STiR coffee and tea magazine

18 STiR coffee and tea / Issue 2, 2022 (April / May) By Dan Bolton vercoming the combination of sanctions, boycotts, pandemic-impeded logis- tics, and the suspension of business by beverage multinationals – a virtual economic blackout – is all but insurmountable for Russia's major tea brands. Blenders and grocery brands are scrambling to land tea in transit while exploring risky workarounds. Blenders are trucking paper through Latvia to make teabags. FUSO nylon is nowhere to be found. Tea suppliers usually stock two months inventory in their warehouses, possibly a little more due to hedge against delays in delivery times due to the pandemic. Right now, there is no tea to replenish supplies enroute. Brand owners estimate that stocks will be exhausted before July. An even more significant challenge for domestic brands, including Orimi Trade and May Foods, is overcoming financial hurdles like financing shipments upfront. Rus- sia no longer permits the exchange of rubles for US dollars. The ruble's devaluation (now trading at less than one US cent) makes paying for insurance and newly imposed fuel surcharges much more difficult. According to Nielsen, the two brands accounted for 62% of the RUB50 billion spent on tea in grocery and department stores last year. In Russia, open markets account for 15% of sales, 20% of the tea is sold in conve- nience outlets. Sanctions bite Tea is listed as an essential foodstuff, exempt from sanctions. Nonetheless, the price of tea at the major auctions declined the past two weeks mainly due to uncertainty regarding payments. Seven Russian banks are currently blocked from using SWIFT for clearances. Last week several of the world's largest containers carriers, with combined bookings of more than half the entire world's capacity, refused to land or receive goods at Russian ports. Uncertainty led most tea-producing nations and international tea brands to turn to more promising markets than Russia. "In my view, demand will be there, and I believe the government of Russia will be keen to make sure that people get their tea," said Ian Gibbs, chairman, International Tea Committee. Tea Crisis Looms in Russia Tea Crisis Looms in Russia and Ukraine and Ukraine Economic blackout means Russia will soon runshort of tea. O Unlike China and the United States, Russian ports are equipped primarily to transport bulk grains, fertilizer, oil, coal, and ores. Pictured above is the Seaport of Kaliningrad, the only major port on the Baltic Sea that does not freeze. Container throughput surged by 70% to 135,969 TEUs in 2021. Ian Gibbs, chairman since 2016 of the International Tea Committee. SPECIAL BREAKING REPORT

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