Issue link: http://read.dmtmag.com/i/491359
44 STiR tea & coffee industry international "It is a myth that Chinese quality tea does not scale. No one ever put their foot on that gas pedal. The dynamic nature of the Chinese tea market is mind blowing." - Austin Hodge Modern factory production of Anji Bai Cha to remain competitive. This pressure is even greater on small holders and encourages production of large quantities of me- diocre tea. Negotiations for the highest quality specialty tea are pri- vate. Buying direct allows retailers to leapfrog entire stretches of the supply chain. Consolidation is well advanced in the former colonies with vast tracts of land tied to the largest multi-nationals or under management service providers like the Kenya Tea Develop- ment Agency (KTDA) which operates 63 factories serving 500,000 small growers. Consolidation is just getting underway in China. The tea industry continues to be dominated by seven mul- tinationals that control 85% of the market (Unilever is No. 1 and Tata No. 2) with thousands of smaller players dividing the remaining 15%. To make ends meet growers are adding value blending and packaging tea. Many believe that a plantation model dating to 1843 is no longer sustainable. But dealing direct with small holders is inefficient. That is why a new system of production and trade that combines the strengths of East and West is evolving. There must be a better way. Specialty Tea Verticals The internationalization of tea requires a new system. While it dates to antiquity in China, tea has been available in the West for three hun- dred years and in quantity only since the advent of the plantation system. Global sales now exceed $90 billion annually. As the middle class expands and experiences greater exposure to international cui- sine, their demand for and ability to purchase imported products increases as well. China recently began purchasing large shipments of Indian tea. The Japanese drink a lot of oolong from Taiwan. Russia and the United States are top black tea export destinations for several producing countries. American-inspired tea houses are finding success in the Middle East and several coffee chains, including Starbucks, are selling tea abroad. This is all evidence of the internationalization of tea. In response, China is growing a lot of black tea for export and beginning to ex- periment with auctions. New ventures like the Guizhou Tea Co., founded in 2011, are stretching beyond cultivation and launching brands. "We are a provincial locomotive enterprise of agricultural industrialization integrat- ed with tea production, processing, marketing, R&D and culture transmission, focus- ing on foreign and domestic trade businesses," said General Manager Guo Xiaochun. The firm operates two ISO 9001:2000 and HACCP Quality certified tea process- ing factories, cultivates 4,000 acres and employs 100 with 2012 sales of $150 million. Organic certification is pending under the EU IMO, USA NOP and Japan JONA. Traditional green tea and black tea are cultivated for export. The Anji Bai Cha collectives and enterprising private ventures like Guizhou are new in China, a departure from export policies that emphasized quantity over quality. Guizhou is engaged in "company development towards large-scale, standardization, intensification and branding. The abundant resources and good quality of Guizhou Tea will bring us great profits and help us to occupy the market share in domestic and international market," writes Xiaochun. Twenty years ago tea exports were not a high priority. Now they are. "China used to be famous for its teas, so it's important that we restore it to its former glory," said Cai Jun. "It is a pain that we have to endure during this period of transition," he said. "It is a myth that Chinese quality tea does not scale," said Hodge. "This is non- sense. No one ever put their foot on that gas pedal. China has that capacity. The dy- namic nature of the Chinese tea market is mind blowing." Song Heng, a tea enthusiast and author of four books on Chinese tea culture told China Daily that change is already underway: "Chinese tea is set to regain its popularity overseas, because more people are becoming interested in the country and tea is an integral part of our culture."