STiR coffee and tea magazine

STiR coffee and tea 29 The Argentine government used subsidies to encourage the optimization of tea for export. Mechanical harvesters were brought in and farms were able to significantly increase production volumes. *Extracts manufacturer Finlays explains that ex- tracts are concentrated forms of tea that contain the same soluble compounds and flavors as fresh leaves. These include polyphenols, caffeine, catechins, and an- tioxidants. Extracts are available as liquids, powders, and instant tea granules. little reward for this effort and normally have to bear the burden themselves. We get more and more requirements from our customers, but prices continue to slide, so higher costs and lower returns." A Tepid Domestic Tea Market Argentina prefers yerba mate to traditional tea. Only 5% of Argentina's locally grown teas from Camellia var. sinesis varietals are consumed by the domestic market. Tea con- sumption is 200-250 grams per capita countrywide, a bit higher in urban areas, but yerba mate's average per capita consumption is 5.9 kilos. However, tea enjoys a growing reputation for healthful hydration among active young adults and is seen as a soothing, stress-reducing daily break for workers. Market research firm StrategyHelix estimates Argentina's revenue from domestic tea sales to increase by 32.8% (CAGR), adding $1 billion in annual sales between now and 2029. Domestic tea drinkers consumed about 230,000 metric tons of yerba mate in 2023 and 4,100 metric tons of mainly black tea. About 3% of the tea Argentina produces is green. Volume dipped during the global recession and spiked during the pandemic, but consumption has remained steady due to retail prices being regulated since 2008 to maintain greater affordability for lower-income groups. Consumption could rise to 300,000 metric tons by 2026. Major imported brands include Lip- ton Teas and Infusions, Finlays, and As- sociated British Foods (Twinings). Ca- fes, restaurants, and tea houses promote yerba mate blends in social settings. The growing interest in tea's health benefits and a greater variety of green and oolong teas and herbals has increased out-of- home tea consumption. Primed to Pivot Even though volumes are falling and value remains flat, the US market re- mains the most lucrative for Argentine tea growers. Low production costs and established trade relationships favor Ar- gentina over African and Asian bulk sup- pliers, and Argentina's proximity to the New Jersey, Virginia, New Orleans, and Houston tea manufacturing centers is a significant logistical advantage. However, the market advantage of quantity vs. quality has shifted. Argentine growers must adapt to consumer preferences for more flavorful refrigerated and "freshly brewed" RTD and better-tasting tea extracts. Expanding European exports also presents an opportunity, especially consid- ering the EU-Mercosur trade agreement that will eliminate tariffs that inhibit value addition. The agreement has not been ratified, but negotiations continue and are "very close to closing," according to Span- ish Prime Minister Pedro Sánchez. Argentina's tea sector accounts for 90% of the tea grown in South America. Chile imports more Argentine tea than Germany and almost as much as Po- land. The Mercosur countries (Argentina, Brazil, Paraguay, Uruguay, and Bolivia) already do a brisk trade in yerba mate. Neighboring Brazil is developing a thirst for specialty tea. Overall, the commercial tea farms planted in the 1950s in Argentina played a crucial role in establishing the country as a significant player in the global tea market, particularly for bulk black tea exports to the US. The legacy of these farms continues today, though the indus- try faces new challenges in an evolving global market.

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