, lead, cadmium, mercury, zinc, copper and arsenic. In all instances, they were well below the China safety limits expressed as a Hazard Quotient (HQ) for single elements and Hazard Index (HI) for the combination of metals. Others report that black teas have lower concentrations of metals than whites and greens, with oolongs the highest.

Heavy metal molecules can bind to enzymes, cells, proteins and tissues and interfere with their functioning. That binding may build up long-term and create chronic damage rather than just acute toxicity. That has been the case with mercury, where concentrations in fish have grown at a pace where the EPA reported in 2015 that 25% of the samples tested were above the safety level. As with lead accumulation, this build up doesn’t become apparent for many years and is often revealed by the birth of a baby with deformation and damage. The short-term acute toxicity of lead is severe and demands tailored “chelation” to loosen up the binding and get the molecules moving.

Heavy Metals in Tea

(STiR Online News)



3Q 2019

UK Tea Market

Health-focused products, such as matcha and kombucha, have been hitting the UK market in response to consumer demands. National Tea Day, revealed that a staggering 80% of tea brands surveyed confirmed that health and wellness was the overriding trend driving sales and consequently a key growth area for them. An analyst at Euromonitor International said: "In 2018, several brands launched “tea latte” variants in their portfolios, following the “Superfood Lattes” trend due to out-of-home consumption to reach younger, more health-conscious and Instagram-friendly consumers. "Furthermore, an increasing number of plant-based options is expected over the forecast period due to the growing focus on dairy-free alternatives, as consumers associate milk-free with natural and healthier options."

Ayub Diaz Ayub, National Tea Day founder and tea futurist, said the growth in specialty teas was primarily driven by millennials who were looking for teas which are deemed healthier for body and mind; and were willing to pay more for these nourishing moments

Tea presents better value for the consumer: an average cup of coffee cost £1.98 in 2015 and £2.10 in 2017; while the price of an average cup of tea cost £1.69 in 2015 and £1.77 in 2017, The Tetley Tea Report 2018 revealed. Matcha and green tea were two blends that consumers were willing to pay a little more for, and were drinking with greater frequency.

Euromonitor International revealed that tea declined by 3% in retail volume terms, but recorded 2% retail current value growth in 2018.

The majority of tea companies (69%) said growth was being driven by female drinkers, with only 12% saying growth was from male drinkers, while 19% did not know.

In its survey of 50 tea brands, it found that half (50%) saw the 24 to 35-year-old segment as their biggest growing demographic, followed by 25% that highlighted the 35 to 45-year-old age group.

Young people, particularly women, are driving tea consumption in the UK, the National Tea Day Modern Tea Trends 2019 report recently revealed.

Ayub Diaz Ayub, National Tea Day founder and tea futurist, said that there is going to see more tea experiences popping up, whether that’s afternoon teas or tea pairing menus as tea drinkers become more focused on the enjoyment and ‘the moment’ that a cup of tea brings. Venues will need to be offering experiences far beyond what is offered at home in order to succeed next year.

The Tetley Tea Report 2018 agreed that the majority of tea drinkers are aged 35 or under and were looking for a premium drink offering - 59% of 18-34 year olds were seeking to ‘premiumise their drinks choices’. A survey by National Tea Day of consumers found that they would be prepared to pay £5 for a speciality tea, £4.20 for an iced tea in bottle format served in a glass with garnish, £3.50 for Matcha Latte, £2.20 for herbal tea and £1.85 for breakfast tea.

A World Coffee Portal’s report into the out-of-home tea market in 2018 predicted continued growth over the next five years in the tea market.

The forecasted total sector value was expected to reach £439m by 2022, representing 9.2% CAGR growth for the period.

While tea consumption remains the dominant tea drunk out of home, the World Coffee Portal report observed significant growth in fruit, herbal and green tea compared to traditional black tea, with 58% of operators adding more specialty teas to their menus in the last three years.

In its survey of F&B leaders it found that 95% highlighted that experience was key to remaining competitive.

(UK Tea Trends)


China has exported 6,900 MT of jasmine tea, with the highest average export price among all types of Chinese tea exported in 2018, said China Tea Marketing Association (CTMA) .

The average export price of jasmine tea last year was 9.57 U.S. dollars per kg, CTMA said at a conference on jasmine tea and tea trade held in the city of Nanning in south China's Guangxi Zhuang Autonomous Region.

The export volume of jasmine tea accounted for 1.9 percent of China's total tea exports, with a value of 66 million U.S. dollars last year.

(Xinhua)

Indian Orthodox tea prices jump 15% on healthy demand

"Jasmine tea is currently the most widely-known scented tea with the biggest output, most consumers, and the most complete industry system in China," said Mei Yu, CTMA's secretary general.

By the end of 2018, the plantation area of jasmine had reached about 12,400 hectares, with a total output of 120,600 MT.

Commenting on the likely financial impact of the same, Vice President and Sector Head, Corporate Sector Ratings, ICRA, said “Better orthodox tea prices would have a limited impact on the overall financial performance of the bulk tea players based out of North India, given that the orthodox variety accounts for only around 10 per cent of the total production. However, organised bulk tea players who have a high proportion of orthodox teas in their overall production, would stand to benefit substantially with such price trends sustaining.”

As for prices at the South Indian (SI) auction centres, after remaining firm till the beginning of July 2019, witnessed a continuous decline following the crop recovery witnessed in June and July 2019. However, on a cumulative basis, SI tea prices increased by around 4 per cent during five months of 2019, again driven primarily by better orthodox prices.

Prices of the CTC variety of teas, however, continued to be under pressure with prices of tea produced in the bought leaf factories witnessing a decline of 10 per cent, while prices of tea produced in the estates remained flat. As a result, overall tea prices in North India (Assam and West Bengal) remained soft in first half of 2019.

In the first five months of 2019, prices of the orthodox variety of teas witnessed a sharp increase of 15 per cent on the back of healthy demand, primarily from Iran, according to a market report released recently.

According to ICRA, the divergent trend in prices between orthodox and CTC teas is on account of the difference in the underlying supply-demand scenario of the two varieties. While Kenya, which is primarily a CTC producer, reported a decline in crop in 7 months of 2019, the record production witnessed in 2018 has continued to keep international CTC prices depressed in the current year. Increased availability of Kenyan tea in the global market, which is relatively cheaper than Indian CTC tea, impacted CTC export volumes from India.

Jasmine tea is exported to Japan, Morocco, the United States, Hong Kong, Germany and Malaysia and has earned a good reputation worldwide, Mei added.

Jasmine tea tops China's tea export price in 2018


3Q 2019

In addition, domestic CTC prices particularly in North India remained soft on account of an 8 per cent increase in NI production in the current year thus far. This was driven by an 11 per cent rise in production by small growers, while production from estate factories grew by 6 per cent in 7 months of 2019.

On the other hand, orthodox tea prices firmed up considerably in the current year, supported by healthy demand from Iran. Indian tea exports to Iran grew by 125 per cent in 7 months of 2019. While a favourable payment mechanism with Iran supported the offtake of Indian orthodox tea. Sri Lanka, the other major orthodox tea exporter, faced issues pertaining to export of orthodox tea to Iran. This in turn has led to a softening of Sri Lankan prices in the current year. At present, Indian orthodox tea is trading at a premium over Sri Lankan orthodox tea, contrary to historical trends.

(Economic Times of India)

The Rise of Milk Tea in ChinaMilk tea isn’t a new concept in China. For many years, it has been dominated by pearl milk tea, a popular drink that also found its way into the Western market. It wasn’t until after 2010 when beverage start-ups began to innovate the concept by introducing multi-flavoured milk teas.

Two Chinese start-ups, HeyTea and Nayuki , are already profiting from this new tea trend. HeyTea specializes in cheese tea, a combination of fresh tea and imported cheese from New Zealand. Its competitor, Nayuki, on the other hand, specializes in fruit-based teas.

According to a report released by Wenjun Technology the traditional milk tea market total sales from drink shops (traditional tea shops, tea houses, dessert shops, etc.,) was RMB 41.3 billion in 2016, a 14.5 percent YOY increase. By 2021, total sales are expected to reach RMB 77.9 billion in 2021. From 2016 to 2021, the compound annual growth rate of beverage sales would be 13.5 percent.

The demand for the new tea market came primarily from three consumer changes, according to the report.

themselves from “street milk tea”, a small stand that usually has little to no space for customers to enjoy their drink. The

“tea room” is similar to the space one usually finds at Starbucks, portraying how current milk tea shops are adopting

coffee culture. Additionally, HeyTea and Nayuki are situated in “premium locations”, locations considered high-class and often visited by white-collar workers or middle to high-income shoppers.

Lastly, consumers are seeking alternatives to coca cola, sprite, and bottled juice which is considered unhealthy drinks. According to Tonghuashun Finance the healthy concept is on the rise in the milk tea industry which HeyTea and Nayuki are taking advantage of by providing fruit teas. While the definition of healthy varies from person to person, fruit teas are considered healthier than the drinks mentioned above.

Second, new teas are attractive substitutes for instant drinks. Instant beverages such as instant coffee, brewed tea, and more are being replaced by new tea. As China’s middle class gets richer, they are spending considerably more on food and beverages, according to China’s National Bureau of Statistics. According to HKTDC Research, 60% of respondents indicated that they pay attention to product quality even though it means greater spending. Therefore, it can be argued that willingness to pay for higher prices has gone up along China’s middle class getting richer.

First, alternatives to traditional tea shops, tea houses, etc. Recently, HeyTea and Nayuki have created a “tea room”, a comfortable space for their customers to relax. It also differentiates themselves from “street milk tea”, a small stand that usually has little to no space for customers to enjoy their drink. The “tea room” is similar to the space one usually finds at Starbucks, portraying how current milk tea shops are adopting coffee culture. Additionally, HeyTea and Nayuki are situated in “premium locations”, locations considered high-class and often visited by white-collar workers or middle to high-income shoppers.

Notwithstanding the considerable uptick in prices of orthodox teas, the overall prices for NI bulk tea players are expected to witness only a marginal increase in the current year. Thus, while higher production would lead to better absorption of costs, the overall soft price trends are likely to limit the improvement in financial perfromance in the current year.

(IndexMundi)


3Q 2019

Despite the business potential in the new tea market, it’s also a difficult path to tread as new opportunities arise new challenges. Barriers to entry may appear low but due to supply chain complexity, it’s also a challenge. Opening one store is simpler than starting chains as the management team only needs to keep track of one resource stream. It’s also easier to keep track of quality, not only your final product but also your raw materials. Logistics, storage, and transportation are important factors to take into account.

Tea multinationals get notice to surrender title deeds

Kenyan government has issued an ultimatum to multinational tea companies in the country to surrender title deeds of their plantations.

James Finlay, Unilever Tea, George Williamson, and Sotik Highlands Tea are among the 10 multinational tea companies the county government has written to, staking a claim on the parcels of land. The investors occupy an estimated 800,000 acres with tea bushes. The parcels of land were acquired during the pre-independence period.

According to available information, administration wants to regularise all land held under leasehold interest by resurveying it to issue fresh leases to the firms. The companies have 14 days to surrender title deeds from the date of government notice . The governor says after the expiry of the deadline, his administration will evaluate the response by the companies and issue a directive on the way forward.

But in their defence, the multinational companies through the Kenya Tea Growers Association said there is a court order issued some time back preventing any interference with the leases.

(Standard Media)

The plans by the government is to issue the companies with fresh leases that do not exceed 99 years as prescribed by the Constitution. The move comes months after a committee formed by National Land Commission to look into the historical land injustice ordered a fresh survey and audit to be undertaken over land allocated to the companies in Kericho and Bomet.

Additionally, developing and establishing brand awareness is difficult when the industry is already established. In HeyTea’s case, there are many articles written about their experience waiting in tedious lineups such as the one by Caixin Global on a high school student’s hour-long wait for a cup of tea. According to the South China Morning Post, and the Financial Review consumers are more than willing to share their experience online, particularly through WeChat. This not only saves HeyTea “millions in marketing costs” but also reflects their popularity in China and the new tea industry.

Nayuki, on the other hand, its co-founder, PENG Xin was a former director at an IT company. She and her husband, a businessman, worked to pioneer the concept of pairing tea and bread. Over the last three years since its debut, Nayuki is now situated in department stores in tier one cities. According to Business Insider, “each store generates an average monthly sale of RMB 1 million.

HeyTea and Nayuki weren’t pioneers in cheese tea. This special beverage originated in Taiwan. However, it was the “thick and frothy topping anointing each drink” that separated HeyTea from the country’s ubiquitous milk tea, according to AFAR. HeyTea was originally known as RoyalTea but was rebranded four years after its debut. In 2018, HeyTea saw positive growth and has doubled its shop number to reach 163 in total, according to China Daily. Additionally, the HeyTea’s expansion into Singapore saw a reported selling 2,000 cups daily.

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