| Omicron Cancels Restaurant Reservations | Sri Lanka Barters $5 Million of Tea Monthly to Settle Iran Oil Debt | Foodservice Tea Still Recuperating, a TEAIN22 Forecast
Seven-minute Tea News Recap
Caption: Two years of COVID reset tea consumption at restaurants and cafés, initially reinforcing traditional expectations of comfort and warmth but evolving to permanently disrupt delivery, takeaway, menu choices, and celebratory occasions with tea.
This week Tea Biz travels to the Republic of Ireland to visit Teacraft founder and research scientist Nigel Melican who explains the necessity of mechanical tea harvesting and describes an innovation in two-man harvesters that features a rotating head that simulates a “selective” pluck without shearing leaves.
Two years of COVID reset tea consumption at restaurants and cafés, initially reinforcing traditional expectations of comfort and warmth but evolving to permanently disrupt delivery, takeaway, menu choices, and celebratory occasions with tea. Tea (except for bubble tea) largely missed out on the rapid growth of restaurant-quality food delivery, curbside service, and take-out. Beverage service in downtown offices, sales at transit terminals, and inner-city stands remain below pre-pandemic levels. Retail vendors offering afternoon tea at tourist locations, iced tea at sports venues, and food trucks selling teas and juice lost sales to homebound tea drinkers purchasing online or near-to-home suburban locations. COVID reversed the sales growth of tea as a breakfast alternative. Independently operated tearooms with few seats and limited financial resources closed, changed owners, or pivoted online. Tea is consumed more frequently at home, and with food inflation rising and costs driving up menu prices, it is clear that in 2022 tea retail will not return to the familiar patterns of yesteryear.
Caption: Reinventing tea retail, a TEAIN22 Foodservice Forecast
Hear the forecast
TEAIN22 Foodservice Forecast
Diners globally remain enthusiastic about eating out but fearful as omicron infections surge.
Reinventing Tea Retail
By Dan Bolton
The pandemic continues to exert a heavy hand. Everything is so unpredictable that the best advice for a battered tea segment is to stand pat. If 24 months of turmoil has not bankrupted your venture, now is not the time to exit. Those who qualify should judiciously spend government assistance and wait.
Above all, don’t sell out because of Omicron. Retail sales of tea are stubbornly reliable during periods of crisis. Demand for conventional black tea may be flat in developed countries, but tea consumption has more than doubled to 6.4 billion kilos since 2000 — per capita consumption held at 400 grams per capita. According to the Tea Association of the USA, the US tea market grew in 2021 and is now valued at more than $13 billion.
“Tea in the United States was uniquely vulnerable to Coronavirus (COVID-19) since an unusually high proportion of it is consumed at foodservice,” writes Euromonitor beverage analyst Matthew Barry. In 2019, that proportion was 48%. Statista estimates that 52% of spending and 5% of volume consumption in the tea segment will be out-of-home by 2025.
TEAIN22 Forecast: The upheaval in foodservice is manageable. Fears that keep diners away from cafés are diminishing. Out-of-home tea sales in COVID-ravaged India already exceed pre-pandemic totals. It is too soon to know what’s next, so focus on efficiencies in the here and now. The immediate priority is to recuperate and resume growth at a sustainable pace. Retailers that survive will see greater demand, better prices, and fewer competitors.
The path ahead is omnichannel. Elements include experiential online and face-to-faceretail. Teach classes (online or in-person), start tea clubs, serve tea in the park. Offer carefully curated premium teas with an authentic (not necessarily artisan) back story andbotanicals in sachets. Technology is underutilized by tea retailers. Accepting mobile orders and emphasizing takeaway (and drive-thru) communicates convenience and safety. Digital menus and QR codes that open to short videos showcase ambiance and preview the experience. Use predictive consumer intelligence to guide tea discovery online and to save on logistics expenses. Every specialty tea customer, young or old, is now a veteran online shopper seeking value (over price) and confronted with a dizzying number of choices.Concentrating on delivering tea delight – that transforming moment when uninitiated customers first taste premium quality tea –has never been more essential.
Adaptations by tea café and restaurant operators to meet new challenges including high turnover and more significant labor expenses are mainly defensive. Fewer footfalls in shopping districts, hospitality centers, and tourist locations and resorts are a formidable obstacle to full recovery.
While restaurants are experiencing aggressive consolidation and a rush of capital to finance M&A with more than a dozen IPOs in 2021, tea’s transformation will be mainly self-financed. There is little outside investment, and there are no IPOs or $650 million sales of home-grown tea chains to Starbucks on the horizon. Carve-outs are more likely than rollups. In 2021 Unilever shed 34 market-leading brands, including retail outlet T2, due to sluggish growth. The fact that CVC Capital Partners spent $5.1 billion, paying 14x EBITDA to acquire Unilever’s legacy brands, is notable.
Online sales show great promise, but garden-owned and direct-to-consumer brands are crowding a minimal marketplace for premium tea. Worse, automated comparison shopping suggests online prices will converge, driving down margins as advertising costs increase. Devising profitable business strategies, redesigning the retail experience, and remodeling storefronts will take time.
Innovations are emerging: Upscale boba tea rooms, nitro cold brew tea in bars, drive-thru iced tea shops, premium fruit tea outlets, subscriber-only tea clubs, and Livestream marketing. The mix of retail innovations and market-moving developments below (most visible in the West) will shape the future and fortunes of tea foodservice and foodservice suppliers in 2022.
Unprecedented Uncertainty
Defenses against pandemic-driven trends that appeared entrenched in 2020, including Lockdowns and the Pivot Online, continued to evolve in 2021. The restaurant segment and tea-themed cafés initially “hibernated,” as Samovar Tea Lounge founder Jesse Jacobs described. In the spring of 2020, he shuttered locations grossing $1 million annually, hopeful they would soon reopen. The office crowds in downtown San Francisco never returned. A year later, with depleted resources and no longer attracting outside investment, high-cost malls and downtown shops closed. By August 2021, well-respected operators like Roy Fong abandoned the Imperial Tea Room in Berkeley after 16 years. Shunan Teng, who founded Tea Drunk, closed her East Village tea shop in New York the same month. Mary Greengo, who founded Queen Mary’s Tearoom in Seattle in 1988, scaled back to a small packaged goods storefront across from the restaurant. In Sylvania, Ohio, Sweet Shalom Tearoom permanently closed after 20 years. Samovar Tea became an online-only tea retailer, and Jacobs now sells Detroit-style pizza at the former tea shops.
In contrast, small towns tenaciously supported Victorian-style tea rooms. Retirees sold many to a younger generation. According to Sinensis Research, there were more than 1,600 specialty tea shops in the US before the pandemic. Sinensis Research did not survive to count the survivors. Still, researcher Abraham Rowe would have found many fewer conventional “wall of tea” shops and far more bubble tea locations – 3,392 according to IBIS World.
In short, retail is reviving. Camellia Sinensis closed its Montreal tearoom in July 2020 and has been remodeled and will reopen in 2022. The LoKey Café in Spokane, Wash., opened this week, and in Atlanta, the Juniper Café opens next week.
Lockdowns
Always considered extreme, lockdowns for a time all but eliminated 20% of the tea industry’s revenue and continue to depress foodservice sales globally. Staff from chaiwallah stands in Mumbai to five-star restaurants on the Riviera shuttered their stores during the Alpha waves, shuddered in fear as Delta rampaged and now face nimble Omicron as the third year of the pandemic begins.
The National Restaurant Association estimated 110,000 US eating establishments closed in 2020, eliminating 2.5 million jobs as foodservice sales declined by $240 billion below estimates (off 24% year-over-year), making 2020 the worst year for restaurants in history – 2021 had to be better – and it was for a time. Vaccines built confidence, and at mid-year, the NRA forecast a 19% increase in foodservice sales to $789 billion. That didn’t happen. Summer lockdowns to control the Delta variant are to blame. While China, New Zealand, and Australia still tolerate zero-COVID periodic, geographically limited lockdowns like those currently in place to counter the Omicron variant are the new normal.
Diners will eagerly return whenever and wherever infections ease. Perilously-thin margins in the foodservice segment pose a more significant threat and will further tighten in 2022. On median, restaurants have only a 16-day buffer* (cash on hand) to meet their financial obligations.
Tea wholesalers servicing hotels, restaurants, cafes, and coffee shops were in disbelief in 2020 as standing orders simply stopped. Foodservice clients that survived often doubled their orders in 2021 to ensure stock in hand. Wholesalers weathered the crisis in part by supplying packaged tea blenders who worked overtime to restock grocery outlets with shelves stripped bare. The top sellers? Plant-based functional beverages with a reputation for health and wellness. In other words, tea. Sedate center-aisle tea overnight became the fastest moving of the fast-moving consumer goods in stores through much of 2020.
In 2021 the spotlight shifted to botanicals.
Botanicals
Plant-based, functional, botanical beverages (ignoring those with psychoactive properties) eroded tea sales the past two years. Still, there is no gloom for those whose first concern is customer well-being. Rishi Tea is now Rishi Tea & Botanicals with products on the shelf next to Bigelow Botanicals and Yogi Herbal Teas.
Consumers seek the calming promise of herbal teas during a time of anxiety and stress rather than traditional medicinal uses. The popularity of adaptogenic teas shows that evolving consumer taste preferences, healthy living habits, and convenience are the primary factors boosting sales.
According to Research and Markets the botanicals market globally was valued at $93.6 billion in 2020 and will achieve a CAGR of 6.63% from 2021-2026,
Brazil, Canada, the US, and a handful of European countries account for nearly the entirety of global growth in herbal tea because it is in these countries that the wellness trend that is boosting the category is strongest, according to market research firm Euromonitor.
Euromonitor writes that at 4% CAGR, “herbal tea represents most future tea growth in many regions. Usage is expanding beyond traditional medicinal and slimming to embrace a wide variety of new occasions resulting from modern wellness trends. This gives herbal tea a number of new areas to target in functional, indulgent, and hydration spaces.”
Europe consumes the largest share of botanicals globally. Germany has emerged as the leading market. Germans in 2020 consumed an additional two liters of tea to average 70 liters per capita, according to The German Tea & Herbal Tea Association. Most of that increase was from drinking botanicals.
Tea-only vendors are at a disadvantage competing with broader plant-based specialists such as Martin Bauer Group with a century of tea and botanicals expertise. In 2022 if you can’t beat them, join them; botanicals drive innovation, additional drinking occasions, and deliver health benefits. Relish the fact that virtually every botanical benefits with tea as its base.
As the pandemic ebbs, herbals will represent a much larger share of total consumption than in 2019, with calming and immune support functionalities showing especially high rates of interest, according to Euromonitor.
The average revenue created by tea per capita in the United States amounted to $32.53 in 2020. At the same time, per capita volume purchased by US consumers amounted to 400 grams. Per capita spending by Americans will further increase in the next few years, until reaching a per capita revenue of $46.95 in 2025.
– Statista Consumer Market Outlook
Source: SimilarWeb data reported by Barbell Investment on Seeking Alpha
Tea Pivots Online
Online sales are a lifeline for tea retailers large, and small. Statista market research estimates that 5.8% of total US revenue in the hot drinks market (coffee, cocoa, and tea) was generated through online sales in 2021.
The US is a commodity tea market. The Beverage Marketing Corp., in 2018, estimated loose-leaf sales at 0.7% of the total US tea market, with ready-to-drink and tea bags accounting for 90% by value. About 23% of Americans drink tea daily compared to 27% in the US and 47% in the UK.
Amazon and Walmart account for the greatest percentage of online tea sales in the US, but the more expensive and premium teas are offered on hundreds of websites that feature direct-from-origin loose leaf.
Confined consumers who appreciate the convenience of doorstep delivery from their local tea shop’s selection of 100 teas soon discovered the more than 3,000 varieties globally. Delivery costs are reasonable, and niche vendors drive tea discovery by educating consumers about producers and specific origins.
Producers that launched direct-to-consumer brands online, including Luxmi and Tata Tea 1868, broadened their base and earned far more per kilo than at auction. In 2021 every imaginable beverage competed online, forcing marketers to spend a fortune on advertising to generate incremental sales. The standout product is curated subscription boxes that deliver 75 to 1,000 grams of tea (enough for 15 to 45 cups) and sell for around $25 to $35 per month. Exclusive tea clubs that offer rare and premium teas charge subscribers $150 to $300 per year. Sri Lanka’s Dilmah Tea awards loyalty points to club members who earn discounts.
Siliguri-based Teabox pioneered AI-powered curation that predicts seasonal and regional consumer demand for Indian tea. New Delhi-based Vahdam Tea expanded its capacity by partnering with Goodricke Tea to service a global market. In the US, Sips By, founded by Staci Brinkman, is an online subscription marketplace that delivers tea brands from around the globe.
Brand marketers are experimenting with subscriptions, endorsements by tea bloggers, social media influencers, YouTube videos, Tik Tok, and live streaming.
Quivr, a nitro-infused tea maker in Belchertown, Mass., promotes its $3.99 cans on Amazon Live(stream). Founder Ash Crawford told CNBC “It’s like clockwork or guaranteed that if we go live and I do a show, sales are increased for the next 24 hours by like 150%,” said Crawford.
Art of Tea founder Steve Schwartz, in Los Angeles, is a master marketer and blender whose teas are featured on platforms including OzLink and The Collective.
Zach Kornfeld is a novice in tea and one of the Try Guys an online influencer program with 7.3 million followers. In August 2020 he launched his Zadiko private label tea, selling 25,000 units valued at $500,000 in 12 hours.
Online sales resurrected bankrupt DAVIDsTEA, North America’s largest specialty tea chain. The company had fortuitously relaunched its website before March lockdowns forced the permanent closure of 166 locations including 42 US stores. In 2021 the company, trimmed to 18 locations, emerged from its financial peril as an online powerhouse and grocery brand with store-in-store pharmacy partner Rexall Drugs.
The company earned $26 million as the pandemic raged in 3rdQTR20 with e-commerce and wholesale sales accounting for 84.3% of sales. The surge ended by 2021 but online sales remain impressive. The company is on track to earn $100 to $125 million in sales at 40% gross profit margins.
“The 15.3% decrease in 3rdQTR21 sales year-over-year is largely due to a pandemic-fueled surge in online sales for our tea blends and accessories during the better part of fiscal 2020,” said Frank Zitella, President, Chief Financial and Operating Officer, DAVIDsTEA. “Progress achieved in transforming DAVIDsTEA can better be measured by the 18.5% sales increase compared to the second quarter, which is a better measure of our progress since we began our transformation into a digital-first tea merchant,” he said.
Source: SimilarWeb data reported by Barbell Investment on Seeking Alpha
Coresight Research notes that the growth of single-channel online retailers, including marketplaces, now trails their omnichannel counterparts.
“The e-commerce boom should have been a heyday for digital-first retailers, yet one of the most striking features of this trend has been the general failure of online-only (or online-predominant) retailers to seize the opportunity to outperform in the only channel in which they compete,” writes Coresight CEO Deborah Weinswig. Stores serve as an online billboard for a retailer’s websites while online-only competitors are forced to pour money into advertising, she explains.
There were never enough local tea shops where US tea drinkers could taste a selection of good teas. There are many fewer now, making tea discovery online a top priority in 2022.
Bubble Tea
Sonic, Dunkin, and now Starbucks are blowing up the bubble tea trend following difficult days for the niche. Virtually all bubble tea is consumed away from home, and in 2020 just as lockdowns eased, a shortage of Taiwan boba virtually halted sales globally. The bubble tea market reached $2+ billion in 2019. Forecasts of $4.3 billion by 2027 are overly optimistic.
The category has momentum, with legendary fan support in Asia where bubble tea drinkers line up daily rain or shine.
Once a cheap 1980s Taiwan street-stall novelty made with hot powdered milk, boba (named for its tapioca pearls) is now served cold. The colorful beverage blurs the line between dessert and drinks, making it welcome at fast food and fast-casual restaurants, as well as cafes and kiosks. In 2015 vendors began enhancing ingredients, added fresh milk and cream, and customized orders by level of sweetness, adding whipped cheese, candied toppings, and fresh fruit.
“Bubble tea is loved most by Gen Z, a generation that’s grown up overall more used to the idea of global dishes and flavors,” writes Datassential. The sweet mix of milk and tea can be ordered at 20,000 US outlets, including major fast-food chains. IBIS World estimates 3,392 boba shops, including home-grown Kung Fu Tea, Lollicup, San Francisco-based Boba Guys, Gong Cha, Coco, ViVi Bubble Tea, Tiger Sugar, and Yi Fang Taiwan Fruit Tea.
Globally Taiwan bubble tea maker CoCo Fresh operates 3,000 locations. Gong Cha, also based in Taiwan, has more than 1,500 locations in 15 countries. China-based HeyTea, valued at $9 billion, operates 800 locations, and cross-town rival Nayuki which raised $656 million in its Hong Kong IPO to build 1,000 new storefronts, is valued at $2.5 billion.
In late December, a Tik Tok video revealed Starbucks had developed flavored “coffee popping pearls” for its cold-brewed “In the Dark” coffee. The company later confirmed that boba drinks are in trials in Palm Springs along with milk tea and Iced Chai Tea Latte at $5.25 for a grande.
Chai Point (Bengaluru, Karnataka)
Comfy chairs and inviting interiors to encourage leisurely conversation made Chai Point the ideal place to meet friends and take an office tea break with associates. Founded in 2010, the company had expanded to 169 locations during its first decade. Co-founder and CEO Amuleek Singh Bijral preserved the simple mission of “brightening lives and bringing people together” while building the venture into India’s largest chain of tea cafes with annual turnover of $25.5 million.
The company’s innovative online tools go well beyond standard sites and communications that focus on the customer contact point. Chai Point’s relationship-building through technology includes customer face recognition at point of sale, an extensive cloud computing infrastructure that connects to business customers for “touch-free” 30-minute ordering and delivery, a real-time inventory management system, and customer feedback apps.
Overnight COVID lockdowns cut revenue by $15 million. The pandemic transformed the company into a delivery dynamo operating from 120 locations and growing 120% in revenue as the first wave crested. Chai On Call delivery began in 2014. Chai Point launched vending services in 2016. During the crisis the company operated IoT vending machines at 4,000 locations. As locations closed Chai Point pivoted online, developing a packaged goods line of 15 instant teas sent directly to customers.
In March 2021 as the new wave crested, retail sales were close to 80% of pre-pandemic totals, vending had recovered by half with online retail steady Chai Point doubled down with 15 new products including multi-grain organic cookies and snacks.
Bijral told Fortune India, “We didn’t anticipate the second wave. People were cautious but the intensity of the wave and the kind of hysteria it created among consumers was sort of unexpected.” Like a cat, Chai Point once again landed on its feet.
“We ventured into vending, delivery and now, packaging, because we firmly believe that as a brand, we have to provide the customer an arms-length opportunity to pick our products. So, if the customer is at home, how will he get his tea? If he is in the office, he can go to the pantry and get a quick cup of chai. And if he is in the boardroom, he can get his chai served. When walking around, one can step into a neighborhood store and get chai,” Bijral told FortuneIndia.
Iced Tea Drive-thru (Amarillo, Texas)
Texans brag about their Texas tea, but on a blazing day in the oil fields, HTeaO, an iced tea drive-thru in Amarillo (West Texas), delivers another kind of liquid gold. The franchise chain, founded in 2009, has expanded rapidly despite the pandemic. “We’ve got thirty-two stores open, thirty-seven in some phase of construction, and another one hundred and fifty in development,” founder Justin Howe, President & CEO for HTeaO, told Texas Monthly.
HTeaO resembles a convenience stop with 26 fresh brewed sweet and unsweetened iced tea flavors that can be mixed, garnished, or blended with cut fruit. It’s a fun place to hang out with “happy hours” that draw crowds of patrons rewarded with loyalty points and complimentary tea. The focus is refreshment with pebble ice machines, Tik Tok-inspired recipes, and gallon jugs to go. Twelve-ounce cups are nowhere to be found in these shops. Start with 24 ounces, top off a 44-ounce cup with pineapple or cherries or choose the contractor’s favorite 51-ounce (1.5-liter) Peach-ginger or Sweet blueberry green iced tea. Buy a $3.50 tankard or pay $19.99 for four gallons to take away. Shelves are stocked with healthy snack options and a full line of YETI merchandise.
Construction workers arrive throughout the day to fill their on-site coolers with tea and fill five-gallon containers of double-pass reverse osmosis water, kids mix, and match at the self-serve fountain.
The above are just a few examples of experiential, tech friendly, customer obsessed retailers committed to the leaf we love.
Join me at World Tea Expo, for a presentation with additional examples of tea businesses “Coping with COVID” at 8 am Tuesday, March 22, 2022.
*Cash buffer days are the number of days that a business can continue paying its typical outflows — such as payroll, purchasing supplier, or loan repayment — without bringing in any money, in the form of things like revenue, tax rebates, or transfers from investors’ or owners’ private savings.
Gallons of iced tea to mixHTeaO grand opening Pecos, Tex.Comfy but empty due to COVIDChai Point in Bengaluru, India
Nigel Melican is a career research scientist, founder of Teacraft consulting, and President of the European Speciality Tea Association. He has monitored advances in harvesting technology for more than 40 years from crude hand shears and reciprocating blades to the latest generation “selective” harvesters capable of discerning and plucking (not shearing) shoots that consist of two leaves and a bud. Virtually all crops are being mechanically harvested now, explains Melican. Fewer laborers require that mechanization plug the gap. Given the cost and shortage of labor and growth in demand, “There’s no other way that you can make commodity tea commercially viable,” he says.
Caption: Nigel Melican in his office in Cloonerra, Strokestown, Republic of Ireland
Hear the interview
Teacraft Founder Nigel Melican on mechanical harvesting of tea.
Globally a majority of large scale tea farms are mechanically harvested. Photo courtesy Kenya Tea Directorate.
Tea Mechanization Must be Well Managed
Nigel Melican founded the technology consultancy Teacraft Group 25 years ago to serve all sectors of the tea industry, supplying equipment and machinery world-wide and offering training, and specialist contract research and development. Teacraft, headquartered in the Republic of Ireland, specializes in the more traditional orthodox tea manufacture process and particularly in artisanal and hand-made tea making.
Dan Bolton: Nigel, why is mechanized tea harvesting here to stay?
Nigel Melican: I’ve looked at tea harvesting, mechanical harvesting for the last 40 years, I’ve been in tea primarily because I was parachuted into a mechanically harvested tea estate in Papua New Guinea in 1980. It was one of the very few in the world at that time. I knew nothing about tea at that time. I assumed all tea was mechanically harvested.
Having completed that assignment they said to stop in Sri Lanka on your return leg and see some real tea being harvested. I couldn’t really understand what they meant. In Sri Lanka I realized that tea was not a mechanically harvested crop like wheat, for instance.
So, I think now that mechanical harvesting is certainly here to stay. There’s no other way that that you can make tea commercially viable anymore. In virtually all agriculture crops are mechanically harvested: wheat, corn, cotton, even grapes are being mechanically harvested.
The machinery isn’t brought in to displace hand labor. It’s coming in because of labor shortages due to urban drift, in the main. Leaf collectors want their children to be doctors and teachers and accountants, they don’t want them to go into field labor. And rightly so, they aspire for better for their children.
There is a growing lack of labor and mechanization is coming in to plug that gap. Rural dwellers are fewer now as 55% of the world’s population live in cities. There was a tipping point in 2000 with an estimated four billion people now residing in urban areas. Today 95% of the world’s population lives on 10% of the land.
Tea mechanization recognizes all of those drivers.
Without mechanization, you just can’t scale production. So, the simple choice is mechanization or empty tea cups. That is, in a nutshell, why mechanical harvesting is here to stay.
– Nigel Melican
Another thing about mechanization is that annual global tea production is 6.3 million metric tons a year. That’s doubled in 20 years from when it was just three million metric tons. Without mechanization, you just can’t get that sort of scale of production, certainly not of commodity tea.
So, the simple choice is mechanization or empty teacups.
That is, in a nutshell, why mechanical harvesting is here to stay.
Dan: Japanese growers invented the first mechanical harvester in 1910 and today some rely entirely on robotics to operate harvesting equipment. In Africa, in contrast, the introduction of mechanical harvesters in 2006 led to union opposition and uprisings in 2010 as workers burned machines. A dozen years later tea workers continue to resist mechanization in Kenyan’s courts but labor lawsuits seeking to ban mechanization ultimately failed on appeal. Is this resistance a reflection of labor-management issues? Can’t workers see they will be paid more as machine operators for doing less physical labor?
Nigel: I’ve worked in Africa for many, many years, and coming from developed Western society it is sometimes difficult to understand the African way of thinking about life.
And I think going with that is resistance to change. If you read history, you can see it in the UK during the Industrial Revolution, the Luddites burning looms is exactly the same sort of attitudes that mechanization is destroying the traditional way of living. So, I think a lot of it has to do with that sort of culture and way of thinking way of life.
Dan: Does mechanized tea harvesting necessarily mean lower quality tea?
Nigel: With the machines that we have nowadays, it’s difficult to get a level of harvest that you can get from a skilled plucker. Having said that, the overall quality of tea being plucked is going down and has been going down for the last 40 years. The iconic 100% two leaves and a bud pluck is a dream that some planters still have at the back of their mind or sometimes in the front of their mind… and 100% two leaves and the bud plucking is possible, but it’s slow, it’s slow.
And when you were paying only $1 a day, it was achievable. Now pluckers are still poorly paid, but in Sri Lanka, your labor is $5 a day. So, you have to pluck faster, harder, which means a coarser leaf.
Hand plucking is no longer achieving 100% two leaves and the bud, it’s achieving at best about 80% two leaves and the bud and more typically 60%. So, most of the commodity tea is being plucked with about 60% of the day’s harvest as two leaves.
A mechanical reciprocating blade harvesting machine can do about the same as a moderately skilled plucker and reciprocating blade harvesting can be done better than it’s being done now, first by not pushing the machinery so hard and second, by not pushing the people carrying the machinery so hard. We can expect improvements in terms of quality where quality is required by encouraging workers to make a better job of it.
Mechanical harvesting, when properly managed, can achieve the lower level of quality the is expected of a plucker nowadays. Since the mass production of commodity tea bag tea is predicated on volume production, to keep their companies running producers have to be going for the cheapest tea possible, at the highest volume. Mechanical harvesting is a route to doing that.
When you are a volume producer you have to cut corners and one of the corners that is cut is quality. Virtually all the commodity tea goes to supermarkets that have a fixed price policy, they don’t like to see prices of their loss-leading commodity range going up. So black tea pricing is pretty inelastic. When you have steadily increased costs of production and very little ability to get an increased price, something has to give. To trim the margin, producers go for volume, and volume means less quality. So that’s what’s happening out there with mechanical harvesting at the moment.
Now, you should be asking ‘well, is it possible to achieve quality with a machine?’
Yes, it’s possible to do better.
Dan: Harkirat (Harki) Sidhu in a previous podcast acknowledges the limitations of reciprocal harvesters but makes the point that machines allow producers to more efficiently allocate labor. There is a 75% savings in person-days using mechanical harvesters, according to Sidhu. The additional hours are sufficient to increase rounds to prevent overgrowth and to better care for the plants while maintaining the equipment. Additional labor hours gained might also enable growers to produce more labor-intensive high-margin specialty teas.
Nigel: Yeah, yeah. He put his finger on it, it’s about improving management. If we think about how mechanization will improve things in the future that’s one of the things which must improve.
You’ll often find people complain that as soon as you bring in machines, the yield goes down. Yeah, of course, it does. Because they bring it in in a wrong way.
The machine does it totally different from the plucker. The plucker chooses the mature shoots and leaves and avoids the immature shoots. The machine goes zoom right across and takes everything. Then you have to wait 21 days for it all to grow up again. Intermittent use of machines to occasionally fill gaps in labor availability inevitably reduces yield. However, the plucking table will equilibrate if you keep on mechanically harvesting as the Japanese producers have found.
If I had an estate, I would be running it on that well-managed basis. But most people managing big estates recognize that conglomerates have simple ways of thinking about things. And if they were going for commodity volume tea, the plantation owners don’t want people messing with speciality tea.
And similarly, people who are committed to speciality tea are often somewhat elitist. I mean, and I say this as the president of the European Speciality Tea Association, that they have a purist view of what speciality tea is. Ultimately, there is a continuum between very poor commodity tea at the bottom and very expensive premium tea at the top.
I would not want to make all my money from one end or the other end. I would try to do both on my estate; to optimize conditions on my best land or highest land or the land which gave the sweetest flavor and manage the rest to yield more everyday tea.
In many parts of China at the spring flush, the families all come back to the farm. People who’ve gone off to work in the computer component factories and Christmas tree ornament factories — they bring them all back and they all harvest the first flush by hand as that is the one which really makes the money, the $1,000 a kilo to $5,000 a kilo tea.
Then the middle flush, which is the green tea that everyone drinks every day, is harvested by machine as is the final autumn flush; this is really rough stuff that’s harvested for black tea, which goes into instant tea, and they flog that to America.
So, they have covered all the bases very cleverly. And anyone who’s been to China will know how clever they are at looking at a problem and working out ways to solve it.
That’s the way that you can manage your tea on an estate, but as I say, most people don’t want to work that way. They want to be all one or the other.
Dan: Harvester manufacturers have been innovating for 100 years. Going forward, what improvements can we expect?
Nigel: The first innovation in mechanical harvesting in my lifetime is the Australian selective mechanical harvester, which is a machine that discriminates between the bud and the immature and the mature shoot, and only plucks the mature shoot and ignores the immature shoots. It simulates plucking, exerting the same pressure between the thumb and finger that a plucker will use.
That is a totally new way of looking at tea harvesting. And it can do it as well as a skilled plucker.
Dan: What’s your capital investment to put a machine like that in the field?
Nigel: Until it gets into real production, it will be expensive. But currently, I think they’re selling at around $15,000 for a one-and-a-half-meter wide machine.
Compared with the two-person harvester used in India or in Africa, it’s going to be about 10 or 15 times more expensive.
This machine can harvest at the quality which exceeds the average plucker. And it can do it almost five times as fast. And with about 1/6 of the labor cost. So even though it’s an expensive investment, it works for speciality tea. Now, I don’t think it’s gonna work as well for commodity tea. Right? A supermarket tea blend doesn’t justify that sort of level of plucking anyway.
The Selective Tea Harvester manufactured by Williames Tea in Victoria, Australia, sells for $14,950 (head only)
The rotating 1.5-meter head “plucks” shoots, omitting sustenance leaves and immature shoots.
Nigel: When I was a child, I remember wheat grew four feet high. And now it’s 18 inches high. Right? Because the plant breeders got in on the act. The combine manufacturers complained that the wheat was lodging in the cutter due to the length of the stalk. So the breeders developed wheat with short straw. Not only was it easier to harvest, but the short straw meant that more of the plant’s energy went into the ear rather than into the stalk, increasing yield by 25%. So, it was a win-win.
I think that the tea bush can be completely restructured. In the future, we’ll be seeing improvements to the plant shape, the plant architecture. This is a slow job with a perennial crop because the breeding cycle for one improvement takes about 20 years for tea plants, whereas with an annual crop there’s only one season. So it’s a much slower job. The architecture of a tea bush is a tall tree and we brought it down to a three-foot bush. So yes, there will be improvements in the machines, there will be improvements in the bush architecture. And there will be improvements in management.
| TEAIN22: Bulk and Specialty Tea Prices Diverge | France Will Pay €1 Million to GI Certify Ceylon Tea | Sotheby’s Inaugural Tea & Teaware Auctions Total HDK8 Million
PLUS Frugal Innovation, Part 2
Seven-minute Tea News Recap
Caption: A few of the 24 rare Puerh cakes and aged teas that were auctioned at Sotheby’s first tea auction. Photo replicated from Sotheby’s auction website.
This week Tea Biz travels to Asheville, North Carolina to meet teaware potter and ceramist Mary Cotterman who discusses the artisan spirit and state of mind of those embracing native clay and how COVID-19 lockdowns focused her attention like a monk…
…and then to Assam, India to hear Part 2 of the series Frugal Innovation. In this segment, Aravinda Anantharaman explores the application of Frugal Innovation in the tea garden and factories. Shekib Ahmed of Koliabur Tea Estate explains that “Objective data changes the conversation in the factory from vague concepts to thresholds and parameters. It makes operations scientific so that we can improve.”
Mary Cotterman turning a teapot lid at her studio in Asheville, North Carolina
Aritisan Teaware Born from Native Mud
By Dan Bolton
Mary Cotterman was 12 when she learned to throw clay on a potter’s wheel. In the decades since, that wheel has never stopped spinning for this accomplished teaware artisan. She describes the foundation of her work as functionality, “because for me, no matter how it looks, if I’m making a piece of teaware it needs to be a precise tool for pouring tea, so a lot of my design I take from traditional Chinese vessels, but I have learned small techniques and vernacular from all over.” Read more…
Listen to the interview
Mary Cotterman on crafting teaware in the US and the state of mind of artisans embracing native clay.“Technology has become much more affordable today than what it was 5-10 years ago because processing power has made it affordable. Devices are more affordable. Technology has become simpler,” says Shekib Ahmed.
Embracing Simple Technology with Scalable Impact
By Aravinda Anantharaman
Frugal innovations utilize simple technology to address some of the most vexing challenges facing the tea industry. It’s an umbrella term for innovations that do not require much capital, carry a low financial risk, and can be done safely with high reliability. Abhijeet Hazarika, former head of process innovation at Tata Global Beverages, describes several innovations that have moved from the drawing board to become successful pilots at partner estates. explores the application of frugal innovations in the tea garden. Shekib Ahmed of Koliabur Tea Estate in Assam talks about experimenting with frugal innovations in the field, but it’s in the factory, he says, where these simple technologies show the biggest impact. Read more…
Listen to the interview
Frugal Innovation
In Part 1, Aravinda Anantharaman explores the application of Frugal Innovation in buying and selling tea with Abhijeet Hazarika, former head of process innovation at Tata Global Beverages. Listen to Part 1 in Episode 47 of the Tea Biz Podcast
News
TEAIN22: Bulk and Specialty Tea Prices Diverge
By Dan Bolton
The combined annual growth rate (CAGR) predicted for tea in 2022 suggests consumer preference for health enhancements and premium taste will widen the profitability gap separating bulk CTC (cut, tear, curl) from whole leaf and specialty grades.
The fortunes of the tea industry are cyclicalwith better prices ahead.
Demand in recent decades has been resilient, including during the Great Recession – some would say relentless. During the five years ending 2019, demand grew at around 4.5% per year. The pandemic slowed that pace but consumption in 2022 will top 6.5 billion kilos, enough to make three billion cups a day. Until recently growers managed to quench that thirst.
What disrupted that equilibrium in 2020 is that tea output declined for the first time in 20 years. The resulting scarcity in domestic markets including India and China boosted prices. ICRA, a division of Moody’s Financial Ratings, in October 2020 predicted correctly that the bulk tea segment would report the highest operating profits in recent history.
In 2021 the situation reversed as more tea became available and prices declined.
Compounding the supply-demand equilibrium is the fact that consumer behavior rapidly changed consumption habits as office drinkers vanished, foodservice sales plummeted, and health and well-being became a daily concern.
Better tasting teas triumphed
Once content with commodity offerings at the office and in restaurants, the pandemic accelerated growth in the residential segment. Sales of botanicals and blends in grocery and online spiked. In Germany for example, per capita consumption of teas and botanicals increased by an average of two liters to 70 liters per person per year.
Market research firm Techanvio writes that “consumption of tea for residential use is significantly growing as consumers are continuously seeking changes in their lifestyles and food habits and experimenting with cuisines & beverages. Moreover, the rising at-home consumption of tea is expected to grow at a steady rate owing to increasing urbanization and the changing eating habits of consumers across the world.”
Technavio predicts recent growth rates of 3% to 4.5% per year will accelerate to 6%+ (or greater) for the specialty tea market through 2026. The segment will add $5.5 billion in sales from 2021-2026, according to Techanvio.
In contrast, bulk tea is predicted to have a challenging year, according to ICRA and The Associated Chambers of Commerce of India (ASSOCHAM). In a joint report titled Tea Industry at the Cross Road, ASSOCHAM predicts that declining prices and increasing energy and labor costs will be a drag on financial performance.
ICRA Vice President of Corporate Sector Ratings, Kaushik Das says, “Players who are focused on producing quality teas are likely to witness a much lower decline this year as average auction prices of teas manufactured from own garden leaves of the top 50 estates of Assam and Dooars have witnessed a decline of only 8.5% against 25% for the overall auction average during the first half of the fiscal year 2022.”
In North India prices during the first half of the fiscal year declined 23% year-over-year, a drop of 60 rupees per kilo on average compared to 2020. Declines are even more severe in the bought leaf segment, dominated by smallholders. Averages in that segment fell 77 rupees per kilo, down 33% year-over-year. In Kenya, auction prices dropped 8% to $2.18 per kilo in the 12 months ending July 1.
Globally tea production has now returned to pre-pandemic totals, increasing 13% during the first six months of 2021 as growers in India and Sri Lanka adjusted to the pandemic. Output in 2021 is expected to top 15% in Sri Lanka and India has so far produced 100 million more kilos of tea than during the same period last year. Output declined by 10% in Kenya but exports grew 19% helping keep demand and supply in balance.
Biz Insight – The Economist Intelligence Unit first reported tea deficits in 2019 and 2020 and now forecasts demand will exceed supply in 2022 and 2023 by 427,000 metric tons. Warehouses are filled with tea so a shortfall of a few hundred thousand metric tons will not lead to shortages in the grocery aisle, but when combined with the cumulative harm from climate change and with food inflation at record levels, disrupting the long-standing equilibrium will certainly firm up prices that had fallen well below the long-term average of US$2.85 per kilo.
TEAIN22 is one of a dozen New Year Tea Biz forecasts
Tea remains unearthed from ancient tombs in Zoucheng, Jining City, Shandong Province, China. /CMG
Sotheby’s Inaugural Tea Sale
Legendary auction house Sotheby’s concluded its first rare tea and teaware auctions in Hong Kong this week. Sales totaled HDK$4 million for the teas. Reserve prices approached $1 million Hong Kong dollars for Puerh, some aged for more than a century. Teaware as old as 1000 years was featured in a parallel auction titled Echoes of Fragrance: Tea Culture from the Tang to the Qing Dynasties. Sales of teaware totaled HDK$4.3 million (about $552,000 in US dollars)
The online catalog included a 1900 Chen Yun Hao puer cake and a 1950 Jia Ji Blue Label Tea that sold for HKD562,500 ($72,000). Bids for a 1937 basket of Sun Yi Shun (aged Liu An) opened at HKD $240,000 and sold for HDK300,000 ($38,000). A bid of $500,000 Hong Kong dollars is equivalent to about $65,000 US dollars and while that threshold was met for only the rarest of teas, all but two of the 24 lots were sold. Several of the more recent teas including a 1985 Snow Label sold for $112,500 Hong Kong dollars (about $14,000 US).
The companion teaware auction featured 63 lots including a Jian black-glazed bowl dating back eight hundred years to the Song Dynasty and a rare iron-red crane cup dated to the reign of Emperor Jiajing in the 1500s. Temmoku patterns include a “hare’s fur” (that sold for HDK189,000) and a “partridge feather” (that sold for HDK403,200). Also purchased were celadon cups and stands, Yixing teapots, and a carved Tixi lacquered tea bowl that sold for HDK529,200 (about $70,000 in US dollars). During the Tang Dynasty, beginning about 1,400 years ago, tea was boiled and served as a soup with condiments. Examples from that period include conical tea bowls, unique utensils, tea caddies, trays. Winning bids ranged from HDK 25,000 to HDK50,000 (about $6,000 US)
? By Dan Bolton
Yi Chang Hao (Jing Pin-Song Font) 1999 – HKD40000
Blue Label Tea Cake (Jia Ji) 1950s HKD562,500
Sun Yi Shun Aged Liu An (Five tickets) 1937 – HKD300,000
France Will Pay €1 Million to GI Certify Ceylon Teas
The four-year grant finances technical assistance to enable the Sri Lanka Tea Board (SLTB) to protect its national brand from counterfeiters while assisting the Ceylon tea value chain “to become more productive, inclusive and sustainable,” reads the AFD press release.
Eric Lavertu, Ambassador of France to Sri Lanka, said that “France has been a pioneer in the establishment of Geographical Indications to create added value to its quality products and to preserve the reputation of French gastronomy over the world. I am confident that the solid experience of CIRAD in partnership with the… [tea board] will allow a broad endorsement of the Geographic Indication by all stakeholders, based on high-level product quality, together with sound environmental and social standards.”
Currently, Ceylon tea does not have protection to uphold and authenticate its quality, resulting in counterfeit sales in various consumer countries.
Biz Insight – Sri Lanka is Heading for a Fall | Fertilizer banned earlier in the year is now available but the cost has risen from SLRs1500 rupees a kilo to SLRs6600 rupees, about $33 US dollars per kilo and rising. A ban on the herbicide Glyphosate that was eased in November was reversed in December. Output recovered in 2021 but that recovery is highly unlikely to continue due to ongoing economic problems with widespread protests by farmers over the cost of food and unions pressing for a big wage increase. Sri Lanka, where tea is hand plucked, has the highest cost of production in the world, averaging SLRs 269 ($1.33) per kilo.
– Dan Bolton
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Kolkata Sale 49 saw good demand for all teas. The Middle East was active for orthodox tea. Sales of Darjeeling and Dust relied on local buyers. Hindustan Unilever was active in Dust. Prices dropped marginally when compared with Sale 48; Darjeeling saw the biggest price drop of INRs 50. However, there were fewer out-lots of Darjeeling this week, compared to Sale 48. In Guwahati, the market opened to good demand with major blenders active for both CTC leaf and dust. Read more…
India Tea Price Watch | Aravinda Anantharaman
Upcoming Events
January 2022 Tea and Beyond! | GTI 7th Annual Colloquium | January 13 | UC Davis | Day-Long Virtual | Tea and Beyond: Bridging Science and Culture, Time and Space, exploring differences between tea and herbal infusions around the world and in terms of medicine and health, ceremony, traditions, sustainability, marketing, and more.| Program | Register FREE (Zoom)
| Economic Forecasters Predict Higher Tea Prices in 2022 | As Holiday Orders Ease, a Delivery Crisis Looms | Germans Tea Drinkers Set a Consumption Record
PLUS Frugal Innovation, Part 1
Seven-minute Tea News Recap
Caption: Scanning tea fields at different wavelengths to assess plant conditions. Using cameras to monitor crop conditions, in order to identify threats from disease and pests at an early stage, enables a more targeted (and effective) use of pesticides, lifting productivity and profits.
Tea Biz this week travels to Assam, India to explore “Frugal Innovations” that utilize simple technology to address some of the most vexing challenges facing the tea industry. In Part 1 of the series, Aravinda Anantharaman talks with Abhijeet Hazarika @TeaSigma, an IT analyst and former head of process innovation at Tata Global Beverages, and with growers Saurav Berlia and Shekib Ahmed on cost-efficient experiments and pilots that demonstrate why tea producers should embrace simple technologies with scalable impact.
Monitoring quality with inexpensive cameras and laptops, a centrifuge, and microwave ovens.
Bringing Technology into the Tea Value Chain
By Aravinda Anantharaman
There are few entry barriers to tea. It does not demand heavy infrastructure. But a complaint shared by smallholders selling raw leaf to large-scale tea producers operating multiple factories is that for the past decade, farmgate prices are not commensurate with costs. Now the economics of the tea trade is gradually shifting from oversupply to scarcity. At the same time, some quiet work underway in India is yielding encouraging results that lower the cost of tea production, improve quality, and ease a shortage of labor. The most powerful driver for change is revenue. Prices globally, on average, increased by $0.21 cents per kilo during 2021, according to Trading Economics. Abhijeet Hazarika, IT analyst @TeaSigma and former head of process innovation at Tata Global Beverages, observed that “Tea is not a very high profit yielding commodity and will not be so in the foreseeable future until some tech breakthrough happens.” The frugal innovations described in this series, combined with higher prices may herald that breakthrough. Read more…
Listen to the interview (Part 1)
Abhijeet Hazarika on promising new Frugal Innovations
Frugal Innovation
In Part 2, Aravinda Anantharaman explores the application of Frugal Innovation in the tea garden and factories. Shekib Ahmed of Koliabur Tea Estate explains that “Objective data changes the conversation in the factory from vague concepts to thresholds and parameters. It makes operations scientific so that we can improve.” Listen to Episode 48 of the Tea Biz Podcast
News
Higher Tea Prices Forecast for 2022
By Dan Bolton
Globally tea export prices are edging upward, driven by combined spikes in transportation and logistics, more costly fuel and petroleum-derived fertilizer, and increased labor expense.
Regionally the trend is mixed. Exports through September are down 10% by volume but up in value in India, which produces 20% of the world’s tea. India reports falling domestic prices following a pandemic year that boosted prices through the first half of 2021. In November, auction prices for CTC in Kolkata fell to an average of $2.78 (INRs209) per kilo, down from $2.97 during the same period in 2020.
In contrast, last week Kenya auctioned tea at a five-year high of $2.40 (KSH271) per kilo, according to the East African Tea Traders Association (EATTA). Production there is also down 10% overall.
Declines in production are an early sign that the economics of the tea trade is gradually shifting from oversupply to scarcity. The Economist Intelligence Unit (EIU) predicts output globally will increase slightly to 6.279 million metric tons (6.3 billion kilos) while consumption rises to 6.538 million metric tons, creating a deficit of 260,000 metric tons. That deficit will increase to 363,000 metric tons in 2022.
There remains a glut of low-grade tea, but demand for inferior tea is slack.
Globally, tea prices, led by China, have increased by $0.21 per kilo since the beginning of 2021, up 7.32% according to Trading Economics. The analytics firm, using macro models and analyst expectations, based on benchmark CFDs, predicts tea will trade at $3.30 per kilo in 2022. A contract for difference (CFD) is an agreement between a buyer and seller stipulating that the buyer will pay the seller the difference between the current value of an asset and its value at contract time (if the difference is negative, then the seller pays instead). Trading Economics forecasts tea prices could reach an average of $4.10 per kilo by year-end.
If that comes to pass it will be only the second time tea has crossed the $4 per kilo threshold in the past decade. More likely is that rising prices will trigger increases in production. A study by the Indonesian Board of Trade using United Nations FAO data calculated the impact of increased production on prices.
“If there is an overreaction to recent high prices which, for example, would result in a 5% increase in production, the results can be quite different…. the clearing price would be 17% less than the baseline price at $2.54 per kg,” writes Iwan Cahyo Suryadi, Chairperson, Board of Commissioners Indonesia Board of Trade
“If the reaction to the current high prices is even stronger, resulting in a 10% increase in production over the baseline increase, then prices could be 38% lower,” according to Suryadi.
EIU estimates a price increase that is close to the long-term average, “we expect concerns about supply and a gradual recovery in demand in some markets (particularly in Europe and North America) to provide some support to prices in the remainder of 2021. We estimate that prices will average $2.69 per kilo in full-year 2021, representing a 0.5% decline from 2020. We are forecasting an 8.7% increase in average prices in 2022, to $2.92 per kilo.”
Biz Insight – The long-term average price of commodity tea at auction is $2.85 per kilo. Quality tea is more likely to be sold direct and at significantly higher prices. Sales of tea exported by all countries totaled $7.1 billion in 2020, down 4.3% by value since 2016. Year-over-year the value worldwide of tea exports declined an average of 8.6% from 2019 to 2020, according to the website World’s Top Exports. China (dominant in green tea) accounts for 29% of global sales of tea exports by value followed by Kenya with a 16% market share (dominant in black tea), Sri Lanka 10%, and India 9.7% both have about a 10% share.
Tea remains unearthed from ancient tombs in Zoucheng, Jining City, Shandong Province, China. /CMG
Germany Reports Record Tea Consumption
The German Tea & Herbal Tea Association (Teeverband), based in Hamburg, reports that consumption of tea grew by two liters per capita in 2020 to a record of 70 liters per capita. East Frisians averaged an astonishing 300 liters per capita during the stay-at-home year. These totals include the consumption of black, green, herbals, and fruit teas. The report’s authors write that declines in out-of-home consumption, “triggered by the pandemic-induced closure of hotels, restaurants and canteens, were offset by increased demand in food stores, chemists and specialist shops.”
Hamburg is a global hub for the tea trade, importing 41 million kilos and shipping 22 million kilos of teas to 108 countries. India is Germany’s most important tea trading partner, sending 6.7 million kilos so far this year, China and Sri Lanka follow. The tea association’s managing director Maximilian Wittig said that organic certified black teas now account for a 12.9% share of the market. Organic herbal teas increased their market share to 13.5% a 2.5% gain compared to 2019.
Black tea is favored by 73% of Germans with 90% steeped in tea bags. Germans buy 57% of their tea in grocery and department stores and 12.4% at tea shops with the biggest increase in channel purchases online at 8.2%.
Download the 20-page Teeverband report on the Tea Biz blog.
As Holiday Orders Ease, a Delivery Crisis Looms
Logistics experts in November who predicted everything that could possibly go wrong ? were right.
Jason Walker at Firsd Tea, the US office of the world’s largest green tea exporter, writes that “the burden of moving holiday retail goods has shifted from the ships to the warehouses and trucks. Major players and industry experts still do not anticipate any significant, overall easing of rates and more reliable delivery speed until at least Q1 of 2022.”
Until then buyers are advised to place their orders months in advance, be willing to pay exorbitant rates ($10,000 for a 20-foot trans-pacific container), and order tea in much larger quantities than in past years to ensure sufficient inventory. Wholesalers report waiting 62 days for shipments to arrive from China. Bloomberg writes that ports serving Southern California by November had offloaded a record 17 million 20-foot equivalent units and then loaded 3.3 million empty containers for the return trip. Los Angeles has 2 billion square feet of warehouse space that is now renting at a 30% premium. An additional 20 million square feet is under construction.
Deliveries that took truckers two days in 2019 now take up to 10 days before arriving in Chicago as congestion at ports and warehouses and a shortage of drivers combine to more than double delivery times. Walker cites a shortage of warehouse workers and the added expense of overtime as the ports, as requested by President Biden now operate 24/7. On-time arrival is virtually impossible unless delivered by air freight, in which case it’s unaffordable.
When will it end? Ship jams are now visible at ports in Japan, Taiwan, and Mexico. November marks a turning point. But experts predict the transport crisis will remain through spring and once again ? they’re probably right.
– Dan Bolton
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India Tea Price Watch | Sale 48
Responding to the tea producers’ concerns over rising imports against declining exports, the Tea Board of India passed an order on November 11, by which tea importers are mandated to mention the origin of the tea on the sale invoices. Importers cannot blend imported tea with GI-protected Indian tea (Darjeeling, Kangra, Assam (orthodox), Nilgiris (orthodox)) and pass it off as Indian-origin tea. Producers of Darjeeling tea have been asked not to procure green leaf from outside the GI area. This is expected to act as a clampdown on cheap imports into India from Nepal and Vietnam, and allow Indian exports to keep their quality, markets, and prices. Read more…
India Tea Price Watch | Aravinda Anantharaman
Upcoming Events
January 2021 Tea and Beyond! | GTI 7th Annual Colloquium | January 13 | UC Davis | Day-Long Virtual | Tea and Beyond: Bridging Science and Culture, Time and Space, exploring differences between tea and herbal infusions around the world and in terms of medicine and health, ceremony, traditions, sustainability, marketing, and more.| Program | Register FREE (Zoom)
