Tea News for the week ending January 20
Listen to Podcast Episode 100
The world’s top economists predict economic weakness globally in 2023, according to the World Economic Forum, meeting this week in Davos, Switzerland.
| Toronto Tea Festival Returns as In-Person Event
| Argentina Celebrates its Tea Centennial
According to the World Economic Forum, two-thirds of the world’s top economists predict a global economic weakness in 2023, meeting in Davos, Switzerland. The recession poll found Europe, the United States, and China, the world’s largest economies, vulnerable.
Retail sales in the 19 Eurozone countries have decreased by 2.7% year-on-year, with declines beginning in October. Food and drink sales, two important tea-related categories, are down 3.9% year-on-year. The European Commission expects the economic contraction to continue during the first three months of 2023. Declines in two consecutive quarters signal a technical recession.
IN THE US
Stocks fell sharply this week on word that retail sales in the US declined 1.1% in December (the biggest drop in 12 months). Receipts at food service and drinking places, the only services category in the retail sales report, fell 0.9%. Inflation increased by only 0.1%, and unemployment at 3.5% is at a 50-year low. There are still more job openings than workers, but layoffs are mounting as manufacturing output experienced its biggest drop in two years. The economy is losing momentum, according to reporting by Reuters. Economists predict a 70% chance of a recession in 2023.
China reported only 3% growth for the year. Abandoning zero-COVID immediately boosted manufacturing, and normalized supply chains are driving down inflation. But eliminating travel restrictions also increases the likelihood of a surge of infections. Retail sales plunged 5.9% in November and 1.8% in December as consumers stayed close to home.
That hesitancy ended in January as the Lunar New Year began. There were 35 million travelers on the first day of the Spring Festival, with the total passenger flow estimated at 2.1 billion by Feb. 5. That is double the number of Chinese who traveled during the 2022 festival and 70% greater than in 2019 (before the pandemic.)
BIZ INSIGHT – Going into these difficult times, volume sales of packaged tea are stable. Bulk tea sold for an average of $3.10 per kilo in 2022, an increase of 14%, reflecting mainly black tea sales at auctions in Kenya, India, and Sri Lanka. Online retail tea sales continue to expand, but rising marketing costs undermine margins. Food service revenue is down as labor, and food inflation keep profits below pre-COVID levels in tea-friendly formats, especially fine dining. Independent tea shops that weathered the pandemic are closing their doors and moving online.
In contrast, franchise tea ventures like Texas-based HTeaO, with 68 ice tea drive-through stores and 93 under construction in the US, and bubble tea ventures Kung Fu Tea (350 locations) and Gong Cha (1,900 locations worldwide) are expanding with outside investment.
Three Ukrainian Brothers Celebrated for Establishing the First Commercial Tea Farm in Argentina
By Horacio Bustos
The government of Argentina last week declared the first commercial planting in 1923 as a historical moment marking the 100th Anniversary of Argentine tea.
A bill passed by the Argentine Congress immortalizes the three Ukrainian Hnatiuk brothers “who, when faced with the hostile climate generated by the Russian Revolution in 1910, escaped to the new continent to start from scratch.” Don Wladimiro, his brother Tikhon, an Orthodox Priest, and Emanuel Hnatiuk settled in Colonia Tres Capones in the peaceful hills of Misiones to establish the southernmost tea-producing region in the world and center of Argentine tea agriculture.
Tikhon, a missionary, obtained assamica seeds in Crimea in 1923 and presented them to his brothers, who were experienced in raising and processing fruit on an industrial scale. The four hectares they planted were processed locally and sold as W-H Tea. In 1924 seeds from China were planted, and by the 1940s, tea flourished on 300 hectares. In 1944, following a devastating earthquake, the Ministry of Agriculture bought 800 kilos of seeds to plant in the first of many government-financed projects to expand tea cultivation.
BIZ INSIGHT – More than 5,000 planters and five cooperatives today grow 2.7% of the world’s black tea on 72,000 acres (29,000 hectares) in Misiones, with an additional 2,000 hectares planted in Corrientes province. Ninety percent of this tea is exported to 30 countries. The United States is Argentina’s largest tea trading partner, purchasing 70% of the annual crop to blend into iced tea.
Download Argentina’s official founding story (Spanish).
| Toronto Tea Festival Returns as In-Person Event
Like hundreds of in-person tea events worldwide, the Toronto Tea Festival was forced into hiatus for the past two years. In 2023 the popular two-day event returns on January 28-29 to the Toronto Reference Library.
Since 2013, everyone on Canada’s eastern seaboard who trades in tea has traveled to Toronto for Tea Festival demonstrations, samples, lectures, and exhibitions. The event, now in its 9th edition, is hosted by Tao Tea Leaf and The Tea Guild of Canada. With more than 50 exhibitors, it drew a crowd of 2,800 in 2020, making it Canada’s largest tea festival exclusively focused on tea.
Speakers include Author Linda Gaylard and Kevin Gascoyne, a co-owner of Camellia Sinensis in Montreal. Helen Kong at Secret Teatime in Scarborough, Phil Rushworth ZhenTea, Nadia De La Vega at DAVIDsTEA, and Amy Lou Taylor, a highly regarded practitioner of Tasseomancy (tea leaf reading).
One-day passes are $16 and $25 for two-day admission. Visit https://teafestivaltoronto.com to purchase a pass.
| PLUS This year marks the 10th anniversary of the Tea Biz Blog and the 100th episode of the Tea Biz Podcast. Listeners in 117 countries have downloaded 36,474 streams since 2021. The podcast is most popular in these countries in this order: The United States, India, Canada, Great Britain, Australia, Germany, The Netherlands, Japan, France, and Ireland, with Bangladesh, Sweden, China, Kenya, and Sri Lanka making up the top 15.