Need to Know | Tea Sales Accelerate in Canada | Retailers Cope with COVID

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 Tea Hause, London Ontario, Canada
The Tea Haus, London Ontario, Canada

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.”

Tea Centre retail shop in Courtenay, B.C., Canada

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.”

Banff Tea Company, Banff, Alberta, Canada

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.

Favorite US Drinks

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Need to Know | CDC: Restaurant Risk | Retail Stirrings

Need to Know | CDC: Restaurant Risk | Retail Stirrings

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
Patients with COVID-19 symptoms in 10 states were twice as likely to have visited restaurants during the 14 days prior to testing positive, according to a new CDC study.

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.”

CDC: Community and Close Contact Exposures Associated with COVID-19 Among Symptomatic Adults ≥18 Years in 11 Outpatient Health Care Facilities — United States, July 2020

Billy Corgan Resurrects Madame ZuZu’s Tea Emporium

Madame ZuZu's Tea Emporium
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.

Madame ZuZu's Grilled Cheese

“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.

Kenyan tea workers concerned about Unilever’s decision to divest its African holdings.

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.

Click to see and interactive map of Unilever’s suppliers. Download link to suppliers.

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 The Nation 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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Need to Know | Rising Prices | Drenched

Need to Know | Rising Prices | Drenched

Tea Industry News for the week of August 17

  • Rising Prices
  • Heavy Rainfall Wreaks Havoc
  • AVPA Entry Deadline Nears
Tea prices on the rise due to domestic demand and pandemic-related shortfalls. In India the combination is impacting the availability of tea for export.

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.

Drenched

Annual mean anomaly predictions for 2020 relative to 1981-2010. Ensemble mean (left column) and the probability of above-average (right column). As this is a two-category forecast, the probability for below-average is one minus the probability shown in the right column. Grpahics: World Meteorological Organization.

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.

The World 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 Sahel is the 1000-mile wide ecoclimatic and biogeographic zone of transition in Africa between the Sahara to the north and the Sudanian savanna to the south. Having a semi-arid climate, it stretches across the south-central latitudes of Northern Africa between the Atlantic Ocean and the Red Sea.

AVPA Teas of the World Competition

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.

Download the AVPA Monovarietal registration form.

Download the AVPA Infusions registration form.

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.

Click here to review contest rules.
Click here to see who won the 2019 competition.

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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Need to Know | Over the Cliff | Elemental Exam

Need to Know | Over the Cliff | Elemental Exam

Tea Industry News for the week of July 27

  • Over the Cliff
  • World Tea Expo Goes Virtual
  • Made in America
  • DMCC Expansion Plans
  • Measuring Elements in Tea
Historic contraction follows 23 quarters of economic growth as high unemployment and rising infections make a long recovery likely.

Over the Cliff

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.”

See: DAVIDsTEA Reorganizes for additional detail.

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.

Learn more: World Tea Conference + Expo

Made in America

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.

A Lexology 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

UAE Prime Minister and Ruler of Dubai Sheikh Mohammed tours DMCC’s tea and coffee centers. Photo courtesy DMCC.

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.

Testing tea for trace elements

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.

ElementDaily Intake Thresholds
Al (Aluminum)0.10–0.12 mg Al/kg/day for adult
C (Carbon)None
Ca (Calcium)1300 mg/day [harmful > 1500 mg/day]
Cd (Cadmium)FAO/WHO rules limit Cd to 0.2 mg/kg
Cr (Chromium)120 µg/day [harmful > 200 µg/dan
K (Potassium)4700 mg/day [harm depends on weight]*
Li (Lithium)Lithium toxicity level is 1.5 mEq/L
Mg (Magnesium)320-420 mg/day (varies with age)
Na (Sodium)Less than 2300 mg/day
P (Phosphorus)1000 mg/day [harmful > 250 mg]
Si (Silicon)Elemental silicon is an inert material
Source: US FDA and National Institute of Health

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.”

Dr. Ying Guo

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.

Table courtesy Dr. Ying Guo, Georgia Gwinnett College

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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Need to Know | Drink Plants | Enshi Floods

Need to Know | Drink Plants | Enshi Floods

Tea Industry News for the week of July 20

  • Drink Plants
  • Tea Outlook Promising
  • New Teatulia Tea CEO
  • Enshi Floods
  • Bigelow Wellness
An all-plant tea assortment of green and black tea, floral, fruit, and berry botanicals.

Drink Plants

“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%).”

Cargill Report: Note the desire for more tea (22%)

“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.”

Tea on Trend

Non-alcoholic beverages will generate $10 billion more in sales this year, reaching $160 billion, according to market research contained in The U.S. Beverage Market Outlook 2020.

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.

Click here to obtain a copy.

Teatulia Names New CEO

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.”

Submerged street buses in Enshi, China. Massive flooding eases Chinese drought.

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.

New line of cold water infused botanicals from the Bigelow Tea Company

Bigelow Botanicals

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.

Learn more at www.bigelowtea.com.

Need to Know | DAVIDsTEA Reorganizes

Need to Know | DAVIDsTEA Reorganizes

Tea Industry News for the Week of July 13

  • DAVIDsTEA Reorganizes in Bankruptcy
  • US Retail Reopenings Stall
  • World Tea Expo Postponed Until 2021
  • Samovar Tea Lounges Begin “Hibernation”
  • Kenya Court Halts Tea Reforms

DAVIDsTEA Reorganizes in Bankruptcy

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

Regions are reconsidering the pace of restaurant re-openings after a spike in COVID-19 cases.

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.

Founder Jesse Jacobs closes four Samovar Tea Rooms in San Francisco

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.


http://www.hingeglobal.com
Cincinnatti, Ohio

Brand Discovery

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.

Walmart

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 to find 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.

Graphic courtesy Yahoo! Finance

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.

Pantry Pickup available at the Unilever U-Shop include Rejuvenate herbal, Lipton Yellow Label and Tazo Golden Turmeric Latte tea.

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.

Building an omni-channel strategy is likely to pay off. A 2017 survey among U.S. consumers showed that 23% of respondents drink tea every day, while only 10% never drink tea at all.

FDA’s New FSMA Portal

The US Food and Drug Administration (FDA) unveiled a web portal describing in detail a 10-year blueprint for implementation of the Food Safety Modernization Act (FSMA).

Download the blueprint (152mb)

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
  • Tech-enable traceability
  • 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 in Nutra 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.

Need to Know | Retail Rebounds

Need to Know | Retail Rebounds

Tea Industry News for the Week of June 15

  • Retail is Rebounding
  • Breakfast: Deflated Daypart
  • Reopening: Millennials Lead the Way
  • E-commerce Sales of Specialty Tea Spike
  • India Extends Lockdown | Exports Declined in 2019
US retail sales rebounded sharply in May, according to preliminary figures released by the US Census Bureau. Total retail and food services sales amounted to $485.5 billion in May, up 17.7% from the previous month, but still 6.1% below last year’s May figure.

Retail Rebounds

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

Breakfast/Brunch6%
Lunch26%
Dinner64%
Snack3%
Late Night1%
Source: Datassential

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.


Unpleasant truths

China will overtake the US as the largest retail market in 2020. Despite a 4% decline this year in retail sales, China’s retail market is expected to rise to over $5 trillion in sales, while the US is expected to reach $4.8 trillion by the end of the year.

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.

Source: CCInsight COVID-19 Commerce Summary (June 15)

Need to Know | Play the Health Card

Need to Know | Play the Health Card

Tea Industry News for the week of June 8

  • Theaflavins Inhibit Virus Replication
  • Immunity is the Epicenter of Health Enhancing Foods
  • Water Works Wonders
  • Digesting Grubhub
  • Tea for the Front Line

“Now is the time to play the health card” I advised during a June 10 webinar on Tea Vulnerabilities hosted by the European Speciality Tea Association (formerly known as The European Tea Society).

Click here to watch a recording of the webinar.

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.

Click to download the document here.

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.

Digesting Grubhub

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.

Source: Packaged Facts, Food-Carryout & Delivery

Tea for the Front Line

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.

Flu Fighter Tea

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.

Footnote: The US Census Bureau on June 8 announced a very helpful online resource for understanding and keeping up with the impact of COVID-19. Visit: COVID-19 Data Hub (https://covid19.census.gov/).

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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.

Need to Know| International Tea Day

Need to Know| International Tea Day

Tea industry news for the week of May 25.

  • International Tea Day
  • Angela Lansbury as teapots
  • India COVID-19 Update
  • Matcha in Demand
The Kao Ting Academy in Jian Yang, Fujian Province celebrated International Tea Day with a demonstration of the ancient Song Dynasty preparation of powdered tea whisked in Jian Zhan tea bowls fired at a local kiln. Photos by Liu Linjiang and Ding Shuliang.

International Tea Day

Carpe Diem

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.

Events were promoted in several streaming videos with brilliant images such as the Food and Agriculture Organization’s “The Art of Making Tea” and the UK Tea & Infusions Association video: “Raising Our Cup to All Tea Drinkers

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.


This map shows relatively few cases in Assam as rural areas in general experienced lower rates of infection than crowded Mumbai, but that is changing as the contagion progresses and migrant workers return to their home villages. Sikkim, for example, only reported its first case last week and the rate of infection remains low in Ladakh as well as in the union territories of Goa, Puducherry and Dadra & Nagar Haveli. Maharashtra was the Indian state hit hardest by the coronavirus on May 23 the state saw a record of more than 3,000 new infections in the span of just 24 hours surpassing the mark of 50,000 cases.

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.

Need to Know | Boba Delivery

Need to Know | Boba Delivery

Tea industry news for the week of May 18.

  • Boba Tea Tops Beverage Delivery Lists
  • East Africa Update
  • Turkish Tea Harvest
  • Robotic Waitstaff Serves Tea
  • Nepal Asks India to Resume Tea Imports

Boba Tea Tops Unique Food Orders

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?

Boba tea.

“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.

Click here to see the full list.

*Samuel Hansen at Yelp! employed a natural language processing technique called term frequency-inverse document frequency (TF-IDF), which quantifies how frequently a dish is ordered in a state relative to its popularity in other states.

East Africa Update

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.

Turkey has 157,814 confirmed COVID-19 cases with 4,369 deaths, making it ninth on the list of countries most impacted by the pandemic, according to the Johns Hopkins Coronavirus Resource Center.

Tea garden in Turkey’s Rize Province, along the Black Sea.

Robotic Waitstaff Serves Tea

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.