Organizers of the Nomad Tea Festival this weekend are joyfully building on a gathering in July that attracted more than 550 tea lovers from 59 countries. Lead by tea enthusiasts in Europe, this more ambitious two-day virtual event brings together a diverse, talented, and very tech-savvy cadre of tea experts, educators, entertainers, and vendors.
A 16-hour pre-show begins at midnight Friday, Oct. 23 (Central European Summer (Daylight Savings) Time – UTC+2). On Saturday, Oct. 24, the festival launches its live programming at 4 p.m. (CEST) and runs until midnight. The festival offers 15 free workshops and several paid events. Sunday marks the change from daylight savings to standard time, turning back the clock. On Sunday festival activities begin at 2 p.m. (CET). The festival ends at 10 p.m.
Use World Time Buddy (free) to determine start times in your time zone. (The schedule on the Nomad Festival page will magically convert time zones when you register. Since Tea Biz circulates to readers in 140 nations, to keep listings simple all times in this post are CEST or CET).
Watch a mix of free and paid programming, chat with fellow tea lovers globally, visit virtual tea booths to speak with vendors during appointed hours and stick around for the PARTEAS on Saturday and Sunday. Attendees in anticipation of the event pre-recorded short videos to introduce themselves during the opening-night party and describe their love of tea.
Our mission is to build an inclusive tea community by connecting, engaging, and uplifting the diverse tea communities of the world.
Nomad Tea Festival
Click here for TEAkets. General admission is €5.00 General admission + replay is €15.00 TEAkets to attend paid workshops range from €20-€55.00 Attending PARTEAS and visiting the Tea Market is free. Tea Market Vendors click here. RSVP for one of three PARTEAS here.
Xenia Blanco and Soo Chung are co-directors of the Nomad Tea Festival Europe, coordinating a global TEAm inspired to re-connect the many millions of tea lovers separated by the COVID-19 pandemic.
“So many tea events had to announce heartbreaking cancellations, affecting thousands of people from small tea farmers to tea passionate fans,” said Blanco. Events that bring the tea community together are more than simple entertainment, she explains. The festival was created to enhance the overall ecosystem for the global tea community. Virtual events reduce unnecessary cost and waste and bureaucracy. The Nomad Tea Festival is transparent, appeals to tea lovers around the world via a broad range of social media and digital channels and creates opportunities for people interested in tea, she says
Here is the two-day schedule:
SATURDAY Oct 24 4:15PM–4:45PM · Stage Japan, More Than Green Tea │ Priscila Vázquez Ruilova Oct 24 5:00PM–5:45PM · Stage Tea Cocktails│ Susanne Lang Oct 24 6:00PM–7:00PM · Stage Indian Tea – History & Pairing │ Susmita Das Gupta Oct 24 7:15PM–8:00PM · Stage Japanese Tea Ceremony, Omotesenke │ Alba Ameller Oct 24 8:15PM-9:00PM Tea Book Club Tea Partea | Teabookclub Oct 24 9:00PM–10:00PM · Sessions PAID: The Tea Journey to Nomad Cultures Through Tea Horse Trade Route Oct 24 9:00PM–10:00PM · Stage Getting to Know Your Bes-Teas │ Mike Cuevas Oct 24 10:00PM–10:45PM · Stage Introduction to Sencha │ Ricardo Caicedo Oct 24 11:00PM–12:00AM · Stage Midnight Tea Party│ Kyle Whittington (Tea Book Club)
SUNDAY Oct 25 2:15PM–3:00PM · Stage Evolution of Tea Drinking History │ Isilay Aktas Oct 25 3:00PM–4:00PM · Stage How to Source Tea │ Matt Hopkins Oct 25 4:00PM–5:00PM · Stage The Most Boring Tea Business Talk Ever │ Ian Chun Oct 25 5:15PM–6:00PM · Stage Japanese Tea in Japan and Europe│ Simona Zavadckyte & Anna Poian Oct 25 6:00PM–7:00PM · Sessions PAID:Old Trees in China │ Michal Butor Oct 25 7:00PM–7:45PM · Stage Heat Sources and Kettles for Tea │ Admar de Bruin Oct 25 7:45PM–7:55PM · Stage Music for Tea │ Kuzma Bogdanov Oct 25 8:00PM–9:15PM · Sessions Yoga Explorations With Ma (間) │ Moé Kishida Oct 25 9:00PM–10:00PM · Stage Finale Tea Partea │ Soo Chung & Xenia Blanco
Thirsty for more: Soo Chung is hosting the Nomad Tea Festival – Korea in December 2020.
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Tea Industry News for the week of September 28, 2020
Tea Sales Accelerate in Canada
Tea Retailers Cope with COVID
Delivery and Takeaway Boost Market Share
Tea Sales Accelerate in Canada
Retailers of Fast Moving Consumer Goods (FMCG) are still playing catch-up after six months of record sales while foodservice operators struggle following a 27% decline in visits during the past six months. Canada’s economic recovery has begun, but it will be slow, advises Vince Sgabellone, Foodservice Industry Analyst at The NPD Group.
One of the best performers in FMCG is tea, according to Carman Allison, Vice President of Consumer Insights for Nielsen Canada. “Tea has reported an even higher bump in sales in 2020, than FMCG as a category,” he told 60 online attendees.
Year-to-date (Aug. 15) sales are up 19.6% compared to 2019, a full seven points greater than FMCG overall. Tea sales peaked earlier than total FMCG and have been consistently growing faster, he explained. This pace is an unprecedented 5.4 times greater than fiscal 2019, reaching $28.8 million. COVID contributed 80% of the year-to-date increase adding $25.5 million for an 89% increase in growth above expected, according to Allison.
Both Sgabellone and Allison shared valuable insights with tea industry leaders this week during the “The Present: Reimagined”, a two-day virtual gathering hosted by the Tea & Herbal Association of Canada (THAC).
Sgabellone observed that the Canadian restaurant industry was “growing slowly” in late 2019, with restaurant traffic up 1% for the year and restaurant dollars up 3%, citing NPD Group/CREST statistics through August. Within weeks restaurant traffic decline by 27% and revenue dropped 31%. The restaurant industry has been devastated by the COVID-19 crisis,” he said.
Coffee is flat, carbonated drinks are down as well as beverage alcohol but “hot tea is the category-leading growth on the year” with a 9% growth in spend through August compared to the previous year. Coffee and soft drinks account for a greater share of beverage servings but tea now accounts for a 7% share, according to Sgabellone.
Tea in the Time of COVID
By Jessica Natale Woollard
The reason tea sales should not decline during COVID is that tea is a food product found in virtually every Canadian home, and “food companies should be okay,” says Sameer Pruthee, CEO of wholesale distributor Tea Affair based in Alberta, Canada.
And yet, his business, which distributes around 60 metric tons of tea and blends every year to more than 600 wholesale clients in Canada, the United States, and Asia, has declined approximately 30% every month since the March shutdown. The decline, he noted, is most significant among his retail clients in Canada, where the lockdown was widespread and uniformly enforced from mid-March until the end of May.
Pruthee’s theory for why tea sales are down is that tea is not an “online thing. Tea is social,” he explains.
Customers buy tea after the experience of visiting a tea shop, talking to staff, smelling the varieties, and learning about the leaves and their origins. “If nobody can smell the tea, nobody will buy tea,” he says.
Beginning in March tea retailers supplying local restaurants and cafes watched helplessly as re-orders vanished. Local tea shops with online stores initially reported strong sales, largely to existing customers during lockdowns, but without face-to-face opportunities to introduce new teas, tea retailers must innovate to attract new customers.
DAVIDsTEA provides a vivid example. The Montreal-based firm, the largest tea retail chain in North America, was forced to restructure, closing all but 18 of its 226 stores in the US and Canada due to COVID-19. To survive, the company adopted a “digital first” strategy, investing in its online customer experience by bringing its tea guides online to provide human and personalized interaction. The company also upgraded the capabilities of DAVI, a virtual assistant that helps customers shop, discover new collections, stay in the loop with the latest tea accessories, and more.
“The simplicity and clarity of our brand is resonating online as we successfully bring our tea expertise online, by providing a clear and interactive experience for our customers to continue to explore, discover and taste teas they love,” said Sarah Segal, Chief Brand Officer at DAVIDsTEA. The physical stores that remain open are concentrated in the Ontario and Quebec markets. Following a disastrous first quarter, DAVIDsTEA reported a 190% second-quarter increase in e-commerce and wholesale sales to $23 million with a profit of $8.3 million largely due to a $24.2 million decrease in operating costs. Still, sales overall are down by 41% for the three months ending Aug. 1. Still, when compared to the previous year, profits decreased by 62% with gross profit as a percentage of sales declining to 36% from 56% in 2019. Delivery and distribution costs increased by $3 million, according to the company.
“We expect that the increased cost to deliver online purchases will be less than the selling expenses incurred in a retail environment that have been historically included as part of selling, general and administration expenses,” according to the company.
COVID has changed consumer habits, Pruthee says. COVID first cut off in-person shopping, and then transform the shopping experience due to social distancing. For the tea industry to bounce back, tea companies need to find ways to be part of new customer habits.
Below, Tea Biz looks at how three Canadian tea businesses have adjusted to the new normal of COVID-19.
Enhanced customer service
Free home delivery was Suzanne Tsai’s first response to COVID.
Co-owner of the Tea Centre in Courtenay, B.C., along with her husband, Marny, Tsai sensed at the start of the lockdown in March that it would be important to keep connected with their loyal and local customers. The shop started offering free delivery around the region, even driving to nearby towns to bring people their “creature comforts.”
Delivery was worth the investment in gas and wear and tear on their vehicle, Tsai says. “We were able to maintain our business and our customer base.”
Since March, business has been down approximately 10% to 15%, Tsai says, noting, that their expenses have also been less — the shop had to layoff staff after closing the physical store in March. Since then Tsai and her husband have been working extra hours to fill orders.
Tsai attributes the decreased sales with customers’ inability to visit the store, chat with staff, and smell the teas. “Those days are over,” she says.
The shop reopened with reduced hours on June 1, but the size of their store and social distancing requirements has meant customers can’t go inside the shop; instead, service is offered outside the front door.
People are lined up every day, Tsai says, but they can’t experience the loveliness of the shop and that affects sales, particularly of teawares. “People want to see them, touch them, hold them,” she explains. “And they don’t like the pressure of trying to buy a teapot when there is someone behind them waiting in line to pick up an order.”
But delivery orders and online sales have kept the business afloat. “We did get some new customers because many other tea stores were closed down,” she says, adding that the company nearly reached Christmas-level orders between mid- March and May, when Canada was shut down.
“For a small tea business, we feel like we’ve really held our own.”
Wellness tea promotions
The tourist town of Banff, Alberta, in the Canadian Rocky Mountains faced 85% unemployment during the lockdown. Banff National Park, Canada’s oldest national park, attracted 4 million visitors last year and has received more than three million visitors annually since 2010/11. The Banff Tea Company, typically attracts tens of thousands of visitors from around the world, shop owner Siona Gatshore says, and those visitors frequently turn into online customers.
When the shop shut its doors in March, Gartshore laid off staff and moved the business fully online. But, online sales soared, so she rehired two employees within a few days. Though the Banff Tea Company doesn’t ship many tea wares — shipping costs are prohibitive when mailing breakables, Gartshore explains — tea sales, like at the Tea Centre in Courtenay, reached Christmas levels.
“It didn’t make up for not having the store open, but it was enough to pull us through and pay the bills and keep us moving,” Gartshore says.
Banff Tea Company also increased its customer engagement activity on social media, posting more regularly, sharing information, and doing prize draws for products, something Gartshore had not done before.
She invited people to vote to name a new tea blend, choosing between Uncertain Tea and San-i-tea, a new herbal wellness tea with anti-viral and immune boosting ingredients.
“We highlighted our wellness teas (in our online marketing) straight off the bat,” Gartshore explains, noting sales of wellness teas increased when COVID hit. For the first time, Banff Tea Company also sold dried elderberries, a natural antiviral, which sold well.
“Everyone’s feeling uncertain and stressed. Our Knock Yourself Out! sleepy tea has been our best-selling tea for nine years, and our second is Anx-i-e-Tea. People were buying them to comfort them through lockdown,” she explains.
Ironically, the vote between Uncertain Tea and San-i-tea came out even. “We ended up going with Uncertain Tea since no one could decide,” Gartshore laughs.
With fall concerts, festivals, events and conferences cancelled, Banff Tea Company is anticipating a quiet fall. Gartshore will be focused on planning holiday promotions to boost online sales.
“Our customers will get us through,” she says. “I’m so grateful for our customers. We wouldn’t be here without people thinking, buy local.”
Opportunity for innovation
COVID provided the right timing for Tea Haus owners Stefanie Stolzel and her husband to implement new business development strategies.
The London, Ontario, tea shop, has been located in the downtown Covent Garden Market since 2000. Normally the market is busy with office workers, tourists and shoppers, and Stolzel has an established online shop that has been operating since 2003.
Like the Banff Tea Company, Stolzel laid off staff at the start of the lockdown, only to call them back two days later to help with a surge in online sales.
“Without any additional advertising, our customers seemed to go online and order,” says Stolzel, noting that staff include a handwritten thank you note with each order.
In early 2020, Tea Haus won a $2,500 grant from Digital Main Street, a program of the Province of Ontario and the Government of Canada that helps small businesses boost their digital presence.
“The timing was perfect,” Stolzel says. “The funding had to be spent by May 31, so we invested that funding and our own capital (during COVID) to expand our (digital marketing) efforts.”
Primarily, Tea Haus invested funds into social media ads.
In addition, Stolzel participated in a program in early 2020 through Riipen, a company that matches post-secondary students with companies to help them solve problems. Three marketing classes tackled business challenges for Tea Haus, offering solutions and providing ideas to implement, for example, a social media strategy.
“COVID allowed me to focus on these ideas and read them properly,” Stolzel explains, adding she hopes to implement more of the students’ recommendations this fall.
Like Tea Centre in Courtenay, Tea Centre is operating a booth in front of their store, setting up displays so people can see products up close rather than just online.
Says Stolzel, “People still have money to spend, and they want something nice to treat themselves.”
A time to learn
Despite differences in approaches to selling tea during COVID, the company owners interviewed agree that the COVID experience is a time of learning and trying new things.
“There’s no clear direction right now,” Tea Affair’s Sameer Pruthee says. “We try to see what’s happening and what direction we have to take our companies in. Nobody has an answer right now.”
As Canada adjusts to the new normal, now is a good time to sit back, relax, and have a cuppa. Perhaps the answer will be revealed in the tea leaves.
Tea in Foodservice
Research and Markets projects a 4% increase in tea sales in foodservice during the next four years, a revision accounting for the impact of COVID-19 on sales.
“The growth of food delivery and the takeaway market is one of the prime reasons driving the foodservice tea market in US growth during the next few years,” according to the report Foodservice Tea Market in the US 2020-24. “The market is driven by rising demand for mobile foodservice and the functional benefits of tea as well,” according to the newly released report.
Research and Markets estimates the market will increase by $2.66 billion during the forecast period.
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Tea Industry News for the week of September 9, 2020
COVID Study Implicates Restaurants
Retail Stirrings Billy Corgan Resurrects Madame ZuZu’s Tea Emporium
Unilever Divestiture Worries Plantation Workers
COVID Study Implicates Restaurants
CDC: Dining-in Poses Risk
The US Centers for Disease Control and Prevention (CDC) finds that adults with COVID-19 are about “twice as likely” to say they have dined at a restaurant during the 14 days before testing positive for the disease.
The study, which was limited to those experiencing symptoms, examined 314 adults at 11 different health care facilities in 10 states. Half (154) tested positive, and 160 tested negative for COVID-19.
Those who tested positive “were approximately twice as likely to have reported dining at a restaurant than were those with negative SARS-CoV-2 test results,” according to the study. As a result, researchers recommend that “efforts to reduce possible exposures where mask use and social distancing are difficult to maintain, such as when eating and drinking, should be considered to protect customers, employees, and communities.”
“Adults with confirmed COVID-19 (case-patients) were approximately twice as likely as were control-participants to have reported dining at a restaurant in the 14 days before becoming ill,” according to the CDC. “In addition to dining at a restaurant, case-patients were more likely to report going to a bar/coffee shop,” according to the report released Sept. 11.
“Reports of exposures in restaurants have been linked to air circulation. Direction, ventilation, and intensity of airflow might affect virus transmission, even if social distancing measures and mask use are implemented according to current guidance. Masks cannot be effectively worn while eating and drinking, whereas shopping and numerous other indoor activities do not preclude mask use,” according to the study.
Researchers report that 71% of the COVID-19 positive patients said they work masks in public; 74% of those who tested negative said they always wore face coverings in public.
“In this investigation, participants with and without COVID-19 reported generally similar community exposures, with the exception of going to locations with on-site eating and drinking options,” writes CDC.
Forty-two percent of those who tested positive reported having close contact with at least one person known to have COVID-19, most often family members.
The study mentions five limitations, including small sample size and the fact that participants were aware of their test results. “Of note, the question assessing dining at a restaurant did not distinguish between indoor and outdoor options,” according to researchers, who say additional research is warranted but caution that “eating and drinking on-site at locations might be important risk factors associated with SARS-CoV-2 infection.”
Billy Corgan Resurrects Madame ZuZu’s Tea Emporium
Two years after closing, and in the middle of serious viral spread in Chicago, Billy Corgan is bringing back Madame ZuZu’s Tea Emporium on First Street in Highland Park.
Singer and song writer Corgan, who founded the Grammy-Award winning Smashing Pumpkins, promises “to carry on ZuZu’s tradition of a whimsical atmosphere but in a larger, Art Deco space reminiscent of a 1930’s tea salon.”
Partner Chloe Mendel told Eater Chicago that she and Corgan are sourcing from the Rare Tea Cellar, a local gourmet tea supplier with a global reputation. In addition to superior teas, the cellar offers $195 olive oil and bottled mixes like Umami Shrubbery and Forbidden Forest Lapsang Souchong Syrup.
The avante-garde vegan menu expands on the original, featuring $10.25 salads such as kale power salad, Chinoise crunch and Salad Niçoise. Chloe’s tomato soup is $4.95 a cup and sandwiches sell for $8 to $12. Specialties include grilled vegan cheese and vegan Gado Gado tofu bowl and a miso bowl with pickled veggies and coconut rice.
“I quickly learned that the delicious world of plants is so overlooked,”says Mendel, who crafted several plant-based dishes.s here
Iced tea sells for $3 a glass and a Korean Blue Elektra Matcha is priced at $4.50. There is a Reishi cappuccino and a Lionsmane Mushroom Coffee ($5) on the drink menu. The rare teas are about double these prices.
“Our business model is simple: healthy living combined with an open source venue for the arts, where everyone in our community can gather and share,” writes Corgan, who opened the first location in 2012.
At the time he told Crave Magazine, “I’m a tea guy and living in Highland Park since 2003. I’ve always wanted to open a salon like this for everyone to enjoy,” Corgan told Crave Online. “This is a place with no age boundaries. We hope to attract everyone from young students to seniors. With a blend of music, photo galleries, art displays and speakers, I think Madame ZuZu’s offers something for everyone.”
There will be no impromptu concerts for now. The shop operates under COVID-19 restraints limiting dining-in, so take-out is a good option. Staff are tested for COVID-19 daily, writes Corgan.
Amid hundreds of store closings, a steady trickle of new tea shops and cafes are re-opening. Eater Chicago lists Sawada Coffee, the Living Water Tea House and El (evated) Ideas, a Michelin-starred restaurant. Keep in mind that while tea shops sell a tiny fraction of the total volume on offer, places like Madame ZuZus influence conventional tea drinkers to give specialty teas a try.
Unilever Divestiture Worries Plantation Workers
The announced divestiture of tea holdings by the world’s largest tea supplier makes uncertain the fate of the company’s wholly owned tea gardens and hundreds of smaller gardens under contract.
In July, following a strategic review begun in January, London-based Unilever said it will break up its tea business, retaining only bottling partnerships while continuing operations in India and Indonesia. The rest of the company’s tea assets, including several tea estates, will be sold at auction.
Unilever purchases 10% of the world’s tea, employing more than one million workers in 21 countries. Brands currently marketed by the company include Lipton, PG Tips, Brooke Bond, Pure Leaf, TAZO, Bushells, T2 (retail shops), and 21 smaller brands sold in more than 150 countries. Lipton Yellow Label, the world’s best-selling tea brand, accounts for 7% of black tea sales globally. Sales of green tea are insignificant when compared to Asia brands. The tea division is valued at $4-$5 billion, according to financial analysts at Barclays.
Unilever will retain the core brand in high-growth markets and divest in slow-growth regions such as Australia and Europe where the popularity of black tea is in decline, according to Allied Market Research.
In Kenya, 60,000 workers employed by Unilever Tea Kenya Ltd. anticipate a gradual scaling back of operations at the 8,700-hectare Kericho Tea Estate. Staff are uneasy, according to TheNation which reports Unilever “has not yet revealed its plans with its Kenya operations to shareholders, who have endured five years without receiving dividends owing to losses.”
In August Sylvia-ten Den, managing director at Unilever Kenya Tea Ltd. advised the Kenya Agricultural and Plantation Workers Union (KPAWU) “that the company is changing its operation model.”
“She writes that Unilever will form a new company to manage its global tea business, and that the form and shape of the new entity will be decided at the end of next year. She assures that until then operations will proceed as normal,” according to The Nation.
Unilever contracts with 30 Kenya tea estates and the Kenya Tea Development Agency (KTDA) which represents another 69 estates producing black and green tea.
In addition to Kenya, Unilever contracts with tea gardens in Malawi (21), Uganda (13), Tanzania (12), and Zimbabwe (6). It is likely that Unilever will continue to purchase tea grown in Africa but marketed under its India brands. Brooke Bond, which was acquired by Unilever, has a century-old tradition of growing tea in Africa.
The coronavirus pandemic is forcing companies to reassess their core divisions and shift focus to higher-growth areas, say bankers and mergers and acquisitions lawyers, according to MarketWatch.
“So far this year, companies globally have sold 8,895 non-core assets worth a total of $391 billion, according to financial data provider Refinitiv. That compares to 11,294 asset sales worth almost $415 billion for the same period in 2019,” writes MarketWatch.
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A shortfall in domestic production amid rising demand is boosting tea prices to record highs in India.
The Tea Board of India is reporting record prices at tea auctions. In Kolkata and Guwahati (Assam) prices are up INRs100 ($1.33/kg compared to last year. The price for CTC (crush, tear, curl), which is mainly used in making tea bags, recently averaged INRs 313.58 ($4.19/kg), up INRs129.99 per kilo.
Prabhat Bezboruah, the chairman of India’s Tea Board, said that a 12% price increase might compensate for the 10% crop loss. Green leaf prices in Tamil Nadu also rose from INRs14-17 to INRs22 ($0.29) in August.
Last week marked the fourth week of price gains in Mombasa, Kenya where the East African Tea Traders Association (EATTA) reports an average Ksh208 ($1.93) compared to Ksh194 ($1.80/kg) the previous week. Unlike India, where production has declined significantly, tea production is up 41% in Kenya due to good weather but is likely to plateau for the remainder of the year. Exports to primary trading partner Pakistan are up 14% and the UK purchased 66% more Kenyan tea than usual as a result of shortages elsewhere.
In Japan, the newspaper Chunichi Shimbun reported record low prices for Kagoshima Nibancha. Sales by global tea firm Ito En, the largest tea company in Japan, decreased by 8.5% from February through April due to the coronavirus.
“Tea auctions both in Shizuoka and Kagoshima declared that the price for second harvest tea was lower compared to last year. In Shizuoka, it is estimated that the price per kilogram for summer tea went down by 10-15% from JPY609/kg in 2019. In Kagoshima, the decrease is even steeper by 26% to JPY452/kg this year,” according to the Global Japanese Tea Association.
Over the past decade, tea prices have ranged from a low of $2.19/kg in January 2009 to a high of $3.29/kg in September 2017, but the long-run average price has stood at $2.85/kg, according to the Economist Economic Unit (EIU).
“Last year tea prices fell to $2.57/kg globally, due to ample supply, marking the weakest result since 2008. Although production prospects in most major tea producers are disappointing in 2020, weaker demand growth is likely to depress prices further,” according to EIU. Prices fell to $2.33/kg in the first quarter of 2020, which marked the weakest quarterly result in 11 years. “Although they rebounded to $2.57/kg in the second quarter, they remain 3% below year-earlier levels. We expect tea prices to average $2.50/kg in 2020. Even assuming that underlying conditions improve in 2021, we expect only a moderate rise in average prices, to $2.81/kg,” writes EIU.
Sri Lanka also reports increased prices at auction with some record-setting buys, defying on first appearance the rules of supply and demand.
Controversial Import Proposal
As domestic prices surge, India is weighing the possibility of importing tea from Kenya and Vietnam. The government currently imposes a 100% tariff on tea imports which discourages imports.
If the initiative advances, The Federation of All India Tea Traders Association (FAITTA) said that importing teas will be a one-time affair and that it will not push for imports in the coming years, according to a report in the Economic Times. FAITTA wants a one-year relaxation of tea tariffs.
FAITTA chairman Viren Shah said, “Prices have gone up significantly this year due to a shortage of supply. But we are not being able to pass on the price to our customers because the economic situation in the country is not conducive to increasing prices. The pandemic has created economic uncertainty everywhere.”
The debate is heated. Tea landed in India to this point is for re-export, which is not available in domestic markets where it competes with locally grown tea. Re-exports total only 9-10 million kilos annually. Planters, represented by the India Tea Association (ITA), strongly oppose lowering tariffs even for a limited time.
“We will move the commerce ministry with a request to stop the import of cheap teas if the traders try to do so,” said Vivek Goenka, chairman, ITA.
The price of CTC tea has increased by 48% year-on-year making imports less expensive than domestic teas. Even with a 100% duty, imported Kenyan tea at $1.84 per kilo or Vietnamese tea at $1.50 per kilo would be less expensive than the average INRs305 ($4.07) per kilo paid for CTC at the Kolkata Tea Auction.
India consumers purchase 1,100 million kilos annually. Much of this tea is from Assam and West Bengal where production is down 30% during the period January-July. Ultimately imports may be unavoidable as teas from overseas would stabilize domestic prices.
Monsoons annually claim the lives of many tea workers and cause hundreds of millions in property damage. Ten days ago, 43 died in a mudslide that swept tea workers away in their sleep at the Kannan Devan Hills Plantations (KDHP) in Munnar, South India. Rescuers dug for two days but found no additional survivors amid the 20 homes that were lost. The garden employs 12,500 workers.
In Kerala, lowland floods claimed additional lives. This spring India’s tea production fell 26.4% compared to last year due to a combination of flooding and coronavirus lockdowns. Assam gardens reported serious flooding in May, June, and July which is the top tea producing month.
Indian Tea Association Secretary Sujit Patra, told Reuters that a recovery in crop totals was unlikely in the second half of the year. The shortfall has caused auction prices to rise up to a record average of IRNs232.60 ($3.12) per kilo last week, up 57% compared to the same period in 2019.
This week in Yunnan China, 14 died and 20 are still missing following flash floods caused by Typhoon Higos. Landslides killed five. The storm forced the relocation of 34,900 residents and affected 1.1 million people, causing at least $450 million in damage, according to China.Org. After an extended drought, rainfall averages are up 12.5% year-on-year. Across China 200 have died in weather-related incidents this year which have caused $25 billion in losses.
In July the Japanese island of Kyushu suffered severe flooding that damaged several tea farms. Production is down overall, in Shizuoka the normal harvest decreased by 20-30% from 7,616 metric tons in 2019, and likely will be the lowest since 1953, when the first of such data became available.
TheWorld Meteorological Organization (WMO) predicts“high latitude regions and the Sahel* are likely to be wetter than the recent past whereas northern and eastern parts of South America are likely to be dryer” during the period 2020-2024.
“Most of Eurasia, eastern USA and central Africa have been wetter than average, with southern Africa, eastern Australia, Indonesia, north-east Brazil, and western Europe drier than average,” according to WMO’s five-year forecast.
“The annual global temperature is likely to be at least 1°C warmer than pre-industrial levels (defined as the 1850-1900 average) in each of the coming 5 years and is very likely to be within the range 0.91 – 1.59°C,” according to WMO.
“The smallest temperature change is expected in the tropics and in the mid-latitudes of the Southern Hemisphere,” according to WMO, but “it is likely (~70% chance) that one or more months during the next 5 years will be at least 1.5°C warmer than pre-industrial levels.
Click here to download WMO’s 16-page global weather update.
The deadline to enter the third annual Teas of the World competition, conducted by the Agency for the Valuation of Agricultural Products (AVPA) is Sept. 15, 2020. Prizes will be awarded Nov. 16 in Paris, France
The competition is open to producers who benefit from recognition of their exceptional quality, helps producers stand out from others growing and processing tea, and encourages producers to explore new tea markets.
The competition consists of “Monovarietal teas.” a category limited to Camellia Sinensis and “Infusions” which include beverages made with plants other than Camellia Sinensis including blends and favored teas.
Judges evaluate gastronomic rather than standardized refereeing, seeking a striking rather than consensual sensory profile. “This is the first time that an independent body in a consumer country promotes the good practices of production and trade actors,” writes AVPA.
Fees are €110 for individual producers, €550 for other tea professionals and €1,500 for collective organizations.
AVPA is a non-governmental, non-profit organization of producers and enthusiasts. The organization annually conducts four international contests in addition to evaluating tea. These include “Coffees roasted at Origin”, “Chocolates pressed at Origin” and “World Edible Oils.”
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Few tea ventures deployed parachutes capable of breaking the fall as the world’s economies catapulted over the second quarter cliff.
The result is the permanent closure of hundreds of high-profile tea locations in malls and tourist destinations as well as beloved Mainstreet independents like the 10-year-old Wenham Tea House in Massachusetts and 27-year-old Lucy’s Coffee & Tea in Birmingham, Ala.
The Samovar Tea Lounge’s three San Francisco locations are “hibernating” for an unspecified time and the Floating Mountain Tea House will relocate from New York’s upper west side to Croton-on-Hudson upstate. Restaurants that featured fine tea, including Augustine in New York’s Beekman hotel, Vaucluse on Park Avenue and “even the glitzy McDonald’s flagship store off Times Square closed,” according to a list maintained by Eater New York. In July DAVIDsTEA permanently shuttered 213 locations including 42 in the U.S. leaving only 18 in Canada.
The U.S. experienced a record 9.5% drop in economic output, that if left unchecked before the year ends could lead to an unprecedented 32.9% annualized decline in GDP. Europe experienced a 12.1% decline, its worst contraction on record. Canada, which has suffered many fewer infections and COVID-19 deaths than the EU and US, estimates its economic activity will decline 12%, according to Statistics Canada. Retail sales in all the Western countries signal a deep recession with several segments, including food service, plummeting from the end of March and continuing their decline through April. Retail rallies began in May except in the U.S. where a new surge of infections led to a loss of steam by July.
The descent was especially rapid and painful in the U.S. It is difficult to get precise numbers on sales of tea in retail channels. Grocery sales figures are generally good as millions of customers that purchased tea at restaurants and cafes now brew at home. Online sales spiked last spring but are flattening. The tea shop category mirrors the fate that has befallen small independently owned cafes and bars with some segments such as Sunday afternoon tea in tony hotels and at cozy Victorian tearooms located in southern tourist towns virtually annihilated.
“Afternoon tea was devastated in the U.S. in particular—most of those businesses didn’t have a way to pivot online or offer tea-to-go,” writes Abraham Rowe, founder of Sinensis Research in Washington, D.C. Rowe observes that online sales proved to be a lifesaver, “people were loyal to some local shops, and are now shopping online from them.”
“Store closures are down a bit—I don’t have final figures, but hope to run another survey sometime to finalize it,” said Rowe.
As brick and mortar sales at tea merchants slipped over the precipice, online sales increased but not uniformly. An updraft enabled Amazon to glide to the bottom with a year-over-year increase of 34% in tea sales, totaling $29 million for the 52 weeks ending in May, according to Hinge Global. Walmart generated an unexpected $4 billion during the first quarter, up 4% over the same period compared to the previous year. The company announced it intends to become a “omnichannel” business. During the past year Walmart consolidated its online and physical store operations and is focused on expanding e-commerce rather than building new stores.
Amazon and Walmart are the exceptions amid a pandemic that devastated the retail sector. While customers ordered groceries online and had food delivered, very few tea ventures had time to deploy a Plan B. DAVIDsTEA, headquartered in Montreal, Canada, in March closed 231 locations eliminating $12.1 million in second quarter sales. Sales for the three months ended May 2 declined 27.3% to $32.2 million. Wholesale and online revenue climbed $9.3 million to $17.0 million. Online sales reflect the trend identified by Rowe at Sinensis Research: specialty tea buyers online remain loyal to their local tea shop whether in a mall or downtown.
“Sales in grocery stores and pharmacies across Canada continues solid growth,” according to Frank Zitella, who is both CFO and COO at DAVIDsTEA. He wrote in a July 31 earnings report that “with first quarter sales growth of over 120% year-over-year, we are extremely pleased that our loyal tea-loving customers have shifted to buying our teas online, and in supermarkets and drugstores. The strong performance of these sales channels provided us with the confidence that we are on the right path for the future.”
Calls to wholesalers confirm that while online sales have eased the painful loss of tea house closures, declining monthly orders from restaurants and hotels resulted in orders that are no where near pre-pandemic norms. The collapse of restaurant dining, which accounts for 20% of tea sales globally, is the biggest cause. Some 2.2 million restaurants worldwide are not expected to survive through 2020. Closings have a greater impact on coffee sales in the U.S. but in tea drinking nations like the UK and Russia the shift from away-from-home to at-home preparation has been significant.
McKinsey Small Business Forecast
“In a muted recovery, it could take more than five years for the most affected sectors to get back to 2019-level contributions to GDP,” according to McKinsey & Company. Small businesses, which are hard hit due to lower margins and limited reserves, constitute 68% of the food services and accommodations sector and are not expected to recover before the first quarter 2024 stretching into 2025. Arts, entertainment and recreation sectors will take even longer, according to U.S. Small Business Recovery After the COVID-19 Crisis.
“After the 2008 recession, larger companies recovered to their pre-crisis contribution to GDP in an average of four years, while smaller ones took an average of six,” writes McKinsey Global Institute.
“Improving operations and adapting business models can help small businesses in many industries recover,” observes McKinsey, but muted demand, operational challenges due to health and safety restrictions and new customer expectations all take time: “Finding the cash to do so may be a stretch.”
Working capital is often tied up in inventory and small businesses have added cost servicing their debt. A McKinsey survey of 1000 small firms finds the cost of servicing debt averages 30% of revenue. The shift to off-premise delivery and carryout “is likely to erode profitability and increase packaging costs and hinder their ability to sell high-margin items.” McKinsey found that nearly 40% of small businesses in the restaurant sector operate at a loss or break-even.
Solutions suggested in the report involve technology and marketing.
“Independent restaurants might digitize their businesses by using aggregators to increase their visibility, reach potential diners, and outsource their delivery,” write McKinsey authors Andre Dua, Deepa Mahajan, Lucienne Oyer and Sree Ramaswamy.
“Aggregators might help by offering additional on-boarding support or spotlighting small, independent restaurants on their platforms. Some combination of public and private aid may also be necessary for small restaurants, especially offering technical and financial support they’ll need to compete with larger ones that can build contact-less solutions at scale,” according to the report.
“The crisis has exposed financial frailties that have built over time, and the next normal could impose additional burdens,” according to the authors, who add, “The survival of US small businesses across the economy will require new business models and technology solutions that few have the resources to finance.”
World Tea Hosts Virtual Summit
Organizers of the World Tea Expo this week announced a virtual summit scheduled for the second week of October.
The World Tea Conference + Expo was postponed from June 14-16 to October. It was later canceled due to restrictions on events drawing large crowds to the Colorado Convention Center, in Denver Colo.
The World Tea Virtual Summit + Resources is scheduled for October 12-14.
“The virtual summit will introduce online networking and lead generation,” according to Questex, organizers of the event. Guests include Sebastian Michaelis, head of tea at Tata Global Beverages; Peter Goggi, president of the Tea Association of the USA, and Tony Tellin, co-founder of A. Tellin Co.
The agenda of three half days offers an opportunity to “learn from peers, share ideas, network virtually and safely, and support one another as we continue the shared journey through COVID.”
The next live, in-person event is scheduled for July 14-16, 2021.
Great quantities of tea are blended in America but according to the Made in America Act, a product manufactured in the US that claims to be American made, must contain at least 50% US ingredients.
ALexology post this week discusses a class action suit “that calls out Bigelow Tea for pushing unpatriotic tea.”
The post summarizes a report by Linda Goldstein and Amy Ralph Mudge with the Washington D.C. based law firm Baker & Hostetler.
The complaint, filed in California’s Central District Court, by Kimberly Banks and Carol Cantwell, alleges that by promoting their tea as “Manufactured in the USA 100% American family owned” and “America’s classic” Bigelow violates provisions of the California Consumer Legal Remedies Act, False Advertising Law, Unfair Competition Law, and Breach of Express and Implied Warranty.
Plaintiffs allege themselves and other consumers, “purchased the Bigelow Tea products because they reasonably believed, based on the packaging and advertising, that these products are American-made. However, the products are comprised solely of foreign-sourced and processed tea.”
Had plaintiffs known the truth “they would have paid less for them or they would not have purchased them at all,” reads the complaint.
Bigelow Tea responded Friday with the following statement: “Bigelow unequivocally disputes the allegations in this California based lawsuit.”
“Every box with our statement of being “Manufactured in the USA” refers to the fact these teas are produced and distributed by one of our three Bigelow owned and operated manufacturing facilities, located in Connecticut, Kentucky, and Idaho. In addition, our packaging clearly states that our teas are “Blended and Packaged in the USA”. Bigelow continues to be open and transparent about our global sourcing of ingredients (many of which come from the United States) on both our website and the packaging of select varieties of our teas.”
“Frivolous lawsuits such as these are designed to purposefully damage the reputation and finances of the companies they target. Bigelow Tea is proud to be a 100% American family owned and operated manufacturing company and we are prepared to vigorously defend ourselves against this meritless lawsuit,” writes Bigelow.
While Bigelow owns the largest US tea farm, The Charleston Tea Garden, located in Charleston, South Carolina, the tea garden markets its tea under its own brand. The plantation website makes it clear that “Bigelow Teas are not made from any of the tea leaves grown or harvested here at the Charleston Tea Garden. Charleston Tea Garden teas are the only teas made from the tea leaves produced by the Camellia Sinensis plants grown in the fields of the Charleston Tea Garden.”
DMCC Expansion Plans
Fifteen years ago,Ahmed Bin Sulayem, executive chairman and chief executive officer of Dubai’s Multi Commodity Centre (DMCC) envisioned a tea trading hub that would service the world’s largest growing regions.
Today DMCC processes 48,000 metric tons of tea annually, accounting for 60% of global re-exports. The facility has processed 320 million kilos since its inception. The modern port facilities and airfreight capability attracted 800 new companies during the first half of 2020, said Bin Sulayem, adding that the months of May and June saw a “noticeable uptick despite an overall softer business climate.”
The tea center and atmospheric-controlled warehouse, which stores 5,000 metric tons, has a turnover of $184 million annually.
Commodity teas from 13 origins are blended for consistency and these blends, are often mixed to make herbal, floral inclusions sold as some of the world’s most popular teas. Examples include Earl Grey and the many breakfast blends distinct to markets in Ireland, Scotland, and England. Classic brands processed include Lipton and Red Rose as well as local blenders such as Tea Trading International DMCC, a Dubai-based British SME that markets brands Vertea and The Leaf to food-service catering, hotel, and resort customers.
DMCC’s tea and its new coffee center drew the attention recently of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE, during a visit reported by Gulf Today.
“Under the guidance of His Highness Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, DMCC is fast becoming the global hub for the tea and coffee industry. Our ambitious plans to triple our capacity in the near future are strategically anchored in Dubai’s drive and ability to facilitate world trade,” said Bin Sulayem.
In a release by Arjun Katyal, of McLeod Russel Middle East DMCC, said, “The DMCC’s expansion plans are incredibly exciting, and represent a huge boost to Dubai’s status as a leading global trade hub. We have been a DMCC Tea Centre member since 2011, and have seen, first-hand, the expertise, experience and vision that has shaped the success of this facility. McLeod Russel Middle East DMCC has its sights set on continued growth, and we will continue to engage new markets and reach a wider customer base than ever before. The DMCC Tea Centre has an important role to play in our success story, and we congratulate them on their latest announcement.”
Since 2005 DMCC has become one of the fastest growing free zones in the world with more than 17,000 companies conducting business in a number of sectors including precious metals, tea and coffee, and food commodities. Establishments and individuals operating in DMCC are exempt from all taxes including income tax, for a period of 50 years.
Measuring Elements in Tea
Minerals are essential to the heath of tea plants and for tea drinkers to experience the full range of tea flavor, but too much of even the best of things in life can create problems.
Researchers Dr. Ying Guo, Dr. Seungjin Lee, and Dr. Tae Lee at Georgia Gwinnett College are currently engaged in testing five commonly available tea brands using a handheld Laser Induced Breakdown Spectroscopy (LIBS) unit manufactured by SciAps. The Z-300 analyzer detects very low concentrations of mineral and potentially harmful heavy elements.
The team, whose lab work is temporarily suspended during the pandemic, detected all of the following minerals and alkali metals (Cs, K, Li, Na) in five popular tea brands. The three most common minerals were carbon, calcium, and magnesium in all five samples. Several heavy metals were also present in all five samples including Cd and Cr which are toxic in very low concentrations.
“(Before the shutdown), we obtained the spectra of tea samples and were able to qualitatively determine the elements present,” Guo says. The next step will be to calibrate and complete the quantitative analysis, she says.
Researchers pelletized tea grains from each brand and measured the intensities of emission spectra at different wavelengths to determine the presence of elements of interest in the samples. Results were validated by inductively coupled plasma mass spectroscopy.
Analyzer manufacturer SciAps notes that “minerals play an important role in maintaining the human body. For example, Ca helps with the functions of muscle contraction, enzyme activity, healthy bones and teeth, blood clotting, transmission of nerve impulses, and regulating heartbeat. K can help reduce risks for certain diseases such as stroke, kidney stones, and hypertension. Even though those are beneficial elements to the human body, there is still a suggested daily intake limit.”
The article states that “additionally, tea may be contaminated by heavy metals, “either as a result of uptake from soil or from atmospheric dispersion due to vehicular or human activities,” according to Guo. This is what led them to investigate the levels of both the beneficial minerals
(e.g., potassium and calcium) and unwanted contaminant elements (e.g., cadmium and chromium) present in different tea brands. Heavy metals can be highly toxic even at a very low concentration. LIBS was able to detect the presence of these metals in all five samples.
The following table lists the quantities of each element by relative abundance for each tea brand.
The research has not been published, but once reviewed, “By comparing with recommended daily intake limits and reference dose, we’ll be able to provide insights on daily consumption limits of tea in order to avoid too much intake of toxic elements,” says Guo.
[Editor’s Note: Tea Biz will follow up once the research is published]
Reversal Forces New Lockdowns
After flattening the COVID curve in April and May it began sloping upward in June in the U.S. while Europe continued to suppress spread of the coronavirus. July has since become the worst month on record for COVID spread with 1.9 million new infections and 1,000 deaths per day, bringing the U.S. total to 4.5 million who have tested positive. The virus is now present in populations young and old in every state with infections rising in more than half the U.S. states. Globally there are more than 18 million cases with deaths approaching 700,000. About 6% of those who have tested positive perished. On a hopeful note, 94% (11 million) have recovered. The U.S. continues to lead country totals but Brazil (2.7 million) and India (1.8 million) are hot spots. The UK, Spain, Peru and Chile experienced death rates greater than 500 per 1 million population. More than 250,000 have died with a high of 6,900 per day in April that dipped for about a month before moving seven-day average of 5,600 globally in July.
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“Consumers across all generations are re-shaping the landscape for beverage product development,” according to a Cargill Insights Report titled Blending, Brewing, and Blurring the Lines… Creating a New Breed of Beverages.
“Traditional beverage categorizations are losing relevance, which is blurring the lines of classic categories and creating opportunities—especially for coffee and tea manufacturers—to meet these demands at the expense of soft drinks,” Cargill writes.
Tea is the go-to beverage in the nonalcoholic market which is estimated at $854 billion globally. Euromonitor estimates the value of RTD (ready-to-drink) tea at $67 billion globally.
“Beverages that are inherently functional have seen growing momentum, which has paved the way for new beverage products touting specific health benefits, according to The Hartman Group’s report, “Modern Beverage Culture.” Consumers are increasingly conscious of beverage calories, and they now want a drink to do more—such as provide energy, added protein, or provide other nutritional benefits,” according to the Insights Report.
“Millennials are the poster children of this new beverage era. Their demands and aspirations are driving much of this emerging beverage culture,” according to The Hartman Group. A consumer survey by Hartman reveals “nearly three in four millennials (73%) always have a beverage on hand, compared to Gen Xers (63%) and Boomer (58%).”
“Millennials say that beverages play an important role in their health and wellness and that they like beverages to do something — such as provide energy or nutrients,” according to Cargill. “The win-win may be to address consumers’ changing and variable aspirations for beverage consumption with new drinks that mix both function and fun (think tea-beer combos or hard kombucha). These products will likely see a growing appeal, especially among younger consumers,” according to Cargill.
“More than half of consumers are now using products made with plant-based ingredients, and this trend is only going to increase,” according to Cargill. “Powerhouse beverage categories like coffee and tea are leading the way by working to provide new consumption options while addressing health and wellness trends. Coffee and tea have existing health halos; they have been able to capitalize on this to support the creation of healthier energy drinks, while also serving as a better-for-you flavoring or mixer in high-end cocktails.”
Proprietory surveys by Packaged Facts show significant changes in retail channel trends and consumer motivations across eight retail channels.
“Despite the economic impact of the coronavirus pandemic, large segments of the U.S. food and beverage industry have managed to balance losses in the foodservice sector with gains on the retail side as consumers even now continue to shift their food and beverage spending from restaurants to stocking groceries at home,” according to Packaged Facts.
“We predict sales will spike in 2020 due to the impact of the coronavirus but will likely decline in 2021 as demand reverts back to more normal levels before returning to typical growth patterns from 2022 to 2024,” says Jennifer Mapes-Christ, food industry publisher for Packaged Facts. The study predicts US nonalcoholic beverage sales of $170 billion in 2024.
Plant-Based Beverages are Trending
Plant-based beverages are a hot trend in the market as consumers increasingly integrate plant-based foods and drinks into their diets, according to Packaged Facts.
What’s driving new interest in the segment:
― consumer demand for healthier, natural products
― consumer demand for more and better protein sources
― the consumer perception that plant-based food is more environmentally sustainable
― the increasing number of people who identify as flexitarians, consuming more vegetarian or vegan meals but not exclusively eating that way
The report also cites the popularity of functional and wellness beverages, specifically tea.
“As with all food categories, consumers are demanding more from beverages. Beyond reduced sugar and cleaner labels, people want drinks to make them feel better, stay healthier, and perform at higher levels. The coronavirus pandemic has further elevated people’s desire for products that help keep them healthy. Immunity-boosting products and ingredients had been trending over the last several years already and have been jumping off the shelves as people look to stay healthy amidst the coronavirus pandemic,” according to the report.
“Turmeric has been perhaps the hottest ingredient to boost immunity and is a cornerstone of many new products, along with ingredients such as ginger and Echinacea. Beyond these, marketers continue to enhance drink functionality with ingredients such as antioxidants, adaptogens, vitamins, probiotics, Coenzyme Q10, and BCAAs (branched-chain amino acids),” according to the report.
Co-founder Linda Appel Lipsius is stepping down as CEO of Teatulia Organic Teas. COO Tim Bradley will take her place.
Denver-based Teatulia, founded in 2006, partners with growers in Bangladesh to supply organic teas and herbs used in making a range of hot teas, iced teas, and canned teas, including a newly introduced sparkling soda sold in foodservice and grocery.
The company also operates the Teatulia Tea & Coffee Bar next to its Denver, Colo., headquarters.
“Lipsius has built a universally-respected brand known for doing things better: From the 3,000-acre regenerative garden itself to Teatulia’s stunningly sustainable packaging to the long list of awards Teatulia has received for quality and using business as a force for good,” according to the company.
Bradley previously worked 10 years as COO at Open Road Snacks in Centennial, Colo. He joined Teatulia in July 2017. A former consultant, he is endorsed for his work in sales and marketing and brand management.
“We are grateful beyond words for her contributions over her many years at the helm, and excited to foster the mission and continue the growth Linda nurtured as founder and CEO,” writes Bradley.
“Linda and I have worked together for the last three years to create a team that is truly positioned to take this company to new heights,” he said.
Lipsius credited “a mighty team of the most passionate, creative, tenacious and intelligent individuals I have ever known” for the company’s success during her tenture, as well as “my most extraordinary partners throughout the journey – Kazi Anis Ahmed, Kazi Inam Ahmed, and Kazi Nabil Ahmed MP.”
Too Much Rain Relief
The tea-growing region drained by the Lancang (Mekong) River is humid, with annual rainfall greater than 800 millimeters annually, yet a 10-year drought persists. Last year the region received 888.4 millimeters of rainfall according to meteorologists, but 180 reservoirs remain bone dry and 100 rivers ceased flowing as of April 15, according to the Yunnan Water Resource Department.
Near constant rainfall since the beginning of the month promises relief but at a high cost. On July 3 Kunming was drenched, leading to several deaths, and the displacement of thousands as well as significant crop loss along the Baishui river (which rose 27-feet overnight).
Enshi, the center of tea production in Hubei Province, has seen the worst flooding in decades with 10,000 along the Yangtze River trapped in their homes. Damage is estimated at $11.5 billion with 28,000 homes lost. The water level at the Three Gorges Dam, the world’s largest hydroelectric facility, is 50 feet above its flood-limit level with inflows of 61 million liters a second, according to the Xinhua News Agency.
Yunnan, which is home to 46 million people, sits on a rugged mountainous plateau sloping from the northern highlands south. During the period 1950 to 2012, the Province, experienced 59 drought years, half considered severe.
Droughts have occurred more frequently in recent years, a condition attributed to global climate change. More than 80% of Yunnan’s rainfall now occurs during the period of May through October. Winters are dry and getting warmer. There is insufficient capacity in reservoirs to supply agricultural needs during periods of unusually high temperatures. The drought, which began in June 2019 resulted in shortages of drinking water in Menghai County and lowered yields of Pu’er by a third according to some growers.
In past years the north and eastern sections of the province were more susceptible to dry weather. Now the tea-rich hills in the southwest are hardest hit. Annual precipitation in the Lancang River basin in 2019 was 680.4 mm, according to the China Meteorological Agency. The total is about 25% less than its long-term average, according to a report by CGTN.
A studio published in the journal Ambio reveals that during the period 1978-1996, cultivated land increased 6.1% (167,400 hectares) in Yunnan. A report describing the impact of droughts on reservoirs and streamflow found the frequency of severe and exceptional droughts in the Lancang-Mekong River Basin has increased over the past 119 years, and all countries in the upstream and downstream of the basin have been severely affected.
As the downpour continues, Song Lianchun, director of China’s National Climate Center, told reporters that the number of days of heavy rain in China has risen by roughly 4% each decade over the past six decades.
Bigelow Tea® has introduced a new line of cold water infused botanicals. Bigelow Botanicals™ Cold Water Infusions use real fruit and herbal combinations to inspire everyone to stay healthy and hydrated throughout the day, according to the company. The infusions are a “healthy alternative to sugary drinks, are zero-calorie, caffeine-free, and contain no artificial anything.”
Easily infused by the glass or on-the-go, tea drinkers simply place a tea bag in cold water for a few minutes, squeeze the bag and stir, or leave in for more flavor.
Bigelow Tea uses only high-quality ingredients and has specially curated the following botanical infusions that slowly come alive once cold water is added. Flavors include:
Watermelon Cucumber Mint
Blackberry Raspberry Hibiscus
Cranberry Lime Honeysuckle
Blueberry Citrus Basil
Strawberry Lemon Orange Blossom
To ensure each cold-water infusion makes a positive impact on the environment Bigelow uses minimal packaging and no plastic bottles (waste reduction is a top priority at this certified B Corporation). The overwrap used to hold each bag works to keep each flavor fresh until sipped by the glass or used with reusable water bottles for the on-the-go consumer.
Cindi Bigelow, third-generation president & CEO writes that “With today’s growing awareness and need to live a healthy lifestyle, we created these beautiful cold water infusion blends to support your wellness choices.”
“It’s truly unlike anything else and really does help you to drink more water throughout the day,” writes Bigelow. The range is gluten-free and non-GMO. The botanicals are sold in boxes of 18 individually-wrapped bags at a suggested retail price of $3.99, about 22-cents per serving.
The largest specialty tea retailer in North America will permanently shutter all but 18 of its 231 outlets in the US and Canada following bankruptcy filings in both countries.
In March, following Canadian stay-at-home orders, Montreal-based DAVIDsTEA, a pioneer in specialty tea retail, closed its downtown storefronts and suburban mall locations and furloughed most of its staff. As Canada cautiously began re-opening, the company’s retail stores remained closed.
By June eviction proceedings had begun against some of the company’s stores for failing to pay rent. In July the company closed all 42 of its US locations and 82 Canadian locations.
Negotiations with landlords led to more favorable lease terms, according to the company. Seven of the stores are in Quebec, five in Ontario and the rest in Alberta, British Columbia, Manitoba, and New Brunswick. All are located in major shopping malls where foot traffic is sufficient to enable profits.
The company sent lease termination notices to the remaining locations and expects they will be closed by summer’s end.
“We believe that a select group of our best-performing stores, complementing our growing online and wholesale business model and supported by an entrepreneurial organization, will enhance DAVIDsTEA’s ability to emerge from the Companies Creditors Arrangement Act (CCAA) restructuring process as a more sustainable and resilient organization,” stated company founder, chairman and interim CEO Herschel Segal.
Frank Zitella, who is both CFO and COO said in July “we are fully committed to continuing to serve our loyal tea-loving customers with passion and ensuring that their favorite blends of tea are available online and in grocery stores and pharmacies, both during and after this restructuring.”
During the fiscal quarter ending May, DAVIDsTEA reported sales decreased 27.3% down $12.1 million to $32.2 million. “Sales in grocery stores and pharmacies across Canada continues solid growth,” according to the July 31 filing. Zitella wrote that “with first quarter sales growth of over 120% year-over-year, we are extremely pleased that our loyal tea-loving customers have shifted to buying our teas online, and in supermarkets and drugstores. The strong performance of these sales channels provided us with the confidence that we are on the right path for the future.”
In an April 27 update, Zitella wrote that “before COVID-19, our path to profitability was predicated on making the business more productive, expanding our product portfolio, and optimizing our sales channels.”
“The post-COVID-19 retail environment creates significant challenges for our unique in-store customer experience,” writes Zitella, who announced a pivot to online sales and expansion of wholesale distribution in grocery stores. The decision follows a multi-year decline in brick & mortar sales.
In the US “we will focus exclusively on our very successful e-commerce sales
“We ended the fiscal year with a solid financial position, and we have taken decisive action to align our operations with our growing online and wholesale channels. In adapting our business strategy to this new reality, we expect to emerge from this crisis as a leaner and more effective company, able to seize opportunity from a landscape ready for health and wellness tea,” according to Zitella.
Full-year revenue was $196.5 million, down 7.7% compared to FY 2018 but wholesale sales up 86% compared to fiscal 2019. The wholesale side of the business supplies 1,500 Loblaws grocery stores and 1,000 other grocery locations.
“This could represent a turning point for DAVIDsTEA and accelerate substantially the anticipated evolution towards online sales to drive long-term profitability and connect with a bigger audience than ever,” writes Zitella.
The company has a market capitalization of $23.5 million Aug. 1 and was trading at 90-cents per share. Shares were valued at $19 in 2015, rising to $35 following an initial public offering, but have since been in decline.
EDITOR’S NOTE: This story was updated Aug. 1
US Retail Re-openings Stall
The largest restaurant chains are reopening to a new normal that includes tea. Dunkin’ for example, is testing a bubble ice tea at some locations.
A study of credit card spending by Bank of America reveals a big gap between sales at independent and small chain restaurants and the 200 largest restaurant chain operators (500+ locations). Prior to the pandemic, Nations Restaurant News, reported that consumer spending was comparable in the two categories.
Green iced tea with strawberry popping bubbles at Dunkin’
“But by mid-April, although the entire restaurant industry was seeing negative year-over-year consumer trends, the spending gap between large and small restaurant chains had widened to nearly 35%,” NRN reports.
In July credit card spending at large chains was positive (compared to last year) for the first time while spending at smaller operations was down 20%. Reporter Joanna Fantozzi noted that smaller chains are more likely to be casual and quick-casual concepts, while large chains are often limited or full-service concepts. “Casual dining and quick-casual have been hit harder by a shift to social distancing, which explains some of the gap between big chains and other restaurants in the data,” according to Bank of America.
While restaurants in all 50 states are in the process of re-opening, those in Arizona, California, Texas, and Florida reversed course and 12 states have paused re-openings amid a resurgence in Covid-19 infections. The New York Times reports a mix of local and state government restrictions in Nevada, Colorado, New Mexico, Louisiana, and Michigan. Colorado reversed its policy and now mandates the wearing of non-surgical masks in situations where social distancing is not possible. Alabama, Arkansas, and Montana also made masks mandatory this week.
Georgia’s governor suspended all mask mandates, saying they are unenforceable, but major retailers including Walmart, Kohl’s and Kroger now require customers to wear masks regardless of local regulations.
East Coast and Mid-Atlantic states are mostly continuing or have completed reopening, showing how the COVID-19 resurgence in the U.S. has affected the Southern and Western States disproportionally (see map).
New Bubble Tea Emoji Speaking of bubble tea, Friday July 17 is World Emoji Day when Apple releases its version, described as representing a tea originating in Taiwan and commonly served with tapioca pearls, also known as boba, in a plastic cup with a wide straw.
World Tea Expo Postponed Until July 2021
The June 2020 World Tea Conference + Expo that was postponed until October has been canceled, according to Questex, organizers of the event. In a release, Questex explained that due to the COVID-19 pandemic, the Colorado Convention Center in Denver declared that no large-scale events can take place in the building for the rest of 2020. This is the show’s first cancelation in 18 years.
“Our thoughts go out to everyone who has been affected by the current situation,” said Questex CMO Kate Spellman. “Our number one priority remains keeping the entire community safe,” she wrote in the press release.
“Our team is working through all of the logistics that are involved with cancelling an event,” she continued. “We understand that you will have questions and concerns. All attendee registration tickets purchased for the original World Tea Conference + Expo 2020 dates will be honored for a full credit towards the 2021 event,” according to Spellman.
Questex derived 70% of its revenue from live events until this spring. The company’s CEO Paul Miller told Folio Magazine “it takes a lot of webinars to make up for the revenue lost when a single conference is cancelled, especially because attendees aren’t accustomed to paying for access to online editions of physical events.” The pause has provided an opportunity to reevaluate every aspect of the business, from minute details to bigger questions, he said.
“Coronavirus or not, I think it was time probably for a change,” Miller told the magazine. “Is a one-location, three-day event really the future? Or is it 12 locations, with a keynote broadcast live and a breakaway for local programming? Are these the things that people might appreciate, not having to get on a plane or give up five days of their week? We’re in a crisis, let’s not waste it. Let’s rethink everything.”
World Tea Expo is the largest gathering of tea professionals in North America, attendance has varied from a few hundred in the early years to more than 5,000, including many international tea suppliers. In recent years the show has attracted 150 exhibitors and 3,500 attendees. Questex purchased the event last December and relocated it from Las Vegas to Colorado.
The 2020 edition was originally scheduled for June but stay-at-home orders and the general disruption that marked the initial months of the pandemic led Questex to postpone the event until Oct. 15-18.
Samovar Tea Lounges Begin Hibernation
Samovar founder Jesse Jacobs announced cafe and restaurant operations at the company’s San Francisco stores “will enter a hibernation period until the current health crisis turns around.”
The company’s Yerba Buena Gardens and SF International Airport locations closed during the first wave of the pandemic. All four locations will enter “hibernation” Sunday, July 19. Pickup and delivery at the Fillmore Street and Valencia Street cafes are available until then and retail products are half off. Operations continue as before at the company’s e-commerce tea shop.
“It’s with misty eyes and a heavy heart that I am announcing a major transition for Samovar,” Jacobs writes on the company’s home page, but he stressed “This is NOT goodbye…”
Jacobs founded the company 17 years ago after a career in high-tech consulting. “When I started Samovar Tea Lounge I realized that tea would be the perfect vehicle to satisfy just what the world needs today: to slow down, unplug, and wake up,” said Jacobs.
Jacobs will host tea-inspired, real-time virtual experiences “to keep the human connection alive.” First in the series is “Mindful Tea Tasting Mediation“, 7 am (PST), Monday, July 27. Click here to register.
Kenya Court Halts Tea Reforms
The Nairobi High Court halted the immediate implementation of controversial government-ordered tea industry reforms pending judicial review in September.
In April Agriculture director C.S. Peter Munya, acting on behalf of President Uhuru Kenyatta, intervened to curb predatory behavior amid falling prices. Kenya is currently record levels of production due to fair weather with little impact from the contagion in rural areas until recently.
Kenyatta’s reforms require the Kenya Tea Development Agency to pay 50% of the price of monthly deliveries. The remainder is to be paid as an annual bonus. In the past, KTDA factories paid farmers Ksh14-16 (1Ksh = USD$0.01) per kilo. Buyers will now pay 10% down with the balance due before export. Factories must pay farmers within 30 days after receiving auction proceeds. Also, brokers representing factories will be limited in the number they represent (no more than 15 factories in the current proposal).
Once an outline of the reforms was announced, Munya named a committee of industry executives, brokers and media to evaluate policy and review regulations and administrative reforms curtailing the powers of the Kenya Tea Development Agency (KTDA).
KTDA responded with a suit alleging bias and conflicts of interest, citing specific committee members. In her ruling, Lady Justice Pauline Nyamw- eya said KTDA’s concerns “met the threshold of an arguable case” and scheduled a judicial review to begin in September.
Kenya’s exports fell by six million kilos during the first five months of the year, and auction prices continue to decline, influenced by disruptions in demand and a global tea surplus.
Accessing markets is challenging, according to industry brokers. Demand for Kenya’s black CTC (cut, tear, curl) tea fell or remains flat among critical trading partners including Iran, Afghanistan, Yemen, and Egypt (down 15%).
The unit price of KTDA marketed teas fell by 6.8% during fiscal 2019/20 reaching a 12-year low of $2.42 per kilo. July 1 ended a fiscal year. Export earnings during the first five months of the year declined by Ksh1.3 billion (USD$12 million)
Need to Know
Tea Industry News for the Week of July 6
Tea Sales on Amazon
D2C Lifeline for Small Retail
Global Restaurant Report Grim
FDA’s New FSMA Portal
Tea Sales on Amazon
Overall, consumer spending in the US and Canada is down, but tea sales online and on Amazon have increased, according to market research firm JungleScout.
At the height of the lockdown, Amazon customers were spending $11,000 per second on virtually anything carried in grocery, apparel, housewares, even automotive. The company hired thousands to meet demand and earned the loyalty of hundreds of thousands of new Prime members despite the inability to guarantee same day deliveries. Prime membership rose to 52.4% from 45.2% during April largely due to COVID-19.
Grocery was one of the top sales categories and as a staple, tea fared well. Kathy Cummins, Head of Data Analysis at HINGE GLOBAL said the US Amazon total tea category (counting bagged tea, loose-leaf, and ready to drink) is $29 million. This is small compared to the $1.2 billion of coffee sales which consists mainly of single-serve capsules and pods generating $929 million. Hinge is a Cincinnatti, Ohio-based e-commerce consultancy founded in 2015 with deep expertise in sales and marketing on Amazon.
“Like coffee, we have seen an average 34% annual growth rate for tea on Amazon, suggesting that consumers are adopting this channel for this category.” said Cummins, adding, “The Subscribe and Save program, as well as the huge assortment of flavors, options, and product formats, are contributing factors.”
The “teas” category on Amazon consists of ready-to-drink, bagged, loose-leaf, capsules & pods, powders, and liquid concentrates, explains Cummins.
“Because of this diversity, sales for tea tends to be more volatile than coffee, and there is more head-to-head competition/switching with non-teas (such as flavored waters, water flavor enhancers, and non-tea ready-to-drink alternatives), according to Cummins.
“Sellers competing in teas should take special care to have strong copywriting and efficient paid marketing to stand out in the crowd,” she said.
A June survey of Canadian consumers revealed that almost half (45%) reported discovering new brands through online resources while researching COVID-19. Website visitors are seeking products that keep them and their families safe, while also seeking the easiest way to purchase them, according to Google Think. “More than 20% of Canadians purchased a brand that was new to them during COVID-19 that they plan to continue to buy,” according to Deloitte State of the Consumer Tracker (April 2020).
In its report on consumer trends, JungleScout writes that COVID-19 has the potential to solidify consumers’ e-commerce brand loyalty. During the pandemic 63% of consumers increased or maintained their online spending and 61% increased or maintained their Amazon spending.
“About 50% of customers are buying more groceries and cleaning supplies with 30% or more buying fewer electronics, office supplies and clothing. JungleScout found that 61% of consumers plan to reduce their spending on non-essential items in the future.
The report found 90% of customers have shopped on Amazon and 65% do so monthly. Thirty-nine percent of respondents said they would be fine if they never had to shop in a physical store again.
Amazon grabbed the headlines but online sales at Walmart grew 74%, contributing to a $134.6 billion first quarter. Comparable sales rose 10% from a very large base, indicating many new customers.
“During the pandemic, customer loyalty went out of the window as consumers shopped around much more …in order tofind the supplies they needed,” GlobalData Retail Managing Director Neil Saunders told Retail Dive.
“As the largest grocer with a massive footprint, it (Walmart) became a destination for all kinds of shoppers. This included many people who don’t usually visit the store much for groceries,” said Saunders.
Walmart is soon expected to rollout unlimited same-day delivery without a per delivery fee for Walmart+ consumers willing to pay $12.95 per month ($98 annual).
“Overall, the pandemic has helped Walmart,” Saunders said. “Before the crisis it was the nation’s retailer and that position has only become more entrenched.”
Global Restaurant Report Grim
Restaurant owners globally are assessing retail carnage in the wake of the coronavirus pandemic that will likely claim 2.2 million restaurants in 2020.
In the US the National Restaurant Association estimates a shortfall of $120 billion in restaurant and foodservice sales from March through May.
Bloomberg News reports that the pandemic is permanently reshaping the restaurant industry. Consulting firm Aaron Allen & Associates estimates 10% of restaurants globally will disappear with an additional 20% forced to go through a financial restructuring. The report quoted an even more pessimistic OpenTable which notes the US restaurant industry, which employs 15.6 million workers, was already suffering from rising debt and excessive competition “before the global pandemic caused a dramatic and unprecedented shift in consumer behavior.”
Delivery and curbside service are now common, but currently bring in only 35-40% of prior sales, forcing chains including Panera Bread and Tijuana Flats to offer groceries for the foreseeable future. Estimates place grocery orders at 10-25% of total sales.
OpenTable CEO Steve Hafner predicts 25% of US restaurants might close permanently. “Even in the best of times, restaurants operate on really thin margins. So if you add on capacity restrictions, new safety, and service protocols, it’s really tough for a restaurant to make it,” he told Yahoo! Finance. On May 14 total reservations and walk-ins on OpenTable were 95% below reservations on the same date the previous year. Nationally, year-over-year restaurant sales are now about 65% of sales during the same period in 2019. OpenTable tracks 60,000 restaurants globally.
YELP! which lists 140,000 businesses large and small, reports 41% of its listings have shut down for good. Los Angeles experienced the largest number of closures at 11,774 but Las Vegas was much harder hit per capita with 1,921 closures, according to YELP! which counted 23,981 restaurant closures along with 27,663 retail shops. Approximately 20% of the businesses that were closed in April have reopened.
There are about 22 million restaurants worldwide. The greatest concentrations are in cities like New York where there are 27,000 restaurants of which 4,800 are now open for outdoor dining.
D2C Lifeline for Small Retail
Online-only tea retailers such as London’s offblak.com launched as direct-to-consumer (D2C) ventures but more recently D2C has become a business-saving lifeline for brick & mortar retailers during the pandemic.
Online tea sales increased during the past six months as home-bound consumers spent the most on everyday household goods, groceries, and medicines. A survey of Canadian consumers found that 30% reported going online in April to purchase for the first time products they would normally buy in-store.
Retailers with close ties to their customers benefit most as their cost of acquiring individuals to sell to is low. Those who are thriving are going beyond e-commerce sites. Jesse Jacobs, founder of Samovar Tea Lounge, launched tea-tasting sessions via Zoom after closing the company’s four cafes.
A first-party data strategy is critical to learning about customers and delivering a personalized experience, which can result in a greater return from marketing investments, according to Google Think. A direct link with customers means retailers can offer more flavors and ranges not available in supermarkets and storefronts with limited shelf space. A cafe, for example, might offer six or eight teas on its menu but easily double that number of offerings online. Those with blending skills can offer exclusive, limited-edition, low-run teas at a premium delivered directly to your home.
Bundling is also an attractive option.
In Canada, Unilever introduced bundles of commonly purchased groceries that include shelf-stable Tazo tea and boxes of Lipton Yellow Label and Rejuvenate herbal tea along with Knorr soup and seasoning multipacks. An enclosed recipe card explains how to make an entire meal. The U-Shop is integrated with Google’s Merchant Center and Shopify.
“The site features product bundles to help get around the low unit cost vs. higher shipping costs — a challenge for most CPGs,” according to Google Think.
Home cleaning, laundry, and home hygiene bundles are currently available at discount in the UK via leverdirect.co.uk. Delivery is free.
During the past few months breakfast shifted from drive-thru to home-cooked while dine-in dinners and restaurant lunches declined. Since few tea drinkers order hot tea with their restaurant takeout (75% prefer beverages from home) providing a packaged single-serve option is good business. Offer larger format teabags for making iced tea — a family favorite given that for the first time in decades, the number of meals shared by family members is on the rise.
The Huffington Post reports that 30-35% of families share fewer than three meals a week together prior to the pandemic.
In a press release FDA Commissioner Dr. Stephen Hahn MD, writes that “Many believe we will see more changes in the food system over the next 10 years than we have in decades. Foods are being reformulated; there are new foods, new production methods, and new delivery methods; and the system is becoming increasingly digitized.”
“To keep pace with this evolution, FDA is taking a new approach to food safety, leveraging technology and other tools to create a safer and more digital, traceable food system,” he said.
“Smarter food safety is about more than just technology. It’s also about simpler, more effective, and modern approaches and processes. It’s about leadership, creativity, and culture,” said Hahn.
FDA: New Era of Smarter Food Safety
The ultimate goal is to reduce the number of food-borne illnesses in the US. The blueprint identifies four objectives:
Smarter tools and approaches for prevention and outbreak response.
New business models and retail modernization
Food safety culture
FDA said it intends to push for a transformation of food and dietary ingredient record keeping. Much of this is still done on paper, which hinders the Agency’s timely response to outbreaks of food borne illnesses. The Agency said it also intends to push for greater transparency in the supply chain, while still being mindful of confidentiality and proprietary interests, writes Hank Schultz inNutra Ingredients USA
FDA announced it will convene a summit to foster new food ingredients and production technologies. Mankind can safely ingest 200,000 of the world’s 400,000 species of plants but the world’s population commonly eats only about 200 plant species. Three crops, maize, rice, and wheat account for more than half the calories and proteins humans derive from plants. Humans require one million calories a year to thrive. Corn produces roughly 15 million calories per acre, enough that if the US harvest of 14.2 billion bushels were used to feed people it would supply 17% of the world’s caloric needs.
Bankruptcies are accelerating. Commercial Chapter 11 filings are up 43% over June 2019 with 609 new filings compared to 424 in June of last year. Prior to the pandemic, about 95% of all bankruptcy cases were filed by individuals, rather than businesses, according to a brief by the Poynter Institute. The 2019 Small Business Reorganization Act (SBRA) became law in February helping small businesses move through the bankruptcy process more quickly and with lower costs. During the first half of the year, 3,604 companies filed under Chapter 11, up 26% compared to 2019. These include 30 US companies with liabilities greater than $1 billion. Z-Score, a formula for predicting insolvencies developed by NY University professor Edward Altman, predicts the total will exceed 60 by year-end, according to a Bloomberg Business report.
Tea wholesalers report foodservice customers are once again placing orders. Iced tea, a seasonal favorite, is in demand. Online sales that spiked amid the lockdown remain at higher levels than the first of the year.
The sales slump that began in March is easing. Still, inventory packaged for foodservice customers remains high and, unlike pent up demand for fashion, household furnishings, and other non-essential products, the food and beverage category is regaining traction slowly, in fits and starts.
Food sales did not decline during the scariest months of the pandemic ― everyone must eat. Grocery sales grew 33% overall, leading all traditional channels in dollar sales growth, with the food and beverage category up 32.5% compared to the previous year, according to IRI, a Chicago based market research firm. The purchase of food online increased by 49.7%. The question now is how soon consumers will begin dining-in, re-inflating the $181 billion on-site beverage category that includes tea.
Market research shared by Datassential indicates millennials are leading the way back to dining-in at restaurants but the majority prefer drive-thru and curbside pickup, and contactless delivery.
Datassential managing director Jack Li told webinar participants that consumer fears are abating. “Coronavirus concern is way down from its peak, closer to early-pandemic levels,” he said. In April at the height of lockdowns, infections, and COVID-19 deaths, 67% of consumers said they were “very concerned,” about dining-in and 28% were “somewhat concerned.” By mid-June, the combined 95% who earlier said that they were concerned had declined to 86%, but with 44% still “very concerned.”
How this fear translates into behavior is critical to the tea industry. Beverages generate about 20% of restaurant sales but constitute far less of the transaction price when consumers place orders for curbside pickup, takeaway, or delivery. When ordering food to eat at home, consumers raid the fridge for their favorites. Beverages maintain their important slice of the transaction when customers order takeaway for office breaks and visit drive-thrus when food is consumed in the car.
Datassential found that avoidance of dining-in is inching down, but slowly. As restaurants began opening their dining rooms in May and early June only 22% of consumers said they have “no concerns whatsoever” about dining out. Almost half, 47% say they will “definitely avoid eating out,” a total that has increased 2% since June 5. Another 31% say they are “nervous but will still eat out.” Boomers, at 59%, are the most fearful. Those in the Gen Z cohort are the least fearful, with only 34% saying they will “definitely avoid” eating out. Datassential, in a survey conducted on June 9, found that 42% of Millennials will also “definitely avoid” eating out.
For now, health concerns remain the top priority, writes Li, “but economic worries have been rising” with 46% of the nation more concerned about the economic crisis (up 1% since June 3 and up 9% since April 7) compared to 54% of the 4,000 adults surveyed who say they are more concerned about the public-health crisis.
Breakfast: Deflated Daypart
Morning meals and snacks suffered the steepest transaction declines during the coronavirus crisis, according to The NPD Group. Millions of at-home workers agree on one thing: no one misses early-morning commutes enough to jump in the car and wait in line for breakfast.
The number of transactions at breakfast locations was down 18% the week of June 7 compared to the same period last year, according to Restaurant Dive. Lunch transactions declined by 11%, and customer transactions fell 12% at dinner during that same period, according to The NPD Group.
FSR Magazine reports that Revenue Management Solutions, using insights based on point-of-sale data, estimates total US breakfast traffic year-over-year slipped between negative 30–35%. Traffic has since leveled out around negative 15%. According to Datassential, customers’ trips to restaurants break down as follows:
Traffic by Daypart
The reversal is dramatic as breakfast is the only restaurant daypart that has experienced sustained growth in visits during the past few years. In January and February with the nation at full employment, hundreds of thousands of workers visited quick-service chains every day, accounting for a 5% category growth during the past five years.
In a January press release, NPD reported Americans consumed 102 billion breakfasts and another 50 billion morning snacks in 2019. “The future of breakfast looks rosy too with forecast growth of breakfast goods,” according to the market researcher firm which published its “Future of Morning” study prior to the pandemic.
Sending two-thirds of the nations’ workers home dimmed that optimism in record time. Breakfast was the easiest meal to convert at home and suffered the steepest transaction declines as McDonald’s, Taco Bell, Dunkin’, and Burger King saw comp sales slump during March, April, and May. Wendy’s, which spent significant marketing dollars promoting breakfast, reported same-store sales finally turned positive the last week of May.
Breakfast is an important hot tea occasion. Gallup has monitored employee preferences on working at home for several weeks, asking workers, “if your employer left it up to you, would you prefer to return to working at your office as much as you previously did, or, work remotely a much as possible.”
No one knows the full impact of stay-at-home orders on buying behavior, but it’s clear that if half of the office workers no longer commute daily to offices on a fixed schedule, the morning routine will be altered for the duration of the pandemic — and likely forever.
Millennials Lead the Way
A majority of Millennials (60%) reduced their spending during the early months of the pandemic, according to a survey by Clutch, a B2B ratings and review platform.
Recession-wary after 2009, they contributed to an unprecedented US savings rate of 33% in April. Only 5% of Millennials reported spending more money than the previous month during March and April.
Food was the exception. Groceries were the top expense for 40% of Millennials, reports Clutch. Half the Millennials surveyed reported spending less dining out, but 50% say they are still eating takeout and ordering delivery. Only 28% have not used food pickup and delivery options since the start of the pandemic reports Clutch.
E-Commerce Sales Surge
The most popular product category purchased online last month was restaurant delivery or takeaway, boosted by a surge in restaurants offering curbside service.
E-commerce sales of food or beverages by American adults increased from 27% in February to 36% in April, according to Bizrate Insights.
The number of customers ordering food online is even higher among frequent internet users (61.5%), according to a consumer survey by Red Points on the “Impact of COVID-19 on Ecommerce Sales.”
In April, 44% of Amazon Prime members ordered food or beverages.
Mo Sardella, marketing director at GS Haly, told Forbes that online sales of specialty tea and herbs spiked during the early days of the pandemic.
“We have seen a huge spike in home tea consumption via grocery and online outlets. Our customers with a well-established online presence are doing exceedingly well,” says Sardella, adding that “customers saw between a 100% to 300% increase in online sales in April alone.”
Lockdowns Wind Down
Sixty-nine percent of restaurant units are located in geographies that permit some level of on-premise dining, and the number should increase to 74% in the week ending June 14, according to The NPD Group. At the height of the pandemic, only 25% were operating. Transactions at full-service restaurants were down 14% the week of June 7 versus a year ago, a 29% gain since April 12.
Quick service restaurants fared better during the pandemic “and continue to do so,” according to NPD. QSR transactions are down 13% the week of June 7, compared to the same period in 2019.
Now that restrictions are easing Millennials and Gen Zers, are eager to eat out for the social benefits and convenience. Datassential reports that 82% of Americans say they know which precautions to take and how to stay safe from COVID exposure, and 60% say “COVID safety precautions have become second nature.”
“Diners are excited to eat in at restaurants again, understand the importance of new precautions, and are willing to make the necessary sacrifices. Yet they’ll also be the first to tell you that seeing servers in masks and needing to comply with social distancing measures do not exactly allow them a complete mental escape,” writes Datassential’s Jack Li.
Tea Yields and Exports Decline
Local shortages of Assam tea for auction has increased prices 15% compared to last year. Growers there lost three weeks of harvest beginning in late March. Plucking was to resume April 12, but by then tea plants required maintenance pruning. Gardens that opened were restricted in how many workers they employ. The combination of these events will result in at least 140 million fewer kilos of tea and may discourage exports.
Meanwhile lockdowns that were previously lifted will be extended in the West Bengal tea lands as the coronavirus continues to threaten India. Rajiv Lochan, the founder of Lochan Tea, shared a local newspaper clipping describing a surge in cases in Siliguri, a center of tea commerce at the foot of the Himalayas.
Tea exports dipped 5.6% in the financial year ending March 31, known as AY 2019-20. The new AY 2020-21 began April 1. Volume fell to 240 million kilos from the 245.5 million kilos exported in AY 2018-19. Russia and the surrounding CIS countries remain the most significant tea trading partners, importing 47 million kilos in 2019-20. Iran emerged as second due to a sharp decline from 15 million kilos to 3 million kilos exported to Pakistan due to hostilities between the two countries.
Exporters told The Economic Times they are concerned Iran will purchase much less tea than last year due to deteriorating economic conditions in that country. Iran bought 54 million kilos of tea from India in 2019. Exporters say that volume could decline to 45 million kilos. Russia is also experiencing a sustained economic decline.
Postponed Chinese New Year purchases will drive this latest rise in consumer spending. Luxury items have been selling well since China eased restrictions. China’s unemployment is much lower than the US, which saw 1.5 million workers file for benefits in June, bringing the total to 21.5 million out of work.
The European Speciality Tea Association casts aside the aura of elitist tea in favor of inclusion. Learn why during a webinarJuly 8at 7pm | London | 2pm EST
In July, the European Tea Society transitions to a more inclusive European Speciality Tea Association. “The rationale is to reflect the nature and purpose of the association more accurately,” writes executive director David Veal. Members of the Society, founded in 2018, overwhelmingly voted for the change, said Veal.
“Whilst the logo, branding, and house style will remain unchanged to help promote consistency and continuity; there will be significant changes in many areas of the association, writes Veal, who outlined a three-year plan.
Here are the highlights:
Education and Research: Education is central to the association’s value and mission, he said. The Association in July will introduce its first online basic module: Tea 101, developed in conjunction with Australian Tea Masters. “It is aimed at beginners and is really to help people who because of current restrictions of movement are not able to partake in more traditional methods of tea education. This module will be free of charge to European Speciality Tea Association members,” writes Veal. A standalone “Introduction to Tea” will be available after June, and the main program will be launched as soon as things are back to normal, most likely in early 2021.
Competitions: Increase the number of tea competitions that we organize, this being such an excellent tool for improving the quality of tea and bringing communities together.
Certifications: Delivered through our members who are trainers, or who have schools or academies, and will cover a number of disciplines at two different levels including Camellia sinensis, brewing skills, sensory skills, botanicals, tea barista skills, health and agronomy.
Tea Research: The association is based at the University of Chester and has access to sensory laboratories for European Speciality Tea Association research and that of our members. Research objectives include developing a greater understanding of many aspects of tea, including claimed health benefits and the importance of full understanding of water.
Advocacy: The European Speciality Tea Association aims to be at the forefront of the growth and development of the community, working closely in forming, and indeed leading relationships with other tea associations and organizations.
Promoting Excellence: The Association seeks to be in the forefront of the continuing quest to improve standards, quality, knowledge, information interest, and enthusiasm for specialty tea.
Veal, who formerly led the Specialty Coffee Association of Europe (SCAE), and more recently served as executive ambassador for the Specialty Coffee Association (SCA), described his vision of “a modern, efficient, inclusive, ethical, professional, member facing, committee-driven and volunteer led membership association.” The European Speciality Tea Association’s great asset is members respected throughout the tea community with strong credibility and reputation and is an inspiration to others, he said.
“Our members continue to make a real difference to the quality of products in our industry and the end-users in and out of the home; internationally through innovation, research, education, communication, collaboration, support, and knowledge; for all sectors of members from farmers to consumers,” writes Veal.
The association’s “strategic focus in Europe, our core market,” but the Association “will be active, either independently or in collaboration with others, opportunistically in other areas around the world commercially and in accordance with our values.”
“In order to grow our membership, to make the association stronger, and to assist in our mission to promote speciality tea, we will be initiating a major membership drive to reach new and potential members across Europe,” writes Veal. Categories include producers in tea growing countries, and one for a new type of person in the tea community, the Tea Barista,” said Veal.
When we have sufficient members in a given country, such as Russia, “we hope to open up a chapter to help those members network and organize events,” he said.
“Once the world starts to get back to some sort of normality, we will resume our strategy of attending events around Europe to promote the association, promote speciality tea, engage with local tea communities, gain new members, and deliver knowledge,” writes Veal.
The European Tea Society was first advanced by several specialty tea pioneers and launched in September 2018 at the Tea & Coffee World Cup Exhibition and Symposium in Birmingham, England, with Nigel Melican as president, Alexis Kaae as vice president, and Bernadine Tay was the founding director.
Recent scientific articles* suggest that black tea polyphenols derived during the oxidation of tea catechins could potentially inhibit the ability of the coronavirus to replicate.
RNA replication in the coronavirus is a two-step mechanism that relies on the RdRP (RNA-dependent RNA polymerase) protein to catalyse the synthesis of the RNA strand.
Authors of a March article in the Journal of Medical Virology conclude that “theaflavin could be used as a lead compound for developing a SARS‐CoV‐2 inhibitor that targets RdRp. However, the exact in vivo effect is still unclear, and further research is needed to confirm the mechanism whereby theaflavin target SARS‐CoV‐2.”
Medical researchers in Taiwan recently concluded an investigation of 720 compounds listed in the Natural Product Libraries for anti-COVID-19 efficacy. The list was narrowed to 10 compounds and mixtures that had strong potential for anti-COVID-19 efficacy, according to Dr. Bashar Khiatah. “The compounds that have been found to have an anti-COVID 19 effect are the polyphenols that are found in teas,” writes Amylee Amos, MS, RDN. These are found in black tea, green tea, oolong tea, and pu-erh. The most promising is Theaflavin-3,3′ -digallate (TF3) which is converted from catechins during fermentation.
Researchers in 1998 found tea theaflavins completely neutralized bovine coronavirus and rotavirus infections. In 2005 Chinese researchers showed that black tea significantly inhibited chymotrypsin-like protease activity essential to virus reproduction. Recent in-vitro studies found TF3 completely inhibited COVID virus replication in cell cultures.
The Indian Council of Medical Research (ICMR) announced that it will study Theaflavins’ antiviral properties.
*View research paper abstracts and links at end of this report.
Immunity is the Epicenter of Health Enhancing Foods
The polyphenols in tea are known to boost immunity and combat inflammation. Health institutes worldwide have for several years recommended eating foods and beverages that reduce inflammation and naturally boost the body’s immune system.
Due to the pandemic this health message has captured the attention of consumers who are increasingly seeking out products to boost their immune system, according to a post-pandemic study by Unilever’s CMI U-Futures and CMI People Data Centre.
Unilever found that in the US the intake of vitamin supplements in March rose by 15% in the space of a month. In Brazil consumers are bingeing on vitamin c-rich fruits and in Japan, yogurt formulated to boost the immune system saw a spike in sales.
Just Food reports that in Israel, interest in immune-system supportive ingredients rose 66% in March. According to AI-focused market research firm Tastewise, “we expect the trend to continue to rise. Immunity, stress relief, medicinal benefits and more are all skyrocketing.”
In China, a post-Covid-19 study of consumer behavior by McKinsey & Co. found that 70% of consumers intend to “work to boost their own physical immunity by exercising more and eating healthy.”
A review of ingredients used by at-home cooks shows a preference for wholesome, lean foods which may be influenced by studies showing obese victims are less likely to survive COVID-19.
“The desire for health and well-being post pandemic is a consistent trend across all markets,” Unilever concluded. Unilever CEO Alan Jope told analysts “anything that’s in the space of wellness – health and well-being – is going to enjoy sustained strength.”
Having an optimally working immune system is more important than ever. The way our body deals with an infection is influenced by many factors of which the nutritional status is a critical element,” Dr Angelika De Bree, Unilever’s global nutrition director, explained to the The Food Navigator..
“Our biggest food brands offer thousands of products and recipes which are nutritious, affordable and made with sustainably sourced ingredients,” according to Dr. De Bree.
Tea is clearly the ideal beverage for the situation at hand.
“Our tea and herbal category delivers healthy hydration through Earth’s most sustainable plant-based drinks,” she said.
Water Works Wonders
The UK Tea Academy released a white paper describing “The Ultimate Ingredient for The Perfect Cup of Tea” – that being water.
“Water, which makes up to 99% or more of a cup of tea, is an often-overlooked ingredient that has a huge impact on the taste, aroma, and appearance of every cup. Following research of many different teas and many different waters, this paper finally provides the ideal water specification need to make the best brew,” writes Jane Pettigrew, one of three principal authors of the 12-page report.
The white paper highlights the key ingredients of water which impact the brewing process of tea. It also describes a standard water specification to create the optimal cup of tea.
Water used to brew tea has not been considered in the same way as water for coffee, according to the report.
If the ideal water is not used, the delicate notes of tea cannot be realized, resulting in a bad experience with even the finest of teas. Sadly, this leads to a lack of consumer confidence as well as misconceptions of how certain teas taste.
“A perfect example of this is green tea. It is very common for people to “think” that they do not like green tea, the opinion reached because the tea has been almost certainly made with unfiltered water, at the wrong temperature and over-brewed. The entire flavor profile is altered, often leaving the tea bitter and undrinkable. Brew a green tea correctly and the entire experience is worlds apart in comparison,” writes Pettigrew.
The report delves into the chemistry of water, describes the importance of removing chlorine and preserving the the buffer capacity of the water, a delicate balance of calcium and magnesium that defines ideal “hardness.”
Retailers and tea traders should view this work as an excellent resource and, like those in the coffee world, they should adopt a water standard when tasting tea.
The specification appears below.
European food delivery venture Just Eat Takeaway derailed what looked like a pre-destined Uber takeover of Grubhub this week.
In May San Francisco-based Uber Technologies was set to acquire Chicago-based Grubhub to become the largest online foodservice delivery firm in the US. Haggling over price, and the likelihood of antitrust scrutiny, killed the deal which was valued at several hundred million (Uber offered $62.50 per share).
In June, Amsterdam-based Just Eat Takeaway offered the equivalent of $75.15 per Grubhub share. Just Eat (UK) and Takeaway (The Netherlands) combined their businesses in April, and now control a huge share of Europe’s growing market for both delivery and food delivery software.
Packaged Facts analyst Cara Rasch said the deal “will allow Just Eat Takeaway to gain a larger footprint in North America, and diversify Grubhub’s business. Skip the Dishes, a subsidiary of Just Eat Takeaway, does a lot of business in Canada and could help the Grubhub brand expand more broadly through North America.”
“In the short-term, third-party restaurant delivery apps have a number of advantages over in-house delivery,” she explains. “They are convenient for consumers because they allow customers to order from a variety of venues using one application. They also can allow smaller businesses without the capital to invest in in-house development of effective online apps to expand their delivery services quickly in the wake of COVID-19, which has forced fast changes,” writes Rasch, but restaurants consider the commissions that third-party online delivery companies charge to be a burden. “If they don’t raise their prices for meals ordered via a third-party app, they are in danger of losing money in an already tight-margin business that has been threatened by lower overall restaurant sales during the pandemic,” she said.
The outlook for carryout and delivery is bright due to distancing guidelines that have shuttered dine-in service or forced restaurants to greatly limit their dine-in capacity.
Long term, “many restaurants are going to see the value of investing in an in-house system for delivery orders. Using a third-party company for ordering and delivery makes it harder for restaurants to develop a direct relationship with consumers. It is also challenging to ensure food quality since restaurants have no control over the food once it leaves the restaurant,” she said.
The Tea Spot launched its new Flu Fighter tea, a caffeine-free herbal blend that features functional ingredients, including astragalus, honeysuckle, organic licorice root, orange peel, tangerine peel, dandelion root, mulberry leaf, red root and organic ginger.
The ingredients in the new Flu Fighter tea were chosen based on a recent medical report, published in Military Medical Research (Volume 7, Article Number 4, February 2020), on the diagnosis and treatment of the novel coronavirus (2019-nCoV), where a combination of herbs and roots were used to support flu-like symptoms.
According to Maria Uspenski, founder and CEO of The Tea Spot and author of Cancer Hates Tea, many of the natural herbs in this sweet, nourishing tea were also used in ancient times to make wellness broths for recovery and building strength. And while the Flu Fighter tea is meant to be supportive and maintain wellness, it is not meant to treat, cure or prevent any disease or ailment.
“The pain and stress of the current pandemic has pushed The Tea Spot to think outside the box as to how we can help empower people to find and support better overall wellness,” said Uspenski. “The result of our efforts is our aromatic and medicinal Flu Fighter herbal tea, inspired by recent medical research. This supportive tea is intended to be used in combination with social distancing, good personal hygiene, sound diet, ample exercise and rest, while it encourages wellness and facilitates calm amidst the turmoil and uncertainty that’s happening around the world.”
The Tea Spot donates 10% of all profits in-kind to cancer survivors and community wellness programs. In May The Tea Spot donated 55,000 specialty tea sachets to first-responders in New York, California, and Texas.
THEAFLAVIN REFERENCES *Jrhau LungYu‐Shih LinYao‐Hsu YangYu‐Lun ChouLi‐Hsin ShuYu‐Ching ChengHung Te LiuChing‐Yuan Wu |The potential chemical structure of anti‐SARS‐CoV‐2 RNA‐dependent RNA polymerase | First published: 13 March 2020 https://doi.org/10.1002/jmv.25761 Chen CN, Lin CP, Huang KK, et al. Inhibition of SARS-CoV 3C-like Protease Activity by Theaflavin-3,3′-digallate (TF3). Evid Based Complement Alternat Med. 2005;2(2):209–215. doi:10.1093/ecam/neh081 Clark KJ, Grant PG, Sarr AB, Belakere JR, Swaggerty CL, Phillips TD, et al. An in vitro study of theaflavins extracted from black tea to neutralize bovine rotavirus and bovine coronavirus infections. Vet Microbiol. 1998;63:147–57. Ksiazek TG, Erdman D, Goldsmith CS, et al. A novel coronavirus associated with severe acute respiratory syndrome. N Engl J Med. 2003;348(20):1953–1966. doi:10.1056/NEJMoa030781 Hegyi A, Friebe A, Gorbalenya AE, Ziebuhr J. Mutational analysis of the active centre of coronavirus 3C-like proteases. J Gen Virol. 2002;83(Pt 3):581–593. doi:10.1099/0022-1317-83-3-581 Leung WK, To KF, Chan PK, et al. Enteric involvement of severe acute respiratory syndrome-associated coronavirus infection. Gastroenterology. 2003;125(4):1011–1017. doi:10.1016/s0016-5085(03)01215-0 Herold J, Gorbalenya AE, Thiel V, Schelle B, Siddell SG. Proteolytic processing at the amino terminus of human coronavirus 229E gene 1-encoded polyproteins: identification of a papain-like proteinase and its substrate. J Virol. 1998;72(2):910–918. Muhammad Tahir ul Qamar, Safar M. Alqahtani, Mubarak A. Alamri, Ling-Ling Chen, Structural basis of SARS-CoV-2 3CLpro and anti-COVID-19 drug discovery from medicinal plants†,Journal of Pharmaceutical Analysis,2020,ISSN 2095-1779,https://doi.org/10.1016/j.jpha.2020.03.009. Zhavoronkov, Alex; Aladinskiy, Vladimir; Zhebrak, Alexander; Zagribelnyy, Bogdan; Terentiev, Victor; Bezrukov, Dmitry S.; et al. (2020): Potential COVID-2019 3C-like Protease Inhibitors Designed Using Generative Deep Learning Approaches. ChemRxiv. Preprint. https://doi.org/10.26434/chemrxiv.11829102.v2 Chen CN, Liang CM, Lai JR, Tsai YJ, Tsay JS, Lin JK. Capillary electrophoretic determination of theanine, caffeine, and catechins in fresh tea leaves and oolong tea and their effects on rat neurosphere adhesion and migration. J Agric Food Chem. 2003;51:7495–503.
The tea industry seized the day May 21, celebrating with authentic and meaningful exchanges of information globally in contrast to amped up marketing typical of previous years.
The inaugural UN sanctioned-event was grounded in the soil and the people who grow and process tea. Since the 1950s marketers, mainly in developed countries, have promoted tea during the year-end holidays, designating December 15 as International Tea Day. The effort was well-meaning but out-of-sync with traditional spring celebrations in tea producing lands.
Last week the world witnessed a confident and much better coordinated effort, as various tea associations, government tea boards, trading companies and educational institutions followed the example set by the FAO Intergovernmental Group on Tea (IGG). Due to the pandemic, many activities were conducted virtually. The overall impact was significant as media coverage carried the UN messaging.
Tijjani Muhammad-Bande, president of the United Nations 74th General Assembly, took part in an online session with 200 delegates from 20 countries. He said that “we must galvanize multilateral collective action to implement activities in favor of the sustainable production and consumption of tea and join the co-convenors and participants in raising the awareness of importance of tea in fighting hunger and poverty.”
Noting that 60% of tea is now produced by smallholders, FAO (UN Food and Agriculture Organization) pointed out that tea production and processing directly contributes to several of the UN’s Sustainable Development Goals (SDGs), including the first goal, the reduction of extreme poverty; Goal 2, the fight against hunger; Goal 5, the empowerment of women; and Goal 15, the sustainable use of terrestrial ecosystems.
In Rome FAO director-general Qu Dongyu said that a more productive and resilient tea sector calls for better policies, more innovation, increased investments and greater inclusiveness in tea production and processing. This year’s theme is “Harnessing Benefits for all from Field to Cup.”
“Tea, as a source of employment and revenue, can help alleviate some of the hardships resulting from the current economic downturn,” he said.
China invested significant resources with regional festivals and a series of events at the Chinese Businessman Museum in Beijing. More than 50 industry groups took part.
Tea consumption has grown rapidly the past two decades and contributes to the financial well-being of millions. China benefited greatly from this growth. Regional activities included a stir-frying tea competition featuring Yuhua tea in Nanjing in China’s Jiangsu Province and a demonstration of the traditional Song Dynasty way of whisking powdered tea in Jian Zhan cups hosted by the Kao Ting Academy in Jian Yang, in Fujian Province.
Zhang Jun, China’s permanent representative to the United Nations, said the inception of International Tea Day has given tea new life and vitality.
The Tea and Herbal Association of Canada President Shabnam Weber hosted an all-day “Sofa Summit” that featured conversations with 21 tea experts, retailers, traders, and association directors across the globe.
China hosted a 36-hour live broadcast featuring 29 people from several countries.
Coordinated by the China NGO Network for International Exchange, events in Beijing brought together the China Culture Promotion Society, the Tea Road (China) Cooperative (TRC) and the China Chamber of Commerce of I/E of Foodstuffs, Native Produce and Animal By-products (CFNA).
FAO formally commended the effort and Wang Shi, chairman of the China Culture Promotion Society cited China’s responsibility “to work with peers in the world to promote the healthy and sustainable development of the tea industry and exchange of tea culture. It can help to build a community of shared future for mankind.”
India announced a special auction organized by the Tea Board of India from tea plucked on Thursday by planters across the country. This special edition is limited to five packages in a lot with a maximum of five lots from each factory. Proceeds from the June auction will be shared with relief funds.
Messaging in every country amplified the global trend toward transparency. FAO organizers used the occasion for an honest assessment of tea industry opportunities, challenges and potential shortfalls.
“Tea can play a significant role in rural development, poverty reduction and ensuring food security in developing countries because of it being one of the most important cash crops,” according to the UN.
Joydeep Phukan, secretary of the Tea Research Center at Tocklai, in Jorhat Assam, formally proposed the UN initiative in 2015 and proudly carried it forward though the General Assembly vote in November 2019.
Angela Lansbury as teapots
Amanda@pandamoanimum posted a clever Twitter thread in tribute to Angela Lansbury and tea. The thread portrays the beloved actress in her many outfits, each meticulously matched with a tea pot. The effort was rewarded with 20,000 retweets and many many “likes” including my own.
The effort inspired others to post their favorite shot of Lansbury and a suitable teapot to share the spotlight.
India COVID-19 Update
The Indian Tea Association (ITA) estimates first quarter COVID-19 related losses will exceed $275 million.
Tea production declined by 65% in March and by 50% in April in Assam and West Bengal following a March 21 lockdown that stopped the harvest and led to transportation and logistics delays.
ITA, which represents planters, urged the federal government and state governments to provide financial support and relief payments. Growers are pressing for an increase in working capital. Operations resumed April 12 but with a limited workforce. Pruning overgrown bushes delayed plucking an additional two weeks. In the meantime, dry weather has lowered yields.
Production totals are 140 million kilos below normal output according to ITA. Export demand is increasing from key trading partners that include Russia, UAE and Europe.
Matcha in Demand
Matcha continues to experience strong growth and sales estimated at $2.26 billion by the end of 2025, according to market research aggregator Million Insights. The combined average growth rate during the five years beginning 2019 is 4.7%, according to the Matcha Tea Market report.
Rising demand for organic, natural and nutrient-rich products are likely to have a positive impact on market growth as consumers demand healthy beverages, containing vitamins and antioxidants.
The report claims that matcha “improves focus, calmness and concentration as well as it enhances metabolism, gastrointestinal functioning, immune system, natural detoxification and inhibition of cancer cells.”
Little of the tea is prepared in the traditional Japanese style of whisk and bowl. Dunkin, for example, introduced a stone ground powder produced in Nishio in Aichi prefecture. The tea is blended with milk (or plant milk) and can be served hot or cold. The matcha lattes were tested in Springfield, Mass., and Phoenix, Ariz., and rolled out nationally Feb. 26.
During the company’s the first quarter earnings call, Dunkin’ specifically mentioned matcha as a sales driver. Comparable sales declined for the three months ending April, but during the early weeks of the quarter comparable sales were up 3.5% “and were on pace to be the highest quarter comparable sales growth since 2013,” according to the company. “The increase in average ticket was driven by a favorable mix shift to premium priced espresso and cold brew beverages, including the launch of Matcha Latte,” according to the company.
In March YELP! marketers decided to find out what food and beverages people across the country were being delivered right now! Data scientists tracked how frequently a dish is ordered in each state relative to its popularity in other states.
“When we first looked at the results, pizza delivery reigned supreme, which is no surprise since it delivers well and it’s perfect for a family night in. However, we dug into the data to find the most uniquely popular delivery order in every state*, and that’s when things got interesting,” writes YELP!
Winners include a run on crayfish in Texas, poke bowls in Indiana, pad thai in Washington, sushi in South Carolina and naan in Wyoming but guess what topped the list of delivery orders in California last week? How about Michigan? and Hawaii?
“What we found was a mix of delectable dishes and drinks that tell a story of how American taste buds differ from state to state and region to region,” according to the company.
Rwanda’s tea sector, largely spared from lockdowns, saw a marked increase in production during the first quarter. The harvest totaled 9,000 metric tons generating $27.6 million in revenue, which is up by 15% from the same period in 2019.
But there are still formidable challenges getting that tea to market.
East African tea growers truck tea destined for export to the auction at Mombasa. Kenya’s borders remain open during the coronavirus pandemic, but Tanzania and Kenya required each driver be tested before crossing.
The result offers a lesson in what can go wrong. A shortage of testing supplies and the sheer number of truckers led to delays that extended from hours, to days, to weeks. Few of those who were tested showed symptoms and none were quarantined while they awaited results. Unable to afford hotel rooms they slept in or under their trucks, cooked together and played sports to kill time. Some wore masks but many did not and very few practiced social distancing. During the two weeks ending last week 150 truckers crossing into Kenya at Namanga tested positive and were eventually ordered back across the border but by then they had infected hundreds of local merchants and fellow truck drivers.
The Washington Post reports that beginning this week, only drivers that have tested negative prior to arrival at the border will be permitted to cross. Uganda has since discovered dozens of infected truck drivers crossing from Kenya. Zambia closed its border to Tanzanian truckers. Kenya is the largest tea producer in the region at approximately 500 million kilograms followed by Uganda which harvests 60 million kilos annually; Tanzania at 35 million, Rwanda at 30 million and Burundi at 9 million kilos per year.
At the Mombasa auction Rwanda growers earned an average $2.68 per kilogram of tea last year, followed by Kenya growers who received an average $2.59, Burundi at $2.21 per kilo, Tanzania $1.36, and Uganda $1.21. The overall average price was $2 per kilo.
Kenya currently has 1,214 confirmed COVID-19 cases, according to Johns Hopkins Coronavirus Resource Center. There have been 51 deaths. Tanzania is reported to have 509 confirmed cases with 21 deaths. Rwanda has 327 confirmed cases with no deaths reported as of the second week of May.
Holiday Travel Restrictions Eased for Turkish Tea Growers
Climate dictates that Turkish tea be harvested in three flushes, unlike Africa, Sri Lanka, and Southern India where plucking continues year-round. Tea is grown there on sparsely populate hills facing the Black Sea where growers depend on seasonal labor.
This year’s spring flush was interrupted by a March 28 lockdown to prevent spread of the coronavirus. Fatma Genc, a researcher at Istanbul’s Marmara University, told The National, that 50,000 tea farmers were unable to prepare their fields for the harvest. Ramadan, which began April 23, complicated timing for Muslims.
“The failure to harvest this year will make it difficult to meet even domestic demand,” said Genc told the newspaper. “Tea prices, which have been hiked twice in a row this year, will increase even more if the producers cannot go to the field.”
This week farm owners and laborers from across the country were finally able to travel to northern Turkey on trips extending through the three-day Eid al-Fitr festival that follows the Muslim holy month of Ramadan. Seasonal labor from neighboring Georgia and Azerbaijan continue to face border restrictions leading to some creative solutions. The city of Findikli in Rize hired locals to harvest around half of the 30,000 metric tons produced nearby in an agreement that spans six months. Workers harvest for 10 days and while the leaves for the next flush are growing they complete municipal projects.
In Rize Province, the heart of the growing region, 16,000 laborers were given permission to travel between fields and home. The Provincial General Hygiene Council required testing at least one member of each family, about 6,000 in all. Screenings continue.
The provinces of Rize, Trabzon, Artvin and Giresun produce around 260,000 metric tons of tea annually, most of it sold domestically. Turks consume an average 3.5 kilos of tea a year, more than any other country. While much of the tea is imported, a significant shortfall is expected due to rising costs and the fact that much of the domestic tea went unpicked. Caykur, the state-owned producer that supplies 60% of the country’s tea is running a deficit and facing additional costs due to the pandemic. Caykur purchases tea from 200,000 independent farmers.
Tearoom Robot Reduces Contact with Waitstaff Easing Customer Concerns
The Tea Terrace, a small London-based chain of tea rooms that was forced to close during the March outbreak intends to open this July with the assistance of family-friendly robots.
Forbes magazine reports that managing director Ehab Shouly found while surveying customers that fear of crowding and contamination by waitstaff were their greatest concerns. Spacing tables was a relatively simple adjustment but a previous experiment with automated service at the company’s Surrey tearoom proved prescient. Last July The Tea Terrace became the first restaurant in the UK and Europe to introduce a robotic waitress, named Theresa.
Theresa is summoned by guests using controls at the table. The robot responds to voice commands. Shouly has also introduced functional assistants such as Captain Tom, a bot that delivers up to four trays each with teapot, teaware, and food.
Modifications are underway to expand robotic services to all four tearooms which serve 200 to 300 guests per day on weekends.
Nepal Asks India to Resume Imports
Tea growers in Nepal are seeking the resumption of exports to India, according to Nepal’s Ministry of Commerce and Supplies.
India stopped importing tea the week of May 6 and has not responded to Nepali officials. Periodically India has shown its displeasure with Nepal by refusing entry of tea and other exports such as palm oil.
Purna Kumar Karki, president of Jhapa Tea Entrepreneurs Association, told My Republica that Indian authorities impose non-tariff barriers on Nepali products from time to time “for no reason.”
Sanjay Bansal, chairman of the Darjeeling Tea Association (DTA), recently appealed to West Bengal Chief Secretary Rajiva Sinha to regulate the sale of Nepal tea to save the Darjeeling Tea Industry. Darjeeling growers maintain that Nepal undercuts their unique tea which is protected with a global Geographical Indication certifying its authenticity.
Bansal told The Statesman Nepal did not impose a lockdown and growers there have been producing at a high rate since February. “These teas are ready and are in the process of being shipped to India through the Indo-Nepal land borders in West Bengal to be sold in the local markets by taking advantage of the absence of Darjeeling Tea in the market due to the lockdown restrictions,” said Bansal.
In a related matter, Federation of Chambers of Commerce & Industry, North Bengal (FOCIN), has requested Chief Minister Mamata Banerjee to allow small wholesale and retail shop owners to open their establishments.
Logistical hurdles in tea producing countries greatly complicated export this quarter as demand declines and prices remain low. Recessions in Russia, Europe, and North America dim prospects of a profitable return for the export segment where sales have declined in value by an average 12.8% since 2015.
The declared value of global tea exports depreciated 18.8% year-over-year in 2019.
Sales from tea exports totaled only $6.4 billion in 2019, according to analyst Daniel Workman at World’s Top Exports. Tea shipments worldwide were valued at $7.3 billion five years ago.
China, at $2 billion in sales, remains the leading tea exporter, accounting for 31.8% of total exports by value, up 13.5% compared to 2018.
China faced several impediments to growth prior to the coronavirus outbreak but retained its rank as the top tea exporter globally in 2019. Green tea exports, the main tea crop, totaled 304,000 metric tons and were valued at $2.02 billion. The average price of exported green tea was $4.34 per kilo in 2019.
China’s tea exports were generally stable and of improved quality, despite the U.S.-China trade dispute and uncertainties in the world economy, according to agricultural and trade officials. Tea exports to the U.S. in 2019 were down 5.1% to 15,000 metric tons, but this was easily offset by a 15.6% increase in purchases by ASEAN nations. The 23,000 metric tons sold to ASEAN countries was valued at $400 million, up 55.7% compared to 2018.
China reported a 13.6% overall revenue increase year-over-year. Black tea exports were up 6.7% to 35,000 metric tons increasing in value by 24.5% to $350 million, according to China customs statistics. Black tea averaged $9.92 per kilo, up 16.72% year-on-year.
Yu Lu, vice president of the China Chamber of Commerce of Import and Export of Foodstuffs, Native Produce and Animal By-Products (CFNA) said the average annual compound growth rate of exports was 3% during the past three years. Green tea accounts for 82.8% of the total volume, which topped 367,000 metric tons last year.
Trade with countries along the Belt and Road increased 4% last year, earning China $560 million, a year-on-year increase of 307%, according to Yu Lu.
India exported $803 million worth of tea in 2019, up 4.6% compared to the prior year. India set a production record in 2019 growing by 3.8% thanks mostly to smallholders, but while volume reached 1,390 million kilos, the country accounted for only 12.6% of tea exports by value.
Sri Lanka’s 11.3% market share by value and Kenya’s 5.7% share also contribute significant volume, but each saw steep declines in value as prices for cut, tea, curl CTC grades fell. During the past five years (2015-20), the value of Kenyan tea exports declined by 71.3%. During that same period, the value of tea sold for export by Taiwan increased 131.3%; sales of Japanese tea are up 59.6%, and the value of Chinese tea for export is up 46.5%, according to World’s Top Exports.
Selling to domestic consumers is appealing in China and Japan, where higher prices are the norm, but India may benefit most from increasing domestic consumption.
Tea & Tariffs
The economic impact of the pandemic makes it unlikely that China will meet the expectations of a “phase one” agreement negotiated with the U.S. in January. As a result, U.S. President Donald Trump said he might initiate another round of tariffs targeting China.
Or maybe, not.
“I’m very torn, I have not decided yet, if you want to know the truth,” President Trump told reporters last week.
On Friday, to keep what have been productive discussions on track, the U.S. Trade Representatives’ office released this statement: “In spite of the current global health emergency, both countries fully expect to meet their obligations under the agreement in a timely manner.”
In January, China agreed to a 2020 increase of $76.7 billion over 2017 imports. China has since purchased less than $25 billion of U.S. goods, which is a decline of 5.9% through April compared to 2019, reports Bloomberg. The 2020 goal is almost $200 billion in sales.
U.S. trade plunged in March. Overall the U.S. bought 6.5% fewer goods than during the same period in 2019. Imports of Chinese tea through March 2020 declined 23% compared to the same period in 2019, according to the Global Agricultural Trade System database (GATS). Lower sales are due, in part, to a 15% tariff imposed in September 2019. The duty was later reduced to 7.5% in February 2020, but by then, many blenders had switched suppliers. During the first quarter in 2019, the U.S. imported Chinese tea valued at $32 million, a total that declined to $24.7 million during the same period in 2020.
Volume is down 31% from 8.7 million metric tons to 6 million metric tons through March. China is predominately a green tea exporter, but volumes of every category slid, except organic flavored green tea.
Jason Walker, marketing director at Firsd Tea in New Jersey, the U.S. offices of China’s largest tea exporter, writes that while “U.S. imports of Chinese black tea have generally declined over the past five years. More recently, the U.S.-China trade war and coronavirus pandemic have contributed to this slowdown. However, organic black tea imports from China have been rising, with a 66% increase in volume.”
Since workers were able to return to the fields before April, tea production China was spared the pandemic-associated drop in yield experienced in India and Sri Lanka. Imports recorded during the first quarter include little of the spring harvest. Second-quarter statistics will be more revealing as they will reflect the logistical challenges that are still rippling through the supply chain.
“Firsd Tea has been watching the activity at U.S. ports for indications of delays and disruptions. We have not seen any to date,” writes Walker. “In terms of containers leaving China, we have not seen any disruptions since normal business resumed around the end of February in China. At this point, China operations have implemented monitoring systems and PPE (personal protection equipment) requirements for workers. We are watching for indications of flare-ups, but so far, we don’t see evidence of another wave of infection,” writes Walker.
Blenders initially found themselves racing to meet the demand for packaged goods, particularly private label for grocery, but orders for foodservice grades has virtually disappeared due to the unprecedented restaurant and retail tea closures. This alone will substantially reduce tea imports from every producing country.
Specialty tea importers receiving Chinese tea this spring say that demand remains steady despite a three-fold increase in airfreight, which is a far greater expense than the 7.5% tariff.
“Importers were working with a three-fold increase in air freight delivery in April. Rates are still high, but at least cargo is moving faster now,” writes Andrew McNeill with Seven Cups Fine Chinese Tea in Tucson, Ariz.
China recognizes the desirability of retaining a presence in the U.S. market as Europe is likely to experience a more severe recession than the rest of the world. The European Commission last Wednesday released projections that show economic activity shrinking by 7.4% in the 27-nation bloc, according to the New York Times. Economists predict the deepest economic recession in EU history.
While the U.S. administration is angry at China, the escalation of retaliatory measures challenges the prevailing business assumptions guiding American companies in China. U.S. companies invested $14 billion in new factories and other long-term investments in China last year, according to the National Committee on U.S.-China Relations and the Rhodium Group, a consultancy that tracks foreign direct investment flows.
Shawn Donnan, writing in Bloomberg Supply Lines, suggests, “it’s worth remembering every so often that it is still businesses and not governments that really make the decisions that drive globalization and supply chains and that they aren’t decoupling yet.”
Reenergize Local Consumption
Pradyumna Barbora, a specialty tea producer in Assam, points to a straightforward solution: Increasing average per capita consumption from 750 to 800 grams will “uplift the Assam tea industry,” he writes.
“If every tea lover in the country increases their consumption by a mere 50 grams per month, and starts sourcing their tea locally, the gardens will be able to meet their expected minimum wages whilst creating a better living environment for themselves,” writes Barbora, spokesman for Tea for Unity, a group of Assam planters. “We are losing focus on a high-quality heritage product which fetches much more and is more valuable than commercially mass-produced tea,” writes Barbora. The tea industry employs more than a million workers,” he explains, “Investment will improve the mindset of the workforce, translating into greater efficiency and quality.”
Processed tea is piling up as demand declines, and transport is interrupted. Globally, warehouses usually empty by the start of the spring harvest. An abundance of tea stored in 2019 is compounding problems in India. Consider the 21 villages in Champawat, a tea-growing region where warehouses are bulging because drivers are not permitted to travel.
Tea, valued at INRs360,000 ($4,700), was ready to be sent for auction in April, “but we have not been able to transport it due to the lockdown. If the stock is not sent to Kolkata soon, those involved in tea plantation and its selling may face a financial strain,” Desmond Brikbeck, manager of several local tea gardens, told the Times of India.
U.S. Consumers Remain Wary of Reopening
Datassential continues its weekly series of webinars tracking consumer behavior during the pandemic. The COVID-19 series is free and hosted by managing director Jack Li, whose company pioneered the use of menu data to predict flavor trends.
Reopening is underway led by Starbucks, which announced that 85% of its corporate stores would soon resume operations.
Li notes that concern has declined somewhat as some states reopen, “but America is still anxious, with slightly more than half of the people feeling very concerned and hugely worried about their own personal health.”
“Avoidance of eating out is steady, but down from a month ago with 55% of those surveyed saying they will “definitely avoid going out” and 27% saying they are “nervous but will still eat out.” The number of individuals reporting “no concerns whatsoever” increased to 18%, up 2% since April 27 but down 23% since March 10, according to Datassential.
Health remains the top concern, but economic worries are intensifying, according to Li, who found that 57% of respondents are more concerned about the public-health crisis (down 2% since April 27 and down 6% since April 10). Those who say they are most concerned about the economic crisis increased 2% from April 27 to 43% of respondents.
“Not much has changed in the past month. America is still at home and still longing to get back out,” writes Li. “People are excited to get back to activities like dinner and a movie, or lunch and shopping at the mall,” he said.
When asked: “Which of the following food & drink places or activities are you most excited to get back to?” 45% selected “dining at my favorite sit-down restaurant,” and 42% selected “visiting recreational places” with 39% longing to “meet family and friends at restaurants.”
Going to coffee shops (20%) and drinking at bars (19%) ranked in the middle. Visiting nightclubs, concerts, and lounges appealed to only 10%. Visiting cafeterias (5%) was the least exciting activity.
Editor’s note: Unemployment increased to 14.7% in April, the highest since the Great Depression. New claims topped 26.5 million during the five weeks ending April. The proportion of employed working-age adults (51.3%) is the lowest on record. Datassential found that 16% of survey respondents are still going to school or working as usual, with 16% stuck at home due to layoffs and furloughs. An additional 33% of those taking part in the weekly survey are working or attending school remotely, with 35% not working overall.
Next episode: “What Consumers Want Right Now.”
Attend the SofaSummit on International Tea Day
Thursday, May 21, is International Tea Day, a global event declared by the United Nations that will, for the first time, be celebrated in every county. The U.N. organized the event to elevate tea by drawing attention to “the importance of tea for rural development and sustainable livelihoods, and to improve the tea value chain to contribute to the 2030 Agenda for Sustainable Development.”
To celebrate, the Tea & Herbal Association of Canada, in coordination with many prominent industry leaders, is hosting an all-day tribute May 21, beginning at 9 a.m. through 7 p.m. EST. The tea and chat will “circumnavigate the globe,” spanning 14 time zones with participants from 13 countries. Watch on YouTube live – no registration required.
The Zoom event begins at 5.30 p.m. Wednesday, May 13 in Colombo Sri Lanka (India|Asia) | 8 a.m. EST (New York) | 1 p.m. (London) | 2 p.m. (EU) | 8 p.m. (Singapore and Hong Kong) | 9 p.m. (Japan and Korea)
If you miss the live event, recordings of these webinars are available for viewing at no charge.
Enhance your well-being with tea. Tea Journey is a bridge connecting those who craft handmade teas in 35 countries with the growing number of premium tea consumers globally. Tea Journey educates readers not only in the selection and preparation of healthy whole leaf tea but also in the manufacture of authentic teaware and utensils designed to enhance the tea experience.
The pandemic is advancing the role and reputation of specialty tea in protecting the health and enhancing human immunity. At the same time, the economic impact threatens every link of the tea supply chain.
Marketers are wise to address health over wealth.
Consumer marketing surveys in several countries, as well as professional opinion research, indicates a “high level of concern” about becoming infected.
Last May, “health care emerged as the top policy issue for American voters at 36%,” according to Real Clear Opinion Research. Concern about the economy was the top issue for 26% of respondents. Health concerns are now top-of-mind for 66% of respondents in the U.S., according to the Edelman Trust Barometer.
Edelman surveyed a representative sample of adults in 11 countries. In Canada, the United Kingdom, and France 70% or more of respondents favor prioritizing health concerns. In Japan, 76% of those surveyed by Edelman cited health concerns.
“A substantial majority of people around the world want their governments to prioritize saving lives over moves to restart economies being hammered by measures aimed at halting the spread of the new coronavirus,” according to the Financial Post,
Overall, 67% of the 13,200-plus people interviewed between April 15 and April 23 agreed with the statement: “The government’s highest priority should be saving as many lives as possible even if it means the economy will recover more slowly.” One third said it is more important that governments save jobs and restart the economy.
Only 29% of those surveyed agreed that CEOs and business leaders were doing an “outstanding job” meeting the demands of the moment.
“It’s complicated because you have two crises simultaneously – a health crisis and an economic crisis,” said Richard Edelman, CEO of Edelman.
“Business will be looked at very closely in the months ahead,” Edelman said, citing how companies perform in areas such as retaining and reskilling workers or using small businesses in their supply chains.
Dramatic Drop in Economic Activity
Economic activity dramatically declined in late March, and consumer confidence plummeted in April as jobless totals soared.
In April business activity at service companies fell to the lowest level recorded. The near-collapse in the service side of the economy has dragged the U.S. into what’s all but certain to be a deep recession. The government has rushed to aid hundreds of thousands of desperate companies with loans and other help, but it’s unclear if it will be enough, according to the Institute for Supply Management.
In tea retail, suppliers that rely on foodservice sales are the segment most impacted. Blenders in the grocery segment are still playing catchup to the stocking-up rush that is now decreasing.
Sales of tea in grocery and convenience will plateau until pantries empty. A fundamental shift away from traditional trips to the grocery store is underway, led by those who order online. Online market research specialists Brick Meets Click found that April sales of groceries sold online grew by 37% to $5.3 billion. Forty million Americans ordered groceries online in April, increasing both frequency and spend, according to the results of a natural consumer survey. Orders increased from 1.2 to 1.6 per month and spend rose to an average $85 per order, up from $82 in March
The April wave of surveys looked at two additional factors to help us understand the health and economic motivators impacting shopper’s behaviors writes Brick Meets Click.
Health: 47% of the households surveyed indicated a “high level” of concern related to catching/contracting the Coronavirus.
Economic: 39% of the households surveyed indicated that their average monthly household income since the COVID-19 crisis started had dropped dramatically – 25% or more – compared to Jan/Feb 2020.
Reopen Now or Not?
In the U.S., where the contagion has killed more than 70,000 people, about half of the states are easing restrictions on business.
Retailers considering reopening should bear in mind that most Americans are not ready to risk infection by going out. While 56% say they are comfortable making trips to the grocery store, 78% indicate they would be uncomfortable eating at a sit-down restaurant. “People in states with looser restrictions report similar levels of discomfort as this in states with stricter rules,” according to a Washington Post-University of Maryland poll conducted last week.
In announcing plans to ease the restrictions on businesses, governors have emphasized that their actions represent a gradual and cautious reopening of their economies. Nonetheless, when asked about eight different types of businesses, majorities of Americans say they oppose ending the restrictions on each of the eight.
“Fear of infection, the poll finds, has not abated at all in recent weeks,” according to the Washington Post.
Datassential polls 1000 consumers weekly, beginning in March. The chart below suggests consumer fears have plateaued with 94% either “very concerned” or “somewhat concerned.” Only 6% say they are not concerned.
Note to Brands
Consumer sentiment is clear: Businesses have a responsibility to ensure their employees are protected from the virus in the workplace and do not spread the virus into the community (78%). They want businesses to focus on solutions, not selling. In a survey of 12 countries, many consumers indicated businesses should shift to producing products that help people meet the challenges (89%). One in three (33%) say they have convinced other people to stop using a brand “that I felt was not acting appropriately in response to the pandemic.”
Brands must do everything they can to protect the well-being and financial security of their employees and their suppliers, even if it means suffering big financial losses until the pandemic ends. – Edelman Trust Barometer 2020
Tea Supply is not a Grave Concern
Lockdowns in tea producing countries are gradually easing, permitting the harvest to resume, but logistical hurdles are mounting as the cost of airfreight, the preferred method of transport early in the season, tripled. The availability of cargo space on aircraft is greatly limited due to the virtual absence of commercial flights. Overburdened carriers are increasingly tasked with flying far more precious or urgently required goods. In India, the national rail service is shut down and trucking fleets are idle.
Containers are piling up at ports, and ships lie at anchor awaiting medical clearances.
Available airfreight on passenger planes in March was down 44% globally compared to the same period in 2019. Dedicated air freighters added more flights, but overall capacity was down by 25% in March, according to the Wall Street Journal.
The cost of air freight from China to the U.S. increased from $3 per kilo in March to $11 per kilo in April and continues to climb.
Paul Golland, owner of P.G. Logistics, a freight-forwarding business in Australia, told the Wall Street Journey that. “You used to get a quote valid for 30 days. Now you’re getting it valid for 24 hours, because tomorrow the situation may change again.”
“International postal services have been among the hardest hit. Many have reduced or suspended international mail in recent weeks due to a lack of flights,” according to the article. The U.S. Postal Service last week said it would start shipping mail by sea to 10 European countries.
In India, Amazon and Walmart are restricted from making deliveries except for food and medicine, which greatly increased the workload for that nation’s 400,000 postal workers in 150,000 branch offices. About the only service tea vendors can count on is mail delivery. India operates the largest postal service in the world and is rising to the challenge. As the Wall Street Journal reports, “courier competitors can’t deliver. They depend on commercial flights and trains, which aren’t running, their truck fleets aren’t allowed on their roads, and their employees can not get to work.”
U.S. Postal Service employs 633,000 in 32,000 post offices, annually delivering 142 billion pieces of mail. But in April, due to the Coronavirus, Postmaster General Megan Brennan told Congress that volume declined by a third and is expected to fall by half by the end of June. E-commerce is surging, but bulk and business mail account for far more business. Postmaster Brennan estimates the shortfall at $25 billion.
The Human Condition
Datassential reports that only 15% of Americans are still going to school or working as usual. There are now 17% stuck at home due to layoffs and furloughs. An additional 37% of those taking part in a weekly survey are working or attending school remotely, with 31% not working overall.
“While most Americans are apprehensive about the reopening of non-essential businesses, they favor people visiting open-air locations like parks and beaches, where they can keep social distance. As you might expect, people who are currently more concerned about the economic crisis are much more accepting of visits to all types of venues than those more concerned about public-health implications. Having guidelines in place for reopening and familiarity with grocery store precautions have likely also paved the way for other retailers. One-third of Americans are OK with visits to places like shopping malls, hair salons, and restaurant dining rooms,” according to Datassential.
Jack Li at Datassential is optimistic that restaurants will remain a vital part of social life after the crisis eases: “People miss dining in restaurants, not just for the food, but also for the psychological benefits. When dining rooms reopen, there will be a heightened appreciation for them and the sense of normalcy they evoke. Americans associate dining in with better pre-COVID times and happy “milestone” celebrations. Restaurants will also provide an opportunity for people to do their part and reconnect with their communities.”
How soon will this end? Simon Baptist, Chief Economist at EIU, writes that “even in countries where containment measures are being eased, economic activity will be slow to pick up. For instance, even though India partially eased restrictions on April 20, high-frequency data on electricity consumption shows no change in demand from the week before.
Delivery Fee Caps
Last week Seattle instituted a local ordinance capping third-party delivery service commissions at 15%. The intent is to address price gouging during lockdowns temporarily.Violators are subject to prosecution by the Seattle City Attorney’s Office and face steep fines. San Francisco is enforcing a similar ordinance capping service commission at 15%. Chicago and New York City are also considering enacting commission caps. In New York, the proposed cap is 10%. The Seattle ordinance mandates delivery drivers get the full amount of tips and makes it a crime for third-party delivery companies to cut drivers’ pay. The ordinance remains in effect until restaurants are allowed to resume unrestricted dine-in services.
Best Retail Practices
Daily wellness checks for all employees (back of store and front line)
Provide ample (non-medical) masks, single-use gloves and additional PPE as required (plexiglass cashier shields etc.)
Clean high-touch surfaces every two hours.
Encourage hand washing every half hour for food handlers.
Seal orders in packaging and do not let cashiers handle food.
Apply social distancing floor decals and display distancing reminders.
Make sanitizer available at checkout and in stand-alone dispensers at entry.
Avoid cash transactions and sanitize credit-card terminals after each use.
Disinfect entire store at the end of each day and schedule periodic deep-cleaning
Encourage customers to order online and at digital kiosks. Avoid face-to-face interaction by offering carry-out, curbside pickup, drive-thru, and contactless delivery. Customers should insert their own credit card into payment terminals (and stores should opt for “tap to pay” where available). Rely on video and remote methods of communication to minimize consumer contact with store personnel.
It is too early to predict the impact of a looming economic downturn with accuracy. Still, a mid-April survey of U.S. tea retailers by Sinensis Research found that 81.8% of the specialty tea business has laid off staff, with 31.7% of American tea shops temporarily closed.
Abraham Rowe, who conducted the survey, reports 2.3% of tea businesses are permanently closed two months into the crisis. “I expect this number to increase if the lockdowns last through the end of May,” he said.
“Many of the businesses still operating report that they expect to close if sales do not pick up, or if they are unable to secure assistance in the form of loans or grants to continue operations,” according to Rowe.
“Specialty tea business revenue is expected to decline to 65% of 2019 sales, suggesting an overall loss of about $133 million to $154 million in tea sales by specialty tea vendors, and likely much greater losses from coffee shops and cafes that sell specialty tea,” writes Rowe.
“The coronavirus pandemic has devastated people and businesses across the world,” says Rowe, but “it’s too early to get a complete picture of the pandemic’s damage to the industry.”
Around 9,200 of the jobs held by tea professionals are gone. The average number of staff laid off at closed business is approximately 10, and at open businesses around 5. Layoffs and store closures represent a “devastating loss of talent and expertise” since the crisis first curtailed business activities in March, according to Rowe.
Most tea business owners remain optimistic. Rowe found that 93.3% of shop owners expect to reopen after the pandemic has ended and restrictions are lifted.
The number of businesses selling online has increased by 7%, and many companies have noted a significant increase in online sales and curbside pickup.
Shops that weather the initial lockdowns “can expect sales to decline between 20% and 80% this year, depending on their region and the extent to which the shop had to close or change their business model.”
Supply is becoming a challenge: 31% of open businesses report supply chain interruptions.
Assuming that restrictions limiting normal operations last six months, “I predict 2020 revenue to decline to about 65% of the estimated $340 million to $400 million in 2019 sales,” said Rowe, adding that 96% of businesses that remain open expect revenue to decline for the year. “Very few of these businesses expect to grow in 2020,” he said.
A massive portion of specialty tea is sold by cafes and coffee shops, many of which are currently closed. “The number of businesses doing in-store bulk tea retail has declined by almost 50%, and the number of businesses serving prepared specialty tea has declined by more than 50% — afternoon tea service has ended almost entirely in the United States,” he said.
Rowe cautions, “these data only represent the impact on the retail market, and not the wholesale market, though a few comments on the impact on the wholesale market are included in his report.”
“I suspect that the wholesale tea market has seen even more damage than the retail market because of this, with revenue declining perhaps as much as 75% or more,” he said. Tea shops have reported that tea wholesale to foodservice clients has declined to zero, and it seems possible that larger wholesalers are feeling this same impact.
Rowe, who founded Sinensis Research in 2019, said his firm is providing research on the pandemic and its impact on the tea industry at no cost.
“Please support this research by exploring our products, such as the State of the Industry Report ($29.95). If you’d like to work with us to get up and running as an online store and get sales moving again, get in touch,” he said.
Starbucks Comps Decline While Starbucks reported a decline of only 3% in comparable U.S. store sales for the quarter ending March 29, same-store sales plummeted 65-70% as the new quarter began, according to executives. Half of the company’s U.S. stores are now closed, leading to a 46% decline in earnings. Most workers will return to cafés in May, and the chain expects to reopen most closed locations in June, according to Good Housekeeping Magazine. Full-year revenue is expected to decline by almost 10%. In 2019 same-store fourth-quarter growth was a positive 6% for the U.S. division.
Consumer Behavior Insights
McKinsey & Co. is closely tracking changing consumer behavior in response to the COVID-19 crisis.
“Consumer behavior has changed across several dimensions: consumption by category, channel selection, shopper trip frequency, brand preference, and media consumption. These shifts, combined with forecasts for virus containment and economic recovery, are critical for commercial strategies,” according to McKinsey. Beverage sales in the grocery channel were up 36% during the period March 1-21, a situation that has led to restocking issues as consumers stocked up. Consumers are making 15% fewer shopping trips and buying enough for two or more weeks.
“Our research found that 30 to 40% of consumers have been trying new brands and products. Almost half of these consumer switches are because the desired product is unavailable, while an additional 19% decided to purchase cheaper available options. Of the consumers who switched brands, 12% expect to continue to purchase the new brands after the pandemic,” writes McKinsey.
Sri Lankan Tea Exports Decline
The bottom fell out of Sri Lanka’s generally robust tea export market in March following dismal yields in February. Tea export volume and value each declined by half compared to March 2019. Tea in packets dipped to 6.3mn kgs from 12.7mn kgs in 2019. Production of teabags dropped more than 1 million kilos from 2.4mn kgs in 2019 to 1.3mn kgs in March 2020. Revenue for all categories of tea was SLRs11.6 billion ($60.1 million) in March 2020 compared to SLRs22.5 billion ($116.7 million) in March 2019, as reported by the Daily News. Anil Cooke, managing director at Asia Siyaka brokers, explained that export activity virtually came to a halt before the government agreed that growing and processing tea is an essential industry.
Samovar Tea Lounge in San Francisco introduced Free Meal Monday in April and has since served 1,100 customers a free lunch of rice stew with vegetables, eggs, and tea. The give-away promotes sophisticated Samovar Life subscription meals starting at $19 for breakfast, $27 for lunch, and $37 for dinner. Meals are delivered Thursday through Sunday, and pickup service is available at all three of the 20-year-old tea room’s locations. Shipping is free from the company’s online tea store. The company is also delivering groceries.
“We’ve never launched so many programs in such a compressed amount of time and while facing so many challenges.”
Samovar Founder Jesse Jacobs
From its inception, Samovar founder Jesse Jacobs viewed customers as a community celebrating the tea lifestyle. That is why he chose the URL: www.samovarlife.com.
The U.S. will report 1QTR GDP on May 1. Globally the impact on economies is “fairly catastrophic” writes market researcher firm Statista.
Singapore reported its economy contracted by 10.6% between January and March despite having initially kept the virus in check. The historic and unprecedented drop in Chinese GDP of 6.8% already made headlines. Japan’s economy contracted by an annualized 7.2% in 4QTR 2019 and is expected to decline another 5% in 1QTR 2020.
Central Banks in France and Italy have projected quarterly losses between 5% and 6%. Experts expect the U.S. economy to contract by 5-10% and the UK economy by as much as 13%.
A running list of permanent tearoom and tea merchant closures in Australia, Canada, New Zealand, UK, and the United States.
To add a business to this list email Dan Bolton (firstname.lastname@example.org) with details and a link to a news report, press release, or a Facebook page announcement. Tea Biz also publishes Tea Shop Obituaries that celebrate the life of tea businesses that have served their communities for five or more years. Owners are encouraged to share their experiences so that other shops will benefit. Tea Shop obituaries are 350-word interviews illustrated with a photo.
The Canadian Federation of Independent Business (CFIB), which represents 110,000 small ventures reported in April that 58% of members surveyed said they could not pay May rent without government assistance. Only 18% of small businesses indicated they are now open. The survey of 10,500 businesses was conducted April 17-19.
Victoria, British Columbia Just Matcha Tea Shop (established 2013-2020) Locations: 2021 Oak Bay Ave. | 544 Pandora Ave. Tiffanie and Kip Home announced the temporary closure of their two tea shops in mid-March but could not make rent payments. Unable to reach an agreement with their landlord (who graciously deferred rent) they decided to close permanently in April after seven years, according to the Times Colonist. “I’m not going to triple my revenues when it opens again and you need to do that in order to cover the rent for the three months that you missed,” Kip told the newspaper. Kip said the company spent a lot of money in January and February restocking inventory and buying merchandise for the upcoming tourist season that relies heavily on cruise ship visitors and public events. The couple and their two business partners hope to one day reopen on Pandora Ave.
A National Restaurant Association survey of 6,500 restaurant operators found a 78% average drop in sales during the first week of April, compared with the same period last year. The U.S. restaurant industry lost 3 million jobs in March with sales plummeting by $25 billion. The association estimates that 44% of restaurant and cafes operators were forced to temporarily close in March with 3% permanently closed. The survey indicated 11% of respondents anticipate closing permanently due to the crisis. Sinensis Research reports that as of mid-April 31.7% of U.S. specialty tea businesses are temporarily closed with 2.3% closed permanently. In a report on the impact of COVID-19, founder Abraham Rowe estimates 9,200 layoffs. His survey of 1,600 shops showed that “81.8% of specialty tea businesses have laid off staff.”
Doylestown, Pennsylvania The Zen Den (established 2011-2020) Location: 41 E. State Street Owner Annette Coletta announced the closing of the popular shop in April, according to the Doylestown Patch. The shop featured many live events and was favorite of artists and musicians. Coletta intended to sell the business and was in discussion with buyers when the coronavirus lockdown forced her to close the shop. On Facebook she wrote: “I have had some of the best years of my life here and made so many friends and acquaintances that I’m very grateful for having. What began as a way of coping with a personal crisis after a horrific car accident, has now ended through a global crisis. What began as an idea in someone with no business experience, The Zen Den grew to earn “The Best of Bucks/Mont” several years in a row—-I have more gratitude and pride than I can articulate—-I have ALL of you to thank!” Liquidation of inventory is planned by April 30. “I will go forward knowing that I gave it my EVERYTHING and ran an honest, ethical business for 9 years and that I did the best I could—-I have no regrets,” writes Coletta.
New Orleans, Louisiana Coast Roast Coffee & Tea (established 2015-2020) Locations: 2381 St. Claude Ave.| 801 Magazine St. (2018-2020) Owner Kevin Pedeaux, a 12-year veteran with three shops in Louisiana and two in Mississippi closed the company’s St. Roach Market and Auction House Market locations in New Orleans but continues to operate the 3618 Magazine Street store which opened in 2019, according to a report in the Uptown Register. Service is limited to delivery, online order for pickup, and show and order-to-go. Pedeaux said in March he had to lay off 12 staff members but in April is back up to five. “It was personally a huge victory to get back to 7 a.m. to 7 p.m. hours,” he told the newspaper.
Datassential surveys consumers weekly and hosts a Friday webinar Food + Coronavirus to share what they have learned about fast-changing consumer behavior. The presentations are free. Mark DiDomenico is director of consumer solutions at Datassential. He told participants during a webinar hosted by the National Coffee Association last week that American consumers at this point are more worried about their health than wealth (health concerns peaked at 67% April 1 and remained at 61% the week of April 8). Respondents (64%) consistently say they will “definitely avoid” eating out.
When asked “since the onset of social distancing, where have you cut back on spending?” eating at restaurants topped the list at 57%.
“Consumers are avoiding risk but also seeking ways to adjust,” said DiDomenico, who cited examples such as cooking from scratch (42% say they do this more often), eating comfort foods (+33%), stress eating (+24%), and drinking alcohol more often at home (+14%). Moving forward? “Consumers are likely to avoid buffets and salad bars. Half say they will order for delivery (and disinfect delivery packaging), he said. Shopping for food online (+22%) is a new behavior that is very likely to stick, he said.
David Parnham, Research Director at Café Culture in Australia, recently completed a report on the immediate impact of lockdowns. The impact is sobering. While Australians were not strictly confined to their homes (New Zealand is in lockdown), a survey of cafe owners found that 19% experienced a 70-90% decline in sales, with an additional 19% reporting declines of 50-70% and 29% reporting declines of 20-50% in sales. Café Culture Managing Director Sean Edwards posted several helpful suggestions from café owners for “Staying Afloat in Tough Times.”
Sri Lanka is embracing a digital future for the Colombo Tea Auction according to Sri Lanka Tea Board Chairman Jayampathy Molligoda. The country’s first three electronic auctions in April resulted in sales of 16.5 million kilos of tea. Efforts to switch from outcry to electronic bidding span 20 years, according to Jayantha Karunaratne, chairman of the Colombo Tea Traders’ Association. “Changing the mindset of some players is not an easy task, said Karunaratne, adding, “Our vision is to go online because it provides advantages such as lower cost, greater efficiency, and more transparency.”
As soon as the auction opened demand from Russia, Turkey, and the Middle East drove record prices. An Uvakellie from Vellapatna Estate, owned by Madulsima Plantations, sold for SLRs810 ($4.21) per kilo and a Uva High from Finlays Oodoowerre Estate sold for SLRs980 ($5.10) a kilo, a record for FBOPF1 grade tea at auction. Akbar Brothers purchased the lot. Dickwella Estate then broke the SLRs980 mark at SLRs1000 ($5.20) per kilo for an FBOPF1 bought by Ceylon Tea Marketing.
“The response from industry stakeholders has been fantastic. The Sri Lankan tea industry has once again proven its resilience to upheavals,” said Dhammike Wedande, senior vice president of Asia Siyaka Commodities, a leading tea broker.
Direct Trade Ban Kenya’s Ministry of Agriculture intends to ban direct tea sales. New regulations state that “henceforth, sale by private treaty (direct sales overseas) is outlawed,” forcing growers to sell exclusively through the auction process.
The new regulations raised concerns voiced by the East African Tea Trade Association (EATTA), which manages auction and direct tea sales in Mombasa.
“Exporters who have long-term contracts with international buyers might have to review those contracts, and we don’t know how this is going to affect the market,” EATTA Managing Director Edward Mudibo told Business Daily.
The Tea Auction in Mombasa, the world’s largest by volume, is experiencing difficulties associated with the spread of the coronavirus and was relocated to a hotel.
The entire auction system is “dysfunctional,” according to small growers who appealed to Kenya’s President Uhuru Kenyatta to intervene to curb predatory behavior amid falling prices. Reformers agree and hope to automate bidding.
Kenyatta’s reforms, announced last week by Agriculture Cabinet Secretary Peter Munya, require the Kenya Tea Development Agency to pay 50% of the price of monthly deliveries. The remainder is to be paid as an annual bonus. In the past, KTDA factories paid farmers KS14-16 per kilo. Buyers will now pay 10% down with the balance due before export. Factories must pay farmers within 30 days after receiving auction proceeds. Also, brokers representing factories will be limited in the number they represent (no more than 15 factories in the current proposal).
Physical Distancing on 1,500 Acres
India reported more than 1,500 new COVID-19 cases in the 24 hours ending Monday, April 20, bringing the national total to 17,656 confirmed cases with 559 deaths. There is no indication of a “flattening curve” with the contagion likely to peak in four to six weeks. West Bengal, which includes the fabled Darjeeling growing region, has 339 reported cases with 12 deaths. Assam reports 35 cases with one death.
Samar Jyoti Chaliha, who manages the Dikom Tea Estate near Dibrugarh in Assam, harvested only 17,000 kilos of tea in March due to government-ordered lockdowns. Usually, the garden produces 40,000 kilos of first flush tea. The early harvest typically yields 70,000 kilos, “but this year, I may be able to make a max of 45,000 to 50,000 kilos,” said Chaliha. The workforce is a concern. “I am limited to 50% of peak season’s employment (3,800 workers),” he said. Chaliha is currently paying 1,800 workers, but few are plucking tea. “Overgrown bushes take a lot of time. Right now, it is more slashing/skiffing and hand breaking overgrown leaves and branches which are tossed to the ground. We cannot make tea out of this stuff,” he said.
Restoring the bushes should be complete by April 23 or 24. It will then take another 15 days to come up with succulent leaves, which brings us to the beginning of the second flush, he explained. A typical second flush yields approximately 260,000 kilos (2.6 lakhs) during May and June.
“I don’t know how the bushes will behave after skiffing at this time of year (pruning is normally done in winter when the plants are dormant). Dikom produced an average of almost 3,000 kilos per hectare last year, a highly productive yield. “If all goes well, the second flush should be fine,” he said.
The garden currently has 1,500 acres (635 hectares) under tea. Given the vast area, instead of limiting the number of workers to one per acre, when they are most needed, consideration should have been given to simply assigning smaller numbers of workers within each block (say 100 vs. 200). Growers could assign 100 masked pluckers to each of two widely separated sections and maintain safe distancing of 10 feet between pluckers. Even with 3,800 workers in the field at the same time, in most of Assam’s licensed tea gardens, there would only be two workers per acre. “Apparently, no one took this up with the government,” he said.
India will take additional steps to spot-check tea to ensure it complies with the Food Safety and Standards Authority of India (FSSAI ) norms. Random checks should result in higher prices a necessity given the lower volumes at auction. “Tea failing to adhere to the FSSAI parameters may not be allowed to be offered in the auctions depending on the extent of the violations by the producers,” according to the circular issued to planters. Tea Board Deputy Chairman Arun Kumar Ray told the Deccan Herald, “right now, the priority is to comply with the health safety norms and hygienic practices in tea gardens to combat the COVID-19 crisis.”
In Sri Lanka, February Yield Marks Decade Low
Sri Lanka harvested only 17.9 million kilos of tea in February, down 3.8 million kilos from February 2019. High grown and medium grown tea showed marginal gains, but tea from the lowest elevations declined 28.3% due to drought. Forbes and Walker Tea Brokers report the first two months of 2020 yielded only 39.8 million kilos, down 5.1 million kilos compared to the first two months of 2019.
Health News Sri Lanka is promoting black tea as an immunity booster with the slogan: “Double Your Protection” The campaign online and in print states that “Black tea is not only delicious but packed with immune-boosting theaflavin antioxidants. Enjoy 3 to 4 cups daily, and be protected both inside and out.”
The Times of Indiareports that the Indian Council of Medical Research (ICMR) will study the antiviral properties of theaflavin-3, a compound found in black tea. The United Planters’ Association of South India (UPASI) circulated a press release citing work by researchers in Taiwan and China, suggesting replication of SARS CoV-2 is inhibited by polyphenols commonly found in tea. These include Theaflavin-1, Theaflavin-2, and Theaflavin-3, all of which are abundant in black tea.
The European Journal of Preventative Cardiology reports fewer heart attacks and a lower risk of dying of heart disease among tea drinkers participating in a Chinese study of 100,000 adults over seven years. Those who consumed three or more cups of tea per week had a 20% lower risk of heart attack or related cardiac incidents and a 22% lower risk of dying of heart disease.
Millennia Tea, a Canada-based supplier of flash-frozen tea leaves, closed its first private funding round at $500,000+. The pioneering brand, based in Saint John, processes tea much like leafy produce at origin where it is washed and frozen to preserve antioxidants destroyed during the drying process.
Shelly King, CEO of Natural Products Canada, a key investor and strategic advisor, told Huddle that “today’s health-conscious consumer has embraced ‘food as medicine’ and is looking for ways to optimize the nutritional value of their everyday pleasures like a simple cup of tea.”
“Millennia TEA has a category-changing product that ticks all the boxes for today’s consumer,” said King.
Upcoming Events The United Nations has designated May 21 as International Tea Day to raise awareness of the need for sustainable production and to honor those working to supply the world with tea. The British have a reputation for never enough when it comes to tea, so they also celebrate National Tea Day (Tuesday, April 21). The Sun once again published a chart of tea in 16 shades from red amber to milky white. The article always leads to squabbles over exactly how much is too much dairy. Historian Seren Charrington-Hollins explains why milk is added last:
“One of the fiercest topics is whether to put the milk in the cup before or after the tea. In the early days of British tea-drinking, when the china we had was of such poor quality that it would crack under the heat of boiling water, milk was always put in first to cool the tea.
“But in the 18th century better china started to arrive and those who could afford it switched to putting milk in after the water, as a social signifier. Continuing to put milk in first was associated with the lower classes.
“Tea tastes better if you put the milk in after the hot water because you avoid scalding the milk. You also maintain the perfect temperature for brewing, which is 95C,” advises Charrington-Hollins.
Tea industry news for the week of April 13 – Grocery Sales Spike – Tea Production Declines – Health Misinformation – Skipping Port – Edible Tea
Tea sales in grocery spiked as consumers rushed to stock up ahead of lockdowns in the US, Canada, and the UK. Sales in the UK the week of March 21 rose 55% compared to the previous year, according to Nielsen market research.
Grocery shoppers in the UK, on average, spent an additional $80 (£62.92) stocking up during March.
In the US, market information provider IRI in Chicago reports an 11% increase in year-to-date in sales of packaged tea in multi outlets (including grocery and convenience stores). Dollar sales of instant tea mixes rose 12%. Sales of refrigerated teas increased by 9.4%, and sales of refrigerated ready-to-drink coffee grew 23% year to date, compared to the same period in 2019. Coffee sales were up 8.2% to $2.6 billion through March 22.
Major brands, including Lipton, Tetley, Twinings, and PG Tips assured consumers confronting empty shelves that supplies were sufficient as grocery sales rose 20% to their highest level in a decade, according to Kantar Research. Herbals associated with improving immunity spiked as well with top sellers listing ingredients such as echinacea, ginger, ginseng, and lemon and honey.
Plucking resumed Monday April 13 in Darjeeling on government orders limiting the workforce to 25% of normal. A large factory like Thurbo, one of the Goodricke Group, employs 400 but can operate with 100 staff by reducing the number of processing lines. Processing capacity makes it possible to resume plucking the valuable first flush leaves.
Financial analysts at ICRA estimate India’s tea industry will experience a decline of 90 million kilos in 2020. The estimate assumes 45-50 million fewer kilos of tea from plantations and 45 million fewer kilos from smallholders. Annual tea production will decline 6-7% in Assam and West Bengal and another 5-6% in South India. Bought-leaf factories remain closed.
ICRA estimates that the earliest tea estates could start production would be around the third week of April, given the present situation, according to The Economic Times. The government permitted plantations to resume harvesting this week, but mandates staffing at no more than half previous levels. Social distancing and health precautions are to be enforced. Since the lockdown, now in its third week, weeds are encroaching, pest counts are high, and a light pruning is needed before plucking resumes. These actions will add INRs15 per kilo to the cost of production, according to ICRA, noting: “Any decline in production in the second flush teas would result in a substantially higher cost per kilo.” In India, labor expense accounts for 65-70% of the cost of production.
Kenya saw exports decline by 4 million kilos in February to 40.5 million kilos compared to February 2019 totals, according to the Agriculture and Food Authority. Disruptions in the auction at Mombasa are to blame as the weather is excellent with moderate temperatures and favorable rainfall in the western and rift valleys. The harvest increased to 49.2 million kilos compared to 31.4 million kilos during the same period last year. Smallholders contributed 19 million kilos to the total. Prices at Mombasa were down, averaging $2.13 per kilo compared to an average price of $2.16 per kilo in February 2019.
Curfews in Sri Lanka temporarily stopped tea production in March. Plantations Minister Ramesh Pathirana said the nation’s tea plantations would be allowed to continue operations so long as they adhere to guidelines set by the Health Ministry. To facilitate transactions, the Ceylon Tea Traders Association has switched to online auctions after 137 years of outcry bidding. Banks and the government departments regulating food safety and trade that are essential to export are now open three days a week but operated by half their usual staff.
In Vietnam, first-quarter tea exports declined 2.4% in volume and lost 19% in value compared to the previous year. Shipments to China, Taiwan, and Russia, were virtually halted. The US is one of the top five destinations that together account for 75% of Vietnamese tea. Prices declined 13.5% to $37 million in February, averaging $1.48 per kilo, according to the Vietnam Tea Association. Trading partners are asking for lower prices, delayed delivery, and even canceling contracts, according to the association.
Physicians strongly disclaim a post stating that drinking tea is an effective cure for COVID-19, the disease caused by the newly discovered coronavirus. The World Health Organization (WHO) in March declared there is no known cure for COVID-19. “To date, there is no vaccine and no specific antiviral medicine to prevent or treat COVID-2019,” according to WHO. The post, incorrectly attributed to CNN, appeared on WhatsApp and Facebook and was widely shared. The report did not appear on CNN. “While tea may strengthen immunity, there is no “research” indicating benefits for COVID-19 patients,” according to Dr. Jayaruwan Bandara, director of the Sri Lanka Medical Research Institute, as reported by AFP in a Fact Check published March 26.
“News reports in China in February also picked up on the claim that tea could be used to stop the virus but said it was not true,” according to the BBC News Reality Check.
Sri Lanka is promoting black tea as an immunity booster, and India may soon follow.
Citing a study by the Tea Research Association (TRA) that Ceylon tea contains high levels of theaflavin, Sri Lanka initiated an advertising campaign claiming that ‘Ceylon Black Tea’ enhances COVID-19 immunity. TRA maintains that theaflavin, the main polyphenol in black tea, boosts immunity based on studies published in medical journals
A 2003 experiment involving 21 volunteers by Dr. Jack Bukowski at Harvard Medical School showed that immune system blood cells from tea drinkers responded five times faster to germs than did the blood cells of a control group. Bukowski explained that L-theanine is broken down in the liver to ethylamine, a molecule that primes the response of an immune system element called the gamma-delta T cell.
“We know from other studies that these gamma-delta T cells in the blood are the first line of defense against many types of bacteria, viral, fungal, and parasitic infections,” he said. In 2007 Bukowski demonstrated that drinking five cups of tea daily increased the body’s ability to ward off colds and flu. His work appeared in The Journal of the American College Of Nutrition
The United Planters Association of South India (UPASI) Tea Research Foundation is compiling a brief to convince the Tea Board of India to follow Sri Lanka’s lead in promoting tea as a wellness drink.
Tea Board Chairman PK Bezbaruah told the Hindu Businessline, “Indian teas, particularly Assam and the South Indian teas, have a very high proportion of the Theaflavin compound and hence should ideally be more effective.”
“I think this can help push exports, particularly at a time when the output is expected to be at least 15% lower this year,” Bezbaruah said.
Shipping companies are bypassing Indian ports essential to the tea trade. Container ships generally stop at one or two local ports to load cargo before traveling between continents. When containers are delayed in reaching port, ship captains have no reason to stop.
Canceling India’s tea auctions for two weeks to prevent the spread of the coronavirus set in motion a sequence leading to this unusual logistical snafu. Tea is exempt from transport restrictions, but shipments delayed at auction experienced further problems in transit as law enforcement agencies stopped trucks en route to ports. Exporters next experienced numerous cancellations of consignments following the collapse of retail demand in foodservice. New buyers are scarce, leading to acute cash flow problems that subsequently hampered exporter’s ability to meet contracted delivery dates.
Nim’s, a UK-based fruit crisp brand, recently introduced the first edible teas. These can be brewed or eaten as a snack. Nim’s located in Sittingbourne, produces air-dried snacks using beetroot and pineapple, kiwi and pineapple, and beetroot and parsnip. The tea sells for $6.25 (£5) for 12 sachets. Once the tea is steeped, you can enjoy the rehydrated fruit and vegetables “Drink, Eat and be Healthier.”
Arizona Iced Tea launched a 5% ABV ginseng and honey-flavored green tea blended with vodka. The new line is named Arizona Hard. The initial rollout in Canada features 473ml single tall cans or 12-ounce (355ml) six-packs. The suggested retail price is CAD$3.49 for the individual can. In Canada, spiked tea can be delivered to your home by food delivery services such as SkipTheDishes.
Statistics compiled from a survey of retailers following China’s unprecedented lockdown of 700 million people reveal that while international chains like Starbucks and Costa and big national chains, including Ten Ren and Luckin, experienced severe financial setbacks, independent tea and coffee shops suffered mortal blows.
Now that the contagion has spread to Italy, shop owners are taking a hit comparable to their Chinese counterparts.
“Being in the “orange” zone we’ve seen the downtown area of Milan losing its fabric, most people (not all, fortunately) are just not going out and are avoiding close contacts with others (i.e., any crowded area) We’re currently recording a drop of 40% to 50% both in the store and the tearoom. We’ve adopted the sanitary ordinances that set a “safety perimeter” of one-meter minimum distance from others and have had to cancel all planned events and tea seminars,” writes a veteran shop owner who established his specialty tea business in 2008.
In China, a Kamen survey of 2,000 shop owners, those with ten shops or less, revealed that 75% of the stores closed during the epidemic. Closures were due to policy prohibitions (primarily in Hubei Province) and concerns about personnel safety as well as the absence of foot traffic.
Globally there were 98,000 confirmed cases and 3,347 deaths, including 148 in Italy. The death count in Hubei Province is 3,000, with 23,972 of the 67,466 confirmed cases still in the hospital.
Revenue, compared to the same period in the previous year, declined to zero at 65.9% of the shops surveyed. Business declined 50% to 80% at 19% of the shops. Asked to evaluate the loss, 65.93% of shop operators said the event was devastating, with 30.97% saying the impact is controllable. Only 3.1% reported minimal impact. The Chinese government has announced subsidies, low-interest loans, and relief from taxes for retailers in the vicinity of Wuhan.
Starbucks announced this week that 85% of its shops in China have reopened. In a letter to the U.S. Securities and Exchange Commission, Starbucks estimated losses of $430 million from the closure of half of its Chinese shops.
Morocco Hoards Chinese Tea
Fearful of the impact on shipments of green tea imports, Morocco is hoarding tea. The president of the Moroccan association of tea and coffee manufacturers (AMITC), Mohamed Astaib, announced that Morocco had imported enough tea to last six months as a preventive measure. Logistics is partly to blame as hundreds of thousands of containers stacked up at China’s 34 ports.
In an article published by the China Media Times Tea Weekly Yu Lu, vice president of the China Chamber of Commerce of Import and Export of Foodstuffs, Native Produce and Animal By-Products (CFNA) said that Morocco, China’s largest trading partner, implemented stringent standards for pesticide residue for 60 chemicals. As a result, sales decreased by 4.2%.
Moroccans consume 70,000 metric tons of tea annually, making it the 9th largest tea importer in the world.
The tea floor at Fortnum & Mason in London’s high street is stocked exclusively with tea sourced globally. In first for the company, it will now sell a non-caffeinated children’s tea in four flavors.
The Small & Wild brand, blended by two millennial-aged mothers, launched two years ago. The teas are ethically sourced, sugar-free blends of natural herbs and fruit.
The decision follows a U.K. consumer shift to tisanes, which are growing in popularity. Hardly stodgy, the fabled tea company reaped a windfall last year on sales of a bottled sparkling tea.
Teatime forRampaging Vikings
Fans of the widely acclaimed television series Vikings gave a nod of understanding with word that researchers attribute the Viking’s barbarian behavior to a hallucinogenic herbal tea. Warriors high on a brew of stinking henbane amd alcohol experienced less pain, according to Karsten Fatur, an ethnobotanist at the University of Ljbuljana in Slovenia. Fatur speculates that ingesting this tea before battle led 9th century Norse Berserkergang “berserkers” to howl like beasts as they rushed wildly into battle wearing animal skins and little armor. Unchecked aggression, unpredictability, and dissociative effects, such as losing touch with reality, might have allowed them to kill indiscriminately without moral qualms, writes Fatur.
The coronavirus outbreak is causing logistical havoc in advance of the world’s most valuable tea harvest.
“All parts of the country (except Hubei Province) are gradually returning to work and production under the guidance of the tea district government,” writes Tea Weekly.
Hubei Province, an important producing region, remains under lockdown with 2,500 (2,467) deaths, and 80,000 (78,914) confirmed cases of the fast-spreading epidemic centered in the city of Wuhan.
“China is reeling from the outbreak of novel coronavirus-caused pneumonia,” according to Cai Jun, secretary general of tea with the China Chamber of Commerce of Import and Export of Foodstuffs, Native Produce and Animal By-Products (CFNA). CFNA is an influential trade association that operates under the supervision of China’s Ministry of Commerce.
Setbacks are not due to illness or deaths of tea garden workers; it is the result of a national effort to limit travel, close factories, ban public gatherings and shutdown bus, train, air, and subways to prevent the virus from spreading.
“As far as I know, Chinese tea people are all safe and sound, which indicates that drinking tea helps to strengthen immunity,” writes Mr. Cai.
China’s tea industry saw this coming, according to tea retailer Austin Hodge, founder of Seven Cups Fine Chinese Tea in Tucson, Ariz. Hodge, who imports tea direct from China, recalls the SARS epidemic in 2003. The Chinese learned valuable lessons from that outbreak, which killed 774 globally.
“No tea is going to waste. They are not plucking if they cannot process,” explains Hodge, who praised the Chinese for “making all the necessary adjustments.”
“In rural tea country, the real issue isn’t the virus; it’s the lockdown and logistics. Everybody is local. They don’t have to travel anywhere,” he said.
He expects his first tea of the year to arrive on schedule in a week or two.
Procedures at China’s largest tea company factory in Erhai are typical. The plant resumed operations Feb. 13 as 700 workers were screened for fever, completed and signed a personal health commitment promising to wear masks, disinfect their hands and periodically visit one of six health test points. Upon entering the factory, they scanned the “Yunnan Epidemic Prevention” QR code with their cell phones, activating a cell phone (WeChat mini app) that tracks their movement and warns employers if they have encountered someone who has come down with the virus.
Effective Feb. 11, all Yunnan residents must scan a QR code to enter and exit public places, including residential complexes, markets, malls, hospitals, and public transit hubs. “No name, ID or other content is stored,” and Yunnan promises to destroy the tracking data once the virus is contained.
A factory manager estimated the increased security reduced productivity by 10%.
In the southern-most tea gardens where the harvest is just beginning, those who prune and pluck tea are required to wear masks and are not permitted to form groups. They must keep a minimum distance of 10 feet apart while working.
The China Tea Circulation Association reports that specialty harvests began Feb. 10 in Gaoxian in Sichuan and on Feb. 20 in southern Zhejiang (Wenzhou and Lishui).
“Under the epidemic situation, while doing a good job of prevention and control, multiple tea-producing areas and companies across the country have also organized tea farmers to start the first batch of 2020 spring tea picking,” according to the association.
“We’re not in picking season yet, so the virus hasn’t had much effect on the tea production and international trade. Although it does affect the sales, it’s overall manageable,” writes Mr. Cai.
Grocery stores and supermarkets remain open, and food and beverage delivery are permitted, but the lockdown has cut foot traffic at China’s premier tea malls to a fraction of normal.
“When most tea markets are not open, companies are encouraged to sell online and micro-businesses,” advises the Agriculture and Rural Bureau of Yuzhou District as reported on the Sichuan News Network. Production of Chuancha in Yuzhou is projected at 1,800 metric tons valued at more than $42.5 million (RMB300 million).
More than 500 million Chinese drink approximately 1.9 million metric tons of tea annually, according to the China Tea Marketing Association. The domestic tea market is valued at $18 billion.
During the crisis, overall retail sales are being stripped of $144 billion a week, according to China’s Evergrande Think Tank (as reported by Forbes).
The impact thus far is most significant in congested urban areas. Every province, including Tibet, has reported cases of Covid-19, but tea regions were spared the initial brunt of the epidemic. Hubei reported 64,084 cases and 2,346 deaths.
Enshi tea producers are the closest hot spot, about 500 kilometers west of Wuhan. Plucking generally commences March 15 on Wufeng Mountain. Enshi is a green tea region, one of the few that specializes in steamed green teas. Train and bus service was suspended in January, all 70,000 cinemas in the province were closed, and public gatherings were forbidden. Only grocery stores, gas stations, drug stores, and hospitals are operating.
Generally speaking, the spread of Covid-19 in tea growing areas is slow, and infections in neighborhoods and local outbreaks are comparatively rare. Covid-19 cases in other places such as Enshi and Shennongjia are still attributed to imported cases, and the risk of spread is relatively low,” according to Epidemiologist Dr. Liang Wannian, Beijing’s health chief. His responses to questions from reporters were posted by the State Council of Information Office in Beijing.
How Bad Could It Get?
In addition to tea and coffee, Yunnan is one of the most important growing regions for cut flowers. Harvesting flowers is time-sensitive, and Valentine’s Day represents a significant but fleeting business opportunity.
Fresh-cut flowers from Yunnan are exported to 46 countries and makeup 70% of domestic market share in China’s major cities. Growers earn $64,000 (RMB450,000) per hectare on average selling flowers for $0.20 (RMB1.43) per bloom.
This year the timing could not have been worse, resulting in big losses due to a critical break in the supply chain as trucks, trains, and flights were suspended.
The magnitude of the problem became evident in early February at the Dounan Flower Market in Kunming. Dounan is the largest fresh-cut flower market in Asia. During the period Jan 27 to Feb 5, trade volume in the market slumped 95% to $61,355 (RMB431,500). Sales were 4.78% percent compared to the same period in 2019. Dounan sold 6.53 billion cut flowers valued at RMB5.4 billion last year.
This was compounded by the fact that 50 million consumers were confined to their homes in the Wuhan region and that offices nationwide were closed for as long as two weeks beyond the traditional spring festival travel holiday. The auction was shut down for several days, re-opening Feb. 10.
One-third of Yunnan’s annual cut-flower revenue is earned in February, according to Wang Jihua, deputy director of the Yunnan Provincial Academy of Agricultural Sciences. Mr. Wang estimates that the loss of Yunnan’s flower industry, including supporting industries such as logistics, during the special period will reach RMB3 to RMB5 billion ($425,000 to $715,000).”
Transport options were cut by 90% during the height of the lockdown and are only now being restored. Roadblocks prevented entire villages from access to larger cities and towns. Tea faces a less critical timeline―processing must begin within four hours once leaves are plucked―but the logistics of transportation are the same.
Phil Orlando, Chief Equity Market Strategist and Head of Client Portfolio Management at Federated Investors, told Bloomberg Newsweek the world’s stock markets had not indicated the true impact on trade. “In my humble opinion, it will be bigger than people think,” he said.
Orlando was proved correct Feb. 25 when stock markets globally suffered steep declines.
The last three weeks of February were the first in which the number of patients cured of the disease outnumbers those who contracted Covid-19. It is too soon to declare an end to the crisis, but progress is evident.
“The epidemic is under effective control due to the Chinese government’s prevention and control measures,” writes Mr. Cai. During the lockdown, “most people work from home except those who work in the sectors responsible for the supply of the necessities. We have full confidence and capability to win this fight against the epidemic,” he said.
Mr. Cai said that China’s major tea companies “have shown a dedication to fighting this virus by donating money and necessary supplies to those affected areas.” CFNA was forced to postpone three tea conferences scheduled for March, and several tea fairs, including the spring edition of the Global Tea Fair, are being rescheduled.
China’s 80 million rural tea laborers annually produce 2.56 million metric tonnes of mainly green tea on 3 million hectares of land. Their effort results in half of the world’s annual tea production of 5.2 million metric tons.
Domestic sales by volume are mainly of green tea, but many localities, including Quimen, Fuzhou, Wuyi, and Fuding (in Fujian province) and Pu’er in Yunnan Province, specialize in the production of high-value oolong, white, jasmine, black, and post-fermented teas.
The China Tea Marketing Association estimates 63.1% of domestic sales are from green tea; Pu’er teas represent 14% of sales; oolong represents 11.1%; black tea accounts for 9.9% of sales and white tea for 1.5% with yellow tea estimated at 0.4% in 2018. The Chinese will drink 670,000 metric tonnes of tea in 2020, for which they will spend $18 billion.
Tea plantation acreage has grown substantially since 2006 with most new plantings south of the Yangtze River valley in Guizhou, Yunnan, Sichuan, and Hubei provinces—the four best-known tea growing regions.
Tea grown south of the Yangtze river spans several provinces. It is called Jiangnan and includes Zhejiang, Jiangxi, portions of Anhui, and Hunan provinces. It is the largest tea producing region by volume. Hubei province is split with Wuhan north of the Yangtze and Enshi, south of the river near the Wufeng Mountains. Wuhan is 850 kilometers inland from Shanghai, which is at the mouth of the Yangtze.
Tea grown north of the Yangtze (Jiangbei) spans Henan, Shandong and northern Anhui. Jiangbei is China’s smallest tea growing region.
South China is known as the Huanan growing region. This superior tea growing region spans coastal Fujian, Guangxi, and Hainan island. Fujian is the most important tea producing province by value.
Tea in Southwestern China within the Xinan region is grown in Guizhou, Yunnan, and Sichuan provinces. The earliest teas are plucked in late February in the semi-tropical portions of this zone bordering Vietnam, Laos, and Myanmar.
In West Bengal, India massive crowds are pressing for Gorkhaland statehood
Internet service in the Darjeeling Hills was disabled June 19 and service providers remain under orders not to allow online communication through July 25. The order is a security precaution to pre-empt organizers from coordinating protests throughout the region from Siliguri to Sikkim and north to the border with Nepal.
DARJEELING, West Bengal
Residents near the Sadar police station in Darjeeling normally file 30 complaints a day, mostly for petty crimes. Not a single complaint has been filed since June 9, shortly after hundreds of thousands of Gorkha began a strike for statehood now in its 33rd day.
Residents are keeping their distance from local police and riot-clad members of the Central Reserve Police Force (CRPF) following weeks of unrest in which seven people have died and hundreds more, including police, were seriously injured. Heavily armed CRPF were deployed to Darjeeling, Kalimpong, and Sonada on July 14. There are 11 CRPF companies now in place in the region but they are not under siege. In most cities, police stand watch over peaceful gatherings.
Headlines worldwide portrayed the violence with a reminder of the 1,200 killed during similar uprisings from 1986 to 1988.
Residents describe a different story.
Allan Rai is a 20-year-old studying tea management. He asked that his location and personal details remain private at this time.
The protests are orderly and residents are determined to prevail, he writes.
“On reading your recent article as well as sharing it with a few of my companions, we felt that the information you were provided was quite biased and portrayed only one side of the story,” writes Rai.
He counters with these points supporting the Gorkha protest:
Firstly, the ongoing movement is a mass movement not adhering to any political party. The common people of the entire region are supporting the demand for a separate state irrespective of their caste, creed, religion, and other differential status. The Gorkhas from different parts of India as well as those across the world have come in support for Gorkhaland.
With regards to the strike being held off for 12 hours on the auspicious occasion of Eid, our Muslim brothers and sisters are in solidarity for our demand for Gorkhaland and were willing to continue with the strike even on the day of their festival.
Approximately 70% of people in Darjeeling and adjoining areas of Doars depend on income from tea plantations directly or indirectly. In almost all the tea factories, 99% of the workers are the natives i.e., the Gorkhas. A separate state is the aspiration of each individual worker in these factories.
Tea workers were protesting for the minimum wage act, which has not been implemented in Darjeeling and Dooars. The Gorkhaland movement began stirring among tea workers who fully support the movement for a separate state. They even carry their lunch from home and actively participate in the rallies every day.
The movement would not have gained such vast momentum if it were not for social media. Not only the Gorkhas, but people from other communities in India and from several parts around the globe are in solidarity for the cause of Gorkhaland.
Gorkhaland is not a separatist movement, unlike Kashmir where they are demanding a separation from the nation entirely. Our movement is for a separate state within the Indian nation for the cause of our IDENTITY and DIGNITY that has been denied to us for the past 110 years.
The movement here is rather democratic and apolitical. The only visible violence is the atrocities committed by the Bengal Government by ordering forces to charge and fire bullets at peaceful protestors in broad daylight.
The violence on June 17 that claimed four innocent lives was due to a clash between the protestors and the armed forces. This was because on previous days these armed forces charged women and elders who were peacefully protesting. On June 16 police raided the house of the Gorkhaland Territorial Administration (GTA) chief. The media flashed that they found weapons and explosives when all that they found was an archery kit that was for training school children, agricultural tools and other traditional weapons along with two cartons of fire crackers. The media termed these “weapons and explosives.” This led to a massive rally in Darjeeling. When the armed forces tried to intervene, it led to a clash and resulted in the death of the four martyrs.
Gorkha tea worker in Darjeeling
The Current Situation
Each day thousands of tea workers from the fields join city residents at a now-familiar 10 a.m. gathering at the historic Darjeeling train station. They rally, tour the city along Mall Road and end their protest at Chowk Bazar. Some groups chant in front of the magistrate’s office. Groups of 500 to 2,000 listen as speakers from the organizing bodies address the crowd for about an hour before dispersing.
There is nothing much else for locals to do. The tea gardens are closed, the factories idle. The tourists are too scared to stay, schools are closed, outdoor sporting events canceled. Restaurants, pubs, shops, and grocers as well as banks and ATMs are locked to prevent looting, according to the Times of India.
Residents report that each day you see the same faces whether the march is for the GJM (Gorkha Janmukti Morcha), the GNLF (Gorkha National Liberation Front), the ABGL (Akhil Bharatiya Gorkha League) or the CPRM (Communist Party of Revolutionary Marxists). All support the effort to establish Gorkhaland, a state carved from the upper reaches of West Bengal.
The scene is familiar to travelers. In January in Chennai tens of thousands of protestors expressed their outrage over the ban of a traditional bull-taming contest known as jallikattu. The sport was continued.
Five years ago, thousands in Darjeeling took to the streets to peacefully protest the expansion of 50 Wal-Mart locations across India. I missed a flight to Kolkata due to the resulting congestion in every village along the 60-mile road to Bagdogra Airport. There are many names for the protests which draw the people of India into the streets carrying signs and chanting. Nationwide a cessation of work is know as a hartal. Locally these strikes are called anishchitkal bandh (indefinite strike).
One key difference is the interruption of the internet, which has choked off contact with the Gorkha. The Hindu reports this decision has led to widespread resentment, which is being tapped into by the movement. On Monday the GJM marched to the magistrate’s office demanding that internet service be restored.
Peaceful street protests
“This movement is not a sudden, it has been prevalent for 110 years, however, it was highly voiced out during the year 1986 under the leadership of late Subash Ghising,” writes Allan Rai.
“During the ongoing agitation in those days my father was among the activists for the cause of Gorkhaland. The movement turned out to be violent, killing 1,200 innocent civilians as well as injuring many. Despite this violence the demand for Gorkhaland was not fulfilled,” he writes.
“Instead they settled with the Darjeeling Gorkha Hill Council (DGHC), a semi-autonomous body to look after the administration in the hills. This granting of autonomy led the masses to believe that now the hills would see better administration and development,” reports Rai.
Here is an excerpt from my upbeat report at the time:
“A new territory was carved from West Bengal’s Darjeeling district but India rejected demands for a separate state. The Gorkhaland Territorial Administration (GTA) will have powers to manage public works, social welfare, health and forests and agriculture including valued tea gardens. Existing land records will be transferred to the authority
“The agreement will end the violence in the hills of Darjeeling and pave the way for development,” newly elected West Bengal Chief Minister Mamata Banerjee told the crowd of joyous Gorkhas gathered in the village of Pintail. She praised the signing as historic. “There is nothing to fear… Bengal is not being divided. Darjeeling is close to our heart,” she said.
“There will be an elected local body, there will be schools, colleges, hospitals, jobs will be available and Darjeeling will shine,” said Banerjee who shared her vision of Switzerland as a model.
Autonomous Region Fails
“The autonomy status was just a farce and the state still continued to intervene and rule over the region, depriving it of the development it deserved,” according to Rai. “I’ve been well acquainted with this movement. Since I was a child, I heard stories about the agitation of 1986, which our loving elders referred to as the most devastating “chyassi ko andolan” one of the biggest and most violent movement in the history of Gorkhaland,” he continues.
Protests soon resumed, often involving garden workers, with frequent strikes disrupting tea production and reducing productivity.
Tensions are greater now than at anytime since the bloodshed of the 1980s.
“The agitation which has been going on for over one month will turn terrible and it will be a decisive battle for our independence,” GJM Chief Bimal Gurung told reporters Saturday night. “If I need to shed my blood I am ready to do that, but the fight will go on till Gorkhaland is achieved,” Gurung said.
So, Why Gorkhaland?
“Darjeeling tea is our pride and our heritage,” writes Rai. “It has been one of the world’s leading brands of tea. However, the tea plantations and factories in the region do not flourish or prosper to their full potential due to several reasons, one of them being inequitable distribution of monetary resource. The revenue collected from the Darjeeling tea does not return to those who produce it. Thus, there is not much monetary support to maintain the factories and the wages of the workers are very low compared to the wages of workers in other states of our country,” he writes.
“Workers are provided with facilities such as PF, Pensions that do not even amount to $15.50 (INRs1000) per month and medical facilities that are mentioned in the documents for name sake as there are no medical units or hospitals. Owing to these factors many factories in the region have been shut down. This has led to widespread unemployment resulting in deaths due to starvation as well as depression,” he said.
“When visiting tea estates, people usually meet the owners and managers of these estates. This leads them to understand only the owner’s or the manager’s point of view regarding the estates. However, they often fail to consider the daily wage workers of the estate and fail to understand or even consider the terms or the conditions in which they work to earn their minimal standard of living.
I’m sure when people drink our Darjeeling tea they sip it in delight but has anyone thought about the condition of the old lady in the garden who plucked those luscious leaves with her delicate hands? Or the ever-smiling man who turns these tea leaves into an aromatic sipping delight? Has anyone thought that even under these extreme and crucial conditions these simple workers do not fail to do their job and supply us with our world-famous brand of tea?
“The people of this region are very hardworking and generous, they work 8 hours a day for a meager amount of $2 (INRs130) per day. These workers are living in such harsh conditions yet has anyone even bothered to think about them? These are the things that one must ponder upon to realize the potential that the tea plantations will reach, if, a separate state is formed,” he concludes.
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To our backers around the world:
Those who know me well, know that I’m never at a loss for words… until now.
Tea Journey was funded at dawn — fittingly by donations from tea lovers on the other side of the world in China and Australia as their day was winding down.
I fell asleep at 5am and awakened to the news with tears of joy…. and relief.
Today is DAY ONE. We can now get on with the joyous task of producing the world’s first truly global, truly collaborative magazine for tea lovers. Its creation demonstrates a rare ability to bridge borders and cultures, to share the stories of the tea lands that introduce growers and artisans to the millions who cherish their labor of love.
You can expect the inaugural issue and both the iOS and Android apps to be ready by the end of the month.
On behalf of the Tea Journey partners and advisors, writers and editors.
Where do the most recent Tea Journey backers live? Here are their names and the home countries of some of the final 50 donors who contributed to the campaign:
Gordon Zhang, China | Margaret Cusak, Australia |Roquen Lómë, Prague Czech Republic | Marc-André Rivet, Montreal, Canada | Richard Tao, US | Jesse Örö, Finland | Debbie Forlanski, Canada | Goh Cheng Fai, Hong Kong | Danny Moortgat, Belgium | Scott Svihula, Florida | Nancy Cocianchi, Argentina | Nigel Melican, UK | Sabine Jürgenmeier, Germany | Wouter Verelst, Malawi | Ernestas Klevas, Frederiksberg, Denmark | Stefano Grassi, Italy |
There is power in this venture that speaks to community more than cash…
The other day, inspired by Jennifer English, the @urbanmommies hosted an online fundraiser for Tea Journey that resulted in nearly 300,000 direct contacts and 5 million social impressions on Twitter and greatest single-day tally of subscribers during the campaign.
The entire world is thirsty for tea knowledge. While the US is home to the largest number of backers, Canada, I’m proud to say, has the largest concentration of subscribers. Tea drinking UK is exploring more diverse teas as are India and Australia. Those in China and Taiwan and Asian tea lands are next, not for lack of knowledge but out of a desire to better understand the markets where they send their precious tea. Gourmands in Western Europe (Germany-France-Benelux) placed their countries high on the list. There are South American fans from seven countries (Argentina tops the list followed by Brazil where out of the goodness of their hearts tea lovers Victoria Bosogno (Spanish) and Kelly Stein (Portuguese) translated and then forwarded the Tea Journey message). Those from tea lands in Africa (including the Middle East) follow. Backers hail from CIS and the Czech Republic, from Mexico and the Caribbean islands and even Iceland where Frank Woolny was the ninth backer to contribute.
The first? That was Peter Wilson, who inspired us with these words:
“…with every tea I taste, and every word I read, I sink deeper into such a joyful state of being that I want to keep going and going. It’s a bit challenging sometimes to find good information about tea in the west, so when I learned of this magazine, not only did I decide that I would contribute, I set my alarm for 12am the morning that the Kickstarter campaign opened, in the hope that I could say I was first to contribute! I’ve told all of my friends, and I’ve also sent letters to all of my favorite tea suppliers (like Harney, DAVIDsTEA, Tea Trekker, and Tea Source), asking them to consider supporting and encouraging more people to become enthusiasts like me. Thank you for all that you do, and best of luck with your magazine! I’m privileged to say that I support it, and I look forward to continuing my own tea journey.”
Backers believe passionately in our mission: Listed below are some of those who donated in the past week to put us over the top.
Mehmet Emin Akyuz, Stephan Baudet, Lorraine Collins, Shawn Geitner, Christopher Day, Peter Ericson, Amethyst Bussey, Nathan Hevenstone, John Alfone, Jaime Chartrand, Eva Lee, Mark O’Deady, Faye Lang, Guy Sirkes, Barbara Broido, Shari Bayer, Jen Piccotti, Joyce Maio, Najat Abdou, Pamela Tucker, Ruth Tobias, Laurence Wooding, Glen Knauer, Dominik Wittenberg, Sean Mates, Rick Ha, Margo Sparto, Raelene Gannon, Kaiting Zhou, David Bess, Brett Holmes, Ellie Chu, Rick Doten, Lisa Braithwaite, Cindy Beeman, Samantha Molineaux, Barb Goldstein, Linda Gaylard, Geena Matuson, Mark Nicholls, Dawn Hoffman, Jeffrey Lorien, Sophia Nadur, Michelle Rabin, Matt Jaffe, Bob Krul, Noah Van der Laan, Andre Gauthier, Rona Tison, Manuel Legault-Roy…
What powered this extraordinary event?
The generosity ofFounding Sponsors:
Camellia Sinensis | Seven Cups Fine Chinese Teas | Young Mountain Tea | Craftea | Mad Monk | Misty Peak Teas | Jalam Teas| Tea Squared | Tealet | Australian Tea Masters | Adagio Teas | Nothing But Tea | Teatrade | Yunomi Tea | Firsd Tea | Smacha Tea Company | Hong China Tea | Teatulia | Lochan Tea Company | Mighty Leaf Tea Company | International Tea Importers | International Tea Masters Association | Rolling Leaf | El Club del Te | Rishi Tea | Tea Total | Teatrade Mart | TeaLula | The Green Teaist | World Tea Podcast | Tea Lifestyle | World Tea Academy | P&T – Paper & Tea GmbH | The Daily Tea | Wild Qi Tea | Tea Vivre | Conundrum Tea | Tea Cosmos | The Tea Emporium | Teas Etc | UK Tea Academy | Mary Cotterman | Royal Tea New York | ITO EN | JoJo Tea | G.S. Haly Co. | Hawaiian Rainforest Tea | 4 Track Tea | Ocha & Co | Hankook Tea | Eco-Cha |
It’s an astronomical, gratifying, amazingly large number of people around the globe.
Google Analytics shows that TeaJourney.pub has attracted visitors from 85 countries. Literally every country in Western Europe where subscribers from UK and Germany lead; seven countries in South America, twelve countries in Africa, the Middle East, Turkey, Iran. India is home to the fourth largest number of subscribers There is great support for Tea Journey in Nepal and Pakistan and Sri Lanka.
There are only four countries in all of Asia where tea lovers have have not visited the website… Iceland and the Caribbean Islands are represented. We love island people from the Azores and Madagascar and the Philippines to Indonesia, Malaysia, Australia and New Zealand. Frank Miller paved the way inThailand and Vietnam. A special shout to Kevin Gasgoyne and Jeff Fuchs in my beloved Canada. There are now 600+ paid subscribers and more than 10,000 names on our free newsletter list.
In thirty days, how can this be?
Let me share a quick story: On Thursday Tea Journey was invited to attend a blazingly fast and fun #TwitterParty hosted by @urbanmommies, an online community of mothers founded by Jill Amery. A TwitterParty is a moment-in-time chat room that afforded us an opportunity to share our love for tea and trivia with @urbanmommies. Jill made a special appeal to support our Kickstarter project in the closing days of the campaign.
Together the Tea Journey team generated hundreds of tweets that led to hundreds more re-tweets that encouraged thousands of tea lovers to echo their support — which mushroomed into hundreds of thousands of individual contacts.
That single one-hour event brought us to the attention of almost 300,000 individual members of the @urbanmommies online community and their friends and it generated 5 million impressions globally. It was the GENIUS-INSPIRED work of Jennifer English… executed with precision by the Tea Journey partners, writers and marketing staff.
Early in the week Jennifer English sent out a call that mobilized her friends to organize an online contest with prizes for participants. Marketing director Ashley Sostaric-Finkes and her marvelous social media assistant Alexandra Enns joined the stream with the help of contributing editors Nicole Martin, Dan Robertson and Jennifer Quail, and bloggers Rachael Carter and Geoffrey Norman; and contributors Elyse Petersen and tea companies including Seven Cups and A Gift of Tea, Scandalous Tea and Tea Wagon.
Together we shot a single bright beam in the night typing so fast we got lost in the moment. The resulting surge made Friday our single biggest day for paid subscribers.
There is still work to do. We have only three days and we are still $4,000 short of our goal. Backers have contributed more than $10,000 in the last 10 days.
Together we can do this. The entire tea world is watching. Wednesday June 1 is the deadline. Click here to show your support.
To date, there have been more than 280,000 creative projects on Kickstarter — phew! Whether you’re a backer looking to find great ideas, or a creator looking for inspiration for your own project (or both), we want to help you find compelling ideas that are thoughtfully presented, exciting, and that bring communities together. With this in mind, we’re excited to introduce Projects We Love, a simple way for us to feature projects that go the extra mile.
Projects We Love is an evolution of Staff Picks, a feature we used in the past to connect creators and backers around best-in-class projects. The difference is that Projects We Love automatically get a nice little badge, so that everyone can tell when we’re extra excited about a project. Projects We Love are featured by a team that works to surface extra-bright projects. They’re not paid endorsements, and like any other project, they retain complete creative independence. Most simply, a Project We Love badge is a show of respect and enthusiasm from us at Kickstarter.
Take a look at some existing Projects We Love, and you’ll see well-crafted videos, striking images, a clear plan, an excited community, and a lot of creativity. While there’s no recipe for making a Project We Love, we do have some tips on how to get featured. We also send out a newsletter every week featuring three Projects We Love — sign up to receive it, and you’ll be on your way to discovering world-class projects that delight and inspire.Onwards and upwards!
Last week donors pledged $15,000 to bring Tea Journey to life.
As you read this note our total paid subscriptions will top 325 and our Kickstarter campaign will have reached nearly 30% of the final goal. There are now 30 days left in the campaign. Many Kickstarter ventures are fully funded in a 30-day window but we need to act quickly to draw attention to our “replenish rewards.”
We need to make the most of each day…
Founding sponsors have committed an additional 1,000 packets of tea and several new tea experience rewards totaling $20,000. This boosts the value of Tea Journey rewards to $95,000 USD (our current goal).
The word is getting out. We have 185 Kickstarter subscribers (and another 130 who subscribed direct from the website). They hail from Iceland and Indonesia to Eastern Europe, India, UK and New Zealand. Those who see the prototype tell us they love it.
The combination of support from bloggers, media and social media has brought us this far but reaching goal depends on peer-to-peer appeals to your friends in tea. Eighty-two percent of our Kickstarter donors are friends in tea. They are responding to short personal notes at a rate of 1% – that’s 5 per 500 notes sent.
A simple note is all it takes: 70% of millennials prefer a “peer” endorsement and rely on non-celebrity bloggers over the glitz and glam of stars. Only 3% of the 14,000 consumers surveyed by Collective Bias say they even consider buying a product endorsed by a celebrity.
The articles, images and video in Tea Journey are authentic, unvarnished, detailed and devoted to tea. Your note should be the same.
Do these five things and we will be celebrating our success on June 1.
1) Open a PayPay account and add $30 (for up to 500 names). GreenInbox only accepts PayPal payments.
2) Signup for GreenInbox.com (and select and upload either your Facebook friends, Twitter followers, Linkedin connections or email contact list). Click the check box beside the names of everyone you think will be interested in Tea Journey (up to 500).
3) Personalize the note below.
4) Click send.
If you are short of cash I will be happy to reimburse you…. better yet, send a note to email@example.com with your Paypal email and I will send you $30 in advance.
I emailed 317 appeals this week and there were 60%+ opens resulting in several donors.
I know a lot of people but not nearly enough to reach the Kickstarter goal.
If you help us by doing this, I am convinced that together the tea community will reach the $96,000 goal but it needs to be done now…. send as many as you can as quickly as practical. It takes donors several days to evaluate the magazine. In many instances it takes appeals from three or four of you to tip the scale.
Tomorrow is too late.
Dear (or Hello, or Hi) <first_name>
Tea Journey magazine presents authentic and elusive tea knowledge translated from publications in China and other tea lands. The mobile app and website is a collaboration between western tea journalists and tea experts to introduce readers to the world’s finest gardens and teas. Choose from these awesome tea rewards: https://www.kickstarter.com/projects/teajourney/tea-journey-magazine
1) Focus the message on the recipient, not you.
2) Make the message positive
3) Keep the message short.
4) Include a clear call to action.
5) Do not use shortlinks (like bit.ly)
Most email providers (like gmail) will mark your message as spam if it includes bit.ly, goo.gl, tinyurl etc. Moreover, better to use the full link since people like to know what’s the target web page. Using the full link will increase the number of people that actually click on it. https://www.kickstarter.com/projects/teajourney/tea-journey-magazine
During the past decade I have met thousands of tea drinkers on a path of discovery, a journey to find the special teas that tantalize their sense of taste and reward them with tales of exotic terroir and artisanship so compelling they are eager to share.
I believe that there is a perfect tea for each of us and that finding that tea is the key to fully realizing the health and wellness tea brings.
But finding that tea and preparing it correctly requires knowledge not easily obtained.
Ron Studd put it this way: “I have a strong feeling that there are many interested in getting to the next level with tea, but they don’t have a good way to get there specifically with knowledge. I know that was a problem I had when I returned to the States. You get people that say they’re enthusiasts, but when their depth of tea knowledge and practice is so shallow, it’s tough to find inspiration and encouragement that can only come from a wider community of other enthusiasts at or beyond your own knowledge.”
In the past year I assembled an awesome team of journalists and tea experts in the tea lands and their counterparts in the west dedicated to obtaining and sharing authentic, elusive and exclusive knowledge. We call our venture Tea Journey. It was christened by Tony Gebely and ratified by a group so passionate about tea I am humbled to stand as their leader.* Together we created something very special, a digital magazine available online, via iOS and Android and downloadable as a PDF.
This mobile magazine features articles written in the tea lands by native-speaking writers. The articles are beautifully illustrated and there are informative videos that bring history to life and describe the amazing work that goes into creating tea:
Click to view the prototype we created. I know you will find the content compelling. Then join us.
Three hundred enthusiasts already have invested $25,000 in making this Kickstarter project a reality.
Ron Studd continues: “When reading the magazine articles, I kept thinking ‘this is exactly what I need!’ Even for topics that I may be familiar with, there’s so much effort that went into making the content intuitive and interesting that any level of enthusiast will enjoy. It’s also just nice to know ‘I’m not the only one interested in this!’ ”
Dan Bolton, Editor/Publisher Nan Cui, Associate Publisher Si Chen, Senior Editor Hans Niebergall, Business Development Ashley Sostaric-Finkes, Marketing Director Suzette Hammond, Education Director Beibei Lu, Art Director Jennifer Sauer, Video Editor Kathe Meseman, Finance Director
Ian Chun, Origins
Jennifer English, Podcast
Jennifer Quail, Teaware & Antiquities
Cynthia Gold, Culinary Tea
Bruce Richardson, Tea Retail
Dan Robertson, Origins
Jennifer Sauer, Videography
Jennifer English, Tea Journey Podcast
Cynthia Gold, Tea Cuisine
James Norwood Pratt
Victoria Bisogno, El Club Del Te
Kevin Gascoyne, Camellia Sinensis Tony Gebely, World of Tea
Austin Hodge, Seven Cups Fine Chinese Tea Joshua Kaiser, Co-founder Rishi Organic Tea Brian Keating, Sage Group
Bob Krul, Boreal Wildcraft Andrew McNeill, Seven Cups Fine Chinese Tea
Dr. Nada Milosavljevic, Harvard Medical Elyse Petersen, Tealet Jane Pettigrew, UK Tea Academy James Norwood Pratt, Tea Lovers Treasury Dan Robertson, The Tea House
Founding Sponsors: Camellia Sinensis | Seven Cups | Mighty Leaf | Mad Monk Tea | Tealet | CrafTea | Tea Squared | Jalam Teas | Misty Peak Tea | Tea Total | Yunomi Tea |Tetulia | Lochan Tea | Teatrade Mart | Rishi Organic Tea | Adagio Teas | World Tea Academy | Hong China Tea | Smacha | Young Mountain Tea | Nothing But Tea | Australian Tea Masters | ITI | Paper & Tea GmbH | International Tea Masters | Wild Tea Qi | The Green Teaist | El Club Del Te | Rolling Leaf | World Tea Podcast | Tea Lula | Daily Tea | Conundrum Tea | Tea Vivre (watch for updates as additional founding sponsors sign up every day.)
Companies interested in becoming founding sponsors should contact Suzette Hammond at firstname.lastname@example.org to inquire.
Location data is critical to retail success and essential to expansion planning. Market research firm AggData offers a revealing tool that TIME Labs used to rank the richest retail locations in the U.S.
The interactive form compiles the U.S. median income of brands based on updated 2013 Census data. TIME ranked 2,996 chains by comparing the median income of the counties where stores are located. TIME used this information to rank the richest department stores, grocery stores, and restaurants by location. You can use it to perform some useful local reconnaissance on tea, coffee and cafe chains.
I started with 390-store Teavana and DAVIDsTEA. The table only ranks U.S. locations which include 311 Teavana stores and 24 DAVIDsTEA locations along with 30 Argo Tea locations. In 2013 the median household (inflation adjusted) income for the entire country was $51,939 according to the U.S. Census Bureau.
DAVIDsTEA has located its shops in very high income counties (Chicago, Boston, New York, San Francisco) with a mean income of $73,226. These stores are located in counties ranking in the top 30% of U.S. incomes. Teavana is more broadly dispersed with mall stores in 46 states. Teavana Tea Bars are located in places like Manhattan and Beverly Hills. The median county income for Teavana locations is $62,304. Teavana locations are situated within counties with households in the top 41% of U.S. incomes. Argo follows with stores in five states and a median county income of $56,263. These locations rank within the top 44% of U.S. household incomes.
By comparison Starbucks has 12,231 locations in all 50 states (and two territories) with a median $52,739. The company also operates 27 Seattle’s Best Cafes in 16 states where the county median is $56,261. This number does not include the many thousands of non-branded locations where Seattle’s Best is sold.
To investigate competitors within your own market click this image and scroll to the bottom of the TIME page. Then use the search box to compare chains including Dunn Bros. Coffee, Coffee Beanery, Dutch Bros. Coffee, Tim Hortons, Gloria Jean’s Coffees, Tully’s Coffee, Panera Bread, Au Bon Pain etc. Peet’s Coffee & Tea was not listed.
Household median income, from the 2013 American Community Survey, is averaged across all counties for every retail location available from AggData to find the “median shopper income.” Estimates for shopper’s income would likely show greater disparity if calculated by geographies smaller than counties, which include a broader spectrum of household incomes. Only brands with stores in 20 or more U.S. states are considered national chains and used in the lists above. Though all brands are available in the search feature regardless of the number of states they operate in.
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Tea Biz serves a core audience of beverage professionals in the belief that insightful journalism informs good decision-making in business. Tea Biz reports what matters along the entire supply chain, emphasizing trustworthy sources and sound market research while discarding fluff and ignoring puffery.
Tea Biz posts are available to use in your company newsletter or website. Purchase reprint and distribution rights for single articles or commission original content. Click here for details.
China is making its biggest splash in tea in modern times this summer at Expo Milano 2015 the world’s largest food and beverage tradeshow.
“Never before has Italy hosted so many tea experts from China all together with so many companies representing the excellence of Chinese tea,” writes Marco Bertona, chairman of the Tea Association of Italy. The China Pavilion in Milan is shaped like fields of wheat rippling in the wind to reflect the theme, “Land of Hope, Food for Life.” It has been visited by almost 250,000 tourists since it opened in May.
“Chinese Tea Culture Week” which ended Sunday brought to light a political mandate to make China the world’s greatest tea exporter.
In 2013 Xi Jinping, China’s new president, proposed The Belt and Road Initiative, a modernization of the Silk Road Economic Belt and the 21st Century Maritime Silk Road. The goal is reviving ancient trade routes between Asia and Europe. The proposed trade and infrastructure network passes through more than 60 countries and regions, with a population of 4.4 billion. Nations along the route produce more than 80% of the world’s supply of tea.
China Pavilion at Expo Milano 2015
Unlike past initiatives which emphasized quantity over quality, this time China is determined to dominate the global market for premium tea.
In 2014 more than 80% of China’s tea exports were low grade green tea destined for Africa, Europe and Russia. Right now there is a surplus of commodity tea and a scarcity of premium tea making this a good time to export fine tea. During the past decade the green tea that China exported sold for between $1 and $2 per kilo. In December 2014 the world average price for tea sold at auction was $2.56/kg down from $2.72/kg the previous year. The average dropped an additional 30-cents to $2.42/kg by the end March 2015, according to statistics compiled by the Central Bank of Sri Lanka.
China Daily reports that the average price of Chinese tea increased to $4 per kilo during the past few years. Last year Chinese tea exports $4.19 per kilo. This is a big improvement but is still not enough to be profitable, according to Chinese traders.
China’s tea market was valued at $56 billion (RMB 350 billion) in 2014. Exports comprise only $1.27 billion of market value, but were up 2.1% compared to 2013. Export volume declined 7.5% during that same period, an indication that China is shipping greater quantities of higher-value tea.
Sri Lanka, the world’s second largest tea exporter, gets the highest average price for commodity teas auctioned anywhere in the world. But the Colombo Tea Auction average is still less than $5 per kilo. Asia Syaka, a global commodities brokerage notes “Sri Lankan orthodox black tea continues to command premium pricing in the international market with prices averaging $4.97 per kilo.”
Specialty teas, in contrast, sell for $150 a kilo with some bringing $350 to $400 per kilo.
In 2013 China was the world’s second-biggest tea exporter at 322,600 metric tons behind Kenya’s 494,400 tons. That year Sri Lanka exported 319,600 metric tons. In 2014 Sri Lanka stepped up exports, setting a record at 327,800 metric tons and China fell to third.
China is without doubt capable of meeting global demand for premium tea. It is the only large tea producing country capable of mass producing all six kinds of tea. China already produces 40% of the world’s tea and is developing thousands of additional acres per year. Tea is grown there on 6.7 million acres (2.7 million hectares) and it is exported to 120 countries. China’s tea is marketed by more than 200,000 companies representing the work of 30 million growers.
China retains its customary lead in the production of green tea, exporting 79% of the global total and accounting for 80% of value. In most instances exported Chinese tea is blended with herbs and fruits. In the US sales of green iced tea have increased significantly as national restaurant chains promote green tea’s health benefits. At least 10% of the nation’s restaurants now serve green tea alongside traditional black.
Despite its massive production capability “China is not strong enough in exports of tea leaves, tea extracts and deep-processing elements which are fundamentals of the tea industry,” according to Wu Zhibin, vice chairman of the Chinese Tea Culture International Exchange Association told Taiwan-based Want China Times. Deep-processing is the Chinese term for what in the west is known as value-added tea.
“The domestic market values low-production, handmade teas but the global tea market prefers mass-produced teas that are standardized in quality and taste,” according to Wu Jing, editor-in-chief of tea portal chayu.com. He told China Daily that “export teas are grown specifically for that purpose and not consumed domestically.”
Tea Culture Week at the Chinese Pavilion is an opportunity “to support top brands of Chinese tea industry in their path towards growth and worldwide development,” said Zhibin. He praised the top Chinese exports brands which were recognized at as special award ceremony in Milan.
“With rising production costs in China and competition that is likely to intensify, Chinese tea producers have to find new strategies to boost Chinese brands and their sales on the global stage,” says Ji Xiaoming, president of Jingwei Fu Tea Co and chairman of the Shaanxi Tea Association.
“Only if the Chinese tea industry is strong, the Chinese tea culture can be innovative and can be promoted all around the world,” Wu told Xinhua News Service.
China Daily reports that “One Belt, One Road” is a rare opportunity to turn Chinese tea consumption into a global phenomenon.
“That is the dream of the country’s tea companies – which are still largely unknown to the world. They are ready to grab a piece of the action in an anticipated market boom,” according to the newspaper.
“The Belt and Road Initiative is not just a rejuvenation of the ancient silk road, but also a comeback of the ancient tea road,” said Jiao Jialiang, chairman of LongRun Group, a Chinese conglomerate specializing in food and health products.
Jiao, who is also a member of the 12th Chinese People’s Political Consultative Conference, told the newspaper that “China’s tea industry will embrace an unprecedented window of opportunity as the Initiative presses ahead.”
Growers and producers spent generations refining the Chinese way of manufacturing tea with its many unique regional variations,” according to the newspaper: “Tea is not simply beverage, but a unique opportunity to share China’s culture.”
“It’s believed the practice of tea culture can take the spirit and wisdom of humans to a higher level, and its study covers a wide field with rich content,” the paper reported.
Tea culture will lead the way boosting the Belt and Road Initiative, said Jiao, “as tea culture spreads around the world, the whole industry will take off,” he said.
Although export figures may continue to trough in the short term, says Wang Jianrong, director of the China National Tea Museum: “The future of Chinese tea exports will be bright if we continue to penetrate overseas markets with tea culture, something that is not reflected in trade figures.”
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An informal assessment of China’s export market for tea.
China has the land, tea varieties, tea quality, government incentives and motivation to excel in tea exports. The growth of tea retail outlets (T2, Teavana, DavidsTea, TenRen) is a very promising development. 1400 years ago China was the top tea exporter and even after India replaced it as a quantity supplier China always offered more varieties and higher quality orthodox, remaining dominate for centuries. India is the only producing country with similar capacity and it cannot effectively compete. Kenya will remain the dominate commodity supplier of black tea, but remains an insignificant supplier of green. Anything the Chinese can do with green they can industrialized and scale for black, but doing so is not profitable with Sri Lanka, India and Kenya in the picture. China is expert at orthodox green and while it will step up its black tea production for Asian consumption, European and US export, it will make its greatest gains in premium green/white, pu-erh and oolongs. China’s RTD tea market is valued at about $29 billion. China’s Ting Hsin International Group not only dominates China’s RTD market but the international RTD market as well with a 10% global market share, according to a financial report by LD Investments, published by Seeking Alpha. Look for breakouts in RTD and value-added tea products from concentrates and extracts to supplements and cosmetics. These are more likely to be developed in collaboration with Japan (ITO EN) and Taiwan (TenRen, Tingyi and Master Kong) using inexpensive Chinese tea from the mainland. Right now China is primarily developing extracts and “deep-processed” tea for its own domestic market.
Globally the demand for black tea is much greater than green. Right now there is a glut of commodity black teas and a shortage of “quality” CTC that is clean, certified and reasonably priced. China loses money producing cheap green and loses volume if they focus only on premium. Conversion to a dominate black tea supplier offers little financial incentives. Ultimately demand for fine green teas will grow due to its health benefits and the adoption of green by foodservice (in US Wendy’s green iced tea at 6,000 stores). Tea exports represents such a tiny fraction of foreign trade that the Chinese government stands to gain very little (other than prestige) from the increase in tea exports. Tea exports earned $1.27 billion which represents about .056% of China’s $2.25 trillion exports. Electronics and other agricultural products generate a lot more money than tea. Unlike the more profitable exports which receive significant government support, much of the investment on outbound marketing will be made by the 200,000 existing tea companies, none of whom are well known brands. Even the largest holds minuscule market share compared to multi nationals like Unilever, Tata Global Beverages or Nestle.
Chinese tea culture is fascinating, varied and universally appreciated. China exports tea to 120 countries. The country will more fully develop its impressivle portfolio of prized teas (premium green, oolongs and pu-erh) and that will generate significant income for regional producers willing to undertake mass production. Ultimately these firms will spend the money it takes to promote their offerings in Europe and North America. China’s domestic market currently values low-production, hand-made teas. The global tea market prefers mass-produced teas that are standardized in quality and taste. In time China will show the benefit of its hand-made teas by making them more available in the global market while at the same time collaborate with Western ventures such as Starbucks/Teavana and Unilever/T2 to produce more commercially successful mass-market teas. In sharing its finest teas China gradually transitions from a commodity producer earning $4 per kilo to a quality producer capable of marketing teas at 10-times that rate and with the capacity to supply the entire world’s demand for premium teas.
A slowing economy makes it more difficult for Chinese firms to invest the marketing dollars it takes to win share in export markets, but its own domestic demand for cleaner tea will help offset these costs. Learning to market value-added tea domestically is a precursor to global expansion and tolerance for the millions it takes to promote a Lipton or Tetley brand (ie. its latest global ad campaign cost Lipton $40 million, no Chinese company has ever invested that kind of money to promote a tea brand). Another threat is global instability that impacts trade (China territorial expansion, tension with Japan, aggressive behavior by surrogate North Korea) are factors. However, the single greatest threat in my view (and a primary motivation for exports) is the fact that young people in China consider traditional tea “old fashioned” and are not practicing the tea traditions of their parents. Consumer surveys reveal that nearly 70 percent of those born in the 80’s do not like to drink tea. This rises to 95% for those born in the 90’s. Tea is not cool, shops are largely antiquated and there is no marketing beyond basic grocery display. Relatively little good tea is purchased in grocery. Ultimately tea must appeal to a new generation of consumers. As one critic noted: “if all the tea stores look like archaeology dig sites and antique stores, then it won’t attract a lot of customers.” Revenue from a lively domestic market is essential to expansion of exports.
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Tea Biz serves a core audience of beverage professionals in the belief that insightful journalism informs good decision-making in business. Tea Biz reports what matters along the entire supply chain, emphasizing trustworthy sources and sound market research while discarding fluff and ignoring puffery.
Tea Biz posts are available to use in your company newsletter or website. Purchase reprint and distribution rights for single articles or commission original content. Click here for details.