Need to Know

Tea industry news for the week of April 13
– Grocery Sales Spike
– Tea Production Declines
– Health Misinformation
– Skipping Port
– Edible Tea

Consumers emptied shelves stocking up on tea, but there is plenty more in warehouses.

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.

Production Declines 

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.

Health Misinformation

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.

Related…

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.

Skipping Port

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.

NEW PRODUCTS

Edible Beetroot & Parsnip tea


Edible Tea

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 introduces Hard Tea with vodka

Vodka Tea

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.

Need to Know

Tea industry news for the week of April 6

China’s tea harvest in full swing including Enshi, in pandemic stricken Hubei Province

Closely Monitor Tea Auctions

Tea auction houses are a choke point for black tea transactions globally. The routine flow of commercial grades of tea is in jeopardy as major tea auctions react to the pandemic. Twin threats loom, the first involves gatherings that ensure the safety of participants. The second is the logistics. India’s national lockdown was tragically timed to the onset of the first flush, which observers predict is lost.

The Colombo Tea Traders Association (CCTA) successfully conducted an all-digital auction – a first in 126 years of outcry” bidding. The pandemic shut down the auction temporarily, halted shipping, and closed factories engaged in processing, blending, and packaging tea. “The tea industry has since regained its composure and momentum, and all its operations are now gradually resuming full capacity islandwide,” according to CCTA. The e-auction runs April 4-6, with samples available for viewing online and for purchase remotely under the guidance of the Colombo Tea Brokers’ Association.

India’s Darjeeling growers earn 40% of their business during March and early April as first-flush teas are rushed to clients in Europe, Russia, Japan, and the US. Plucking had just commenced when India’s prime minister ordered a 21-day national lockdown on March 25. Tea bushes welcome spring with their best quality shoots, which amount to 25% of the crop by volume but bring an estimated $20 million (INRs150 crore), or roughly 40% of revenue. Lost sales are compounded by the fact that by April 15, when the lockdown is scheduled to end, trees will be overgrown, forcing a time-consuming and costly pruning. Darjeeling annually produces about 8 million kilos of tea. That will not be the case in 2020.

The financial losses Darjeeling faces led the Union Home Ministry on April 3 to amend its workforce order to permit gardens to operate with up to half their workers if they enforce social distancing. However, few seem willing to operate processing factories, bought-leaf factories are closed to smallholders, and workers’ unions in West Bengal and Assam strenuously oppose returning to work due to the contagion and limited healthcare. North Bengal accounts for a quarter of India’s 1.3 billion kilo harvest.

Tea Retail

India’s street corner chaiwallahs and tea stand vendors operate without inventory or cash reserves. In the past three weeks, the steady business of supplying office workers has disappeared along with crowded trains and bus stations. At 20 rupees per cup, these workers earn less than $1.50 per day after expenses.

The approximately 1600 US tea shops in all but eight states where residents are now under orders to stay at home, are experiencing dramatic declines in foot traffic. It is hard to profit from small transactions, so Emma’s Tea Spot in Baltimore promoted its curbside pickup and delivery by offering staples as incentives. These include eggs, bread, and toilet paper. Orders are mainly by phone with payment prior to pickup or delivery. No employees come into contact with customers since orders are placed in a sanitized pickup area outside the building.

China Harvest Underway

Saturday (April 4) marked the opening day of the tea harvest in China. Qingming celebrations, which involve traveling to the ancestral homes of urban Chinese, are subdued in many parts of the country this year as more than 3,000 perished amid 83,000 confirmed cases of COVID-19.

Tea harvests in Zhejiang and Anhui Province are in full swing. Harvesting is underway but delayed in Hubei, which is the third-largest producing province and the center of the pandemic.

Yunnan continues to experience a severe drought. Chinese authorities say 1.14 million of the province’s 47 million residents are experiencing difficulties accessing drinking water, along with a quarter of a million head of livestock. Crops covering 180,000 hectares are drought damaged according to the provincial water conservancy department. “At present, 78 rivers in Yunnan have been cut off, 115 reservoirs have dried up, and 99 irrigation wells have an insufficient water supply,” according to a report published by Xinhua News Service.

UPCOMING EVENTS

The European Tea Society is hosting a free webinar on How Pandemics and Climate Change are Affecting the Tea Trade.

On Wednesday, April 8 Elyse Petersen, founder of www.tealet.com, is presetting on Covid19 and how this is impacting working directly with growers. The European Tea Society opened this webinar to anyone.  The webinar begins at 2 p.m. EST.  Here is the link:  https://www.europeanteasociety.org/events/2020/4/8/members-webinar-elyse-petersen-working-directly-with-growers-how-pandemics-and-climate-change-are-affecting-tea-trade.  

The World Health Organization was founded on April 7, 1948. This agency of the United Nations is commemorating the work of nurses and midwives on World Health Day, Tuesday.

Tea Magazine Evolves…

PHILADELPHIA, Penn. — Tea Magazine® a 20-year-old consumer publication for tea enthusiasts is replacing its bi-monthly print edition with a combined print +online content package for its readers, including a new book-style softcover guide to tea published annually.

In mid-April ITEM Media will launch The Daily Tea (www.thedailytea.com) a subscription-based tea portal replacing www.teamag.com. Visitors to the site will see a mix of free and paid content, along with new articles each month, and some previously published in Tea Magazine. Subscribers have their choice of several different newsletters — for example, newsletters targeted to those interested in cooking with tea; Yoga and tea; tea travel and terroir.

Chief Media Officer Graham Kilshaw

Chief Media Officer Graham Kilshaw

Subscribers will get at least three new feature articles a month, “…the articles will be accompanied by video, behind-the-scenes interviews and picture galleries, which is a lot more than we could do in print,” said Chief Media Officer Graham Kilshaw.

Since acquiring the magazine in January 2012, “we have built the audience from just a couple of thousand to more than 30,000. Most of this growth has come from our digital platforms, and very little has come from our print media,” said Kilshaw.

“We now see an opportunity to grow our audience significantly beyond its current 30,000 people – digitally. Consequently we are going to make several changes starting in May 2014,” he said.

The 150-page book-style magazine, often referred to as a “bookazine” will have longer in-depth feature articles on science, geography and history and “great photography,” said Kilshaw. There will also be a catalog of tea products, said Kilshaw. The publication will be mailed to all subscribers and sold nationally in bookstores and by grocers including Whole Foods Market.

Annual subscriptions are $24.99 and include the new $9.99 “Tea Magazine 2015 Tea Guide” mailed annually in September.
Kilshaw was upbeat about the new direction which he described as “evolving from predominately print with a little bit of digital to becoming predominately digital with a little bit of print.”

“This is all about aligning our goals and strategy with our resources. Producing the print magazine required us to spend 80 percent of our resources on 20 percent of the content. During the past 24 months print subscriptions increased by a couple of thousand while our digital audience has grown by five times,” he said.

LOGO_TeaMagazine_400px“The change in the mix of media is driven by our readers,” said Kilshaw. “Print generally-speaking attracts an older demographic and we want to reach a broad audience. Younger tea drinkers are forming their tea habits now, experimenting widely and trying out lots of different teas. They represent the future customers of our media clients,” he said, adding , “We want to build a very large audience for the tea community.”

The company expects to soon announce a new content manager to replace Kate Sullivan who left in December.

Learn more: www.thedailytea.com

The Future of Tea

SOUTHAMPTON, Bermuda — The North American Tea Conference annually hosts an Industry Breakfast to consider difficult issues by engaging stakeholders from all sectors of the supply chain in a Q & A session.

LOGO-TeaInTriangleOrganizer John Snell with Mother Parkers Coffee & Tea writes “this year was exceptional with the various representations from all sectors, including the two largest global tea producers and significant branded and private label packers; pepper this group with a liberal smattering of importers, affiliated trades, Tea Boards and Associations and you have a veritable bouquet of invested industry grey matter.”

“No subject is taboo with everything from labor, legislation and competing land use in the dock. The convivial atmosphere of the tea industry is unique and enables honest debate around these tough issues and I quietly applaud the individual collective to keep the needs of those working in tea at the fore, despite the balance book imperatives of modern business,” reports Snell.

What follows are three of the six questions posed. Each links to a discussion thread. The more who share their opinions on these topics the better. In a few months Tea Biz will summarize the main points and share this with the Tea 2030 project on the Future of Tea.

Question No. 4

North America, like other consuming countries, has constructed many positive release gateways to imports, in order to protect the consumer. The latest is the FSMA offshore Supplier requirements. Is this screening of the food supply chain relevant and what are the ramifications for Producers, Importers and Packers that do not exist within GFSI standards today.

Question No. 5

Given the incredible success that the Tea Association of the US and Canada have had, with respect to addressing the lack of manageable import MRLs (maximum residue levels) for tea, we may have 30 within 5 years. If this is the case, we can Authorities to start applying a little more pressure on imports to live up to these standards. Are we confident that Production will be able to live within these MRLs or is the specter of yet another set of policed benchmarks a call for action for Producers. Should the collective technical committees from all Origins, finally, be interested in pushing for a Harmonized system and which is the right international vehicle for this action?

Question No. 6

If market economics need to prevail then do we need to assess the mechanisms for selling tea in order to increase interest and liquidity?

Is there enough volume to consider a Futures Exchange which could be based on soluble solid content, a scientific parameter rather than a more subjective quality standard, more in line with extract buyers who are used to having a hedging mechanism to work with?

What are the pros and cons for such a mechanism?

Related Posts:
The Future of Tea (Questions 1-3)
Tea in the Triangle: Plotting Tea’s Future

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