STiR coffee and tea magazine

44 STiR coffee and tea | 2024 Issue 3 (June / July) About 45% of black tea is auctioned. Prices are set at three major auction centers: Mombasa, Kenya; Colombo, Sri Lanka; and Kolkata, India. This graphic, shared by Jem McDowell, VP at Universal Commodities, describes key events influencing black tea prices. Most green, oolong, white, yellow, dark, and Pu'er teas are sold directly. Sixty percent of all tea is sold directly. Effect of 2019 Glyphosate ban -prodn shortfall in Ceylon drives prices higher Orthodox teas in Colombo/Kolkat a show consistently higher prices than CTC in Kolkata and Mombasa Except in 2017, Mombasa prices above Kolkata CTC prices=>boost to Indian exports(thanks to drought in Africa) Decline of CTC/African prices as consistently high E.African production weighs on global markets 2017M01 2017M03 2017M05 2017M07 2017M09 2017M011 2018M01 2018M03 2018M05 2018M07 2018M09 2018M011 2019M01 2019M03 2019M05 2019M07 2019M09 2019M011 2020M01 2020M03 2020M05 2020M07 2020M09 2020M011 2021M01 2021M03 2021M05 2021M07 2021M09 2021M011 2022M01 2022M03 2022M05 2022M07 2022M09 2022M011 2023M01 2023M03 2023M05 2023M07 Major Auction Averages Three month rolling average in nominal $US Source: World Bank / Universal Commodities (Tea) Trading Inc. Colombo Orth Mombasa CTC Kolkata - CTC Kolkata - Orth US$/kg 4.25 3.75 3.25 2.75 2.25 1.75 1.25 Ceylon prodn shortfall (fertilizer ban), boosts Colombo/Kolkata Orthodox prices Covid-driven production shortfall In North India drives Kolkata prices up. Decline of North Indian CTC prices as post-Covid shortages in the pipeline are refilled. Mombasa minimum prices for KTDA tea imposed following persistent decline thanks to long-term over- supply. Prices continued the long-term decline regardless) R.C. Bigelow, for example, sells $250 million worth of tea annually in US grocery and mass-market outlets on shelves stocked with competitors, including Harney & Sons Fine Teas, Yogi Tea, and Rishi Tea & Botanicals. In the UK, Yorkshire's aggressive marketing displaced PG Tips as the top-selling tea, with Tetley and Twinings winning in regional markets. But try charging $2 to $2.50 per cup, which grocers routinely get for third-party certified specialty coffee. No one buys. For the first hundred years after arriving in Europe, tea prices remained beyond the reach of all but the wealthiest Por- tuguese, Dutch, and British consumers. Once tea reached mass market availability, it was so deeply engrained in British culture and daily life that households purchased tea at premium prices. In 1749, a tradesman's family in Britain spent three shillings a week on bread and four shillings a week on tea and sugar. As tea became more affordable, consumption peaked at 10- 12 pounds per capita (4.5 to 5.4 kg), equivalent to between 5.5 and 8 cups daily. Prices remained steady at 1 shilling to 1s 6d per pound for ordinary grades and 2 shillings per pound for higher grades. Two shillings in 1910 would be valued at £12-15 pounds sterling in 2024, applying a long-term average inflation rate of 4% per year (114 years). Tea consumption fluctuated after World War I for eco- nomic and social reasons. By 2022, per capita consumption had declined by over half to 4.2 pounds (1.9 kgs) compared to 1910, or about five fewer cups per day. Domestic tea markets expanded significantly from the 1930s onwards in the less economically developed producer countries. In 1910, tea-producing countries accounted for 4.4% of the world's tea consumption. The United Kingdom consumed 40% of the world's tea, and North Americans drank 18.3%. Britain and America reached 74.5% share in 1920 while producing countries consumed less than 10% of the world's tea until the 1940s. China now accounts for 45% of global tea consumption, mainly green tea. India consumes 19% of the world's tea (pri- marily black). The two countries accounted for 64% of global demand in 2023, up from 56% in 2013. In-home consumption in both countries is stable, while out- of-home consumption is increasing. According to the Econo- mist Intelligence Unit's June Tea Report, domestic demand in India will rise by 3.5% in 2024. China's market is expected to expand by 3.8% in 2025. India's per capita consumption is relatively low at 800g. The Chinese drink 1.2 kg on average, but more than half the population does not drink tea daily. Consumption is closely tied to population growth and the steady upward trend of the urban middle class's affluence. Tea consultant Snell says, "The imbalance in supply and de- mand is a product of many factors. Political influence often out- weighs commercial intelligence, which marginalizes those at the beginning of the supply chain. This adds risk to industry players and adversely affects the sustainability of communities and the trade they serve. Credible information sharing up and down the supply chain is needed to bring the trade back into balance and ensure a sustainable future for tea and those working there." PART II Demand has risen steadily for decades, and production has kept pace, but tea is challenged by innovative beverages vying for its enviable share of throat. Part II explains how to energize price growth by marketing quality tea both as the original, affordable, plant-based drink and as a specialty crop grown for specific culinary and beverage uses, from artisanal hand- rolled high-priced Orthodox (loose leaf and in bottles) to concentrates and powders used in cosmetics, supplements, and functional blends.

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