• | Over the Cliff | Elemental Exam

    Tea Industry News for the week of July 27

    • Over the Cliff
    • World Tea Expo Goes Virtual
    • Made in America
    • DMCC Expansion Plans
    • Measuring Elements in Tea
    Historic contraction follows 23 quarters of economic growth as high unemployment and rising infections make a long recovery likely.

    Over the Cliff

    Few tea ventures deployed parachutes capable of breaking the fall as the world’s economies catapulted over the second quarter cliff.

    The result is the permanent closure of hundreds of high-profile tea locations in malls and tourist destinations as well as beloved Mainstreet independents like the 10-year-old Wenham Tea House in Massachusetts and 27-year-old Lucy’s Coffee & Tea in Birmingham, Ala.

    The Samovar Tea Lounge’s three San Francisco locations are “hibernating” for an unspecified time and the Floating Mountain Tea House will relocate from New York’s upper west side to Croton-on-Hudson upstate. Restaurants that featured fine tea, including Augustine in New York’s Beekman hotel, Vaucluse on Park Avenue and “even the glitzy McDonald’s flagship store off Times Square closed,” according to a list maintained by Eater New York. In July DAVIDsTEA permanently shuttered 213 locations including 42 in the U.S. leaving only 18 in Canada.

    The U.S. experienced a record 9.5% drop in economic output, that if left unchecked before the year ends could lead to an unprecedented 32.9% annualized decline in GDP. Europe experienced a 12.1% decline, its worst contraction on record. Canada, which has suffered many fewer infections and COVID-19 deaths than the EU and US, estimates its economic activity will decline 12%, according to Statistics Canada. Retail sales in all the Western countries signal a deep recession with several segments, including food service, plummeting from the end of March and continuing their decline through April. Retail rallies began in May except in the U.S. where a new surge of infections led to a loss of steam by July.

    The descent was especially rapid and painful in the U.S. It is difficult to get precise numbers on sales of tea in retail channels. Grocery sales figures are generally good as millions of customers that purchased tea at restaurants and cafes now brew at home. Online sales spiked last spring but are flattening. The tea shop category mirrors the fate that has befallen small independently owned cafes and bars with some segments such as Sunday afternoon tea in tony hotels and at cozy Victorian tearooms located in southern tourist towns virtually annihilated.

    “Afternoon tea was devastated in the U.S. in particular—most of those businesses didn’t have a way to pivot online or offer tea-to-go,” writes Abraham Rowe, founder of Sinensis Research in Washington, D.C. Rowe observes that online sales proved to be a lifesaver, “people were loyal to some local shops, and are now shopping online from them.”

    “Store closures are down a bit—I don’t have final figures, but hope to run another survey sometime to finalize it,” said Rowe.

    As brick and mortar sales at tea merchants slipped over the precipice, online sales increased but not uniformly. An updraft enabled Amazon to glide to the bottom with a year-over-year increase of 34% in tea sales, totaling $29 million for the 52 weeks ending in May, according to Hinge Global. Walmart generated an unexpected $4 billion during the first quarter, up 4% over the same period compared to the previous year. The company announced it intends to become a “omnichannel” business. During the past year Walmart consolidated its online and physical store operations and is focused on expanding e-commerce rather than building new stores.

    Amazon and Walmart are the exceptions amid a pandemic that devastated the retail sector. While customers ordered groceries online and had food delivered, very few tea ventures had time to deploy a Plan B. DAVIDsTEA, headquartered in Montreal, Canada, in March closed 231 locations eliminating $12.1 million in second quarter sales. Sales for the three months ended May 2 declined 27.3% to $32.2 million. Wholesale and online revenue climbed $9.3 million to $17.0 million. Online sales reflect the trend identified by Rowe at Sinensis Research: specialty tea buyers online remain loyal to their local tea shop whether in a mall or downtown.

    “Sales in grocery stores and pharmacies across Canada continues solid growth,” according to Frank Zitella, who is both CFO and COO at DAVIDsTEA. He wrote in a July 31 earnings report that “with first quarter sales growth of over 120% year-over-year, we are extremely pleased that our loyal tea-loving customers have shifted to buying our teas online, and in supermarkets and drugstores. The strong performance of these sales channels provided us with the confidence that we are on the right path for the future.”

    See: DAVIDsTEA Reorganizes for additional detail.

    Calls to wholesalers confirm that while online sales have eased the painful loss of tea house closures, declining monthly orders from restaurants and hotels resulted in orders that are no where near pre-pandemic norms. The collapse of restaurant dining, which accounts for 20% of tea sales globally, is the biggest cause. Some 2.2 million restaurants worldwide are not expected to survive through 2020. Closings have a greater impact on coffee sales in the U.S. but in tea drinking nations like the UK and Russia the shift from away-from-home to at-home preparation has been significant.

    McKinsey Small Business Forecast

    “In a muted recovery, it could take more than five years for the most affected sectors to get back to 2019-level contributions to GDP,” according to McKinsey & Company. Small businesses, which are hard hit due to lower margins and limited reserves, constitute 68% of the food services and accommodations sector and are not expected to recover before the first quarter 2024 stretching into 2025. Arts, entertainment and recreation sectors will take even longer, according to U.S. Small Business Recovery After the COVID-19 Crisis.

    “After the 2008 recession, larger companies recovered to their pre-crisis contribution to GDP in an average of four years, while smaller ones took an average of six,” writes McKinsey Global Institute.

    “Improving operations and adapting business models can help small businesses in many industries recover,” observes McKinsey, but muted demand, operational challenges due to health and safety restrictions and new customer expectations all take time: “Finding the cash to do so may be a stretch.”

    Working capital is often tied up in inventory and small businesses have added cost servicing their debt. A McKinsey survey of 1000 small firms finds the cost of servicing debt averages 30% of revenue. The shift to off-premise delivery and carryout “is likely to erode profitability and increase packaging costs and hinder their ability to sell high-margin items.” McKinsey found that nearly 40% of small businesses in the restaurant sector operate at a loss or break-even.

    Solutions suggested in the report involve technology and marketing.

    “Independent restaurants might digitize their businesses by using aggregators to increase their visibility, reach potential diners, and outsource their delivery,” write McKinsey authors Andre Dua, Deepa Mahajan, Lucienne Oyer and Sree Ramaswamy.

    “Aggregators might help by offering additional on-boarding support or spotlighting small, independent restaurants on their platforms. Some combination of public and private aid may also be necessary for small restaurants, especially offering technical and financial support they’ll need to compete with larger ones that can build contact-less solutions at scale,” according to the report.

    “The crisis has exposed financial frailties that have built over time, and the next normal could impose additional burdens,” according to the authors, who add, “The survival of US small businesses across the economy will require new business models and technology solutions that few have the resources to finance.”

    World Tea Hosts Virtual Summit

    Organizers of the World Tea Expo this week announced a virtual summit scheduled for the second week of October.

    The World Tea Conference + Expo was postponed from June 14-16 to October. It was later canceled due to restrictions on events drawing large crowds to the Colorado Convention Center, in Denver Colo.

    The World Tea Virtual Summit + Resources is scheduled for October 12-14.

    “The virtual summit will introduce online networking and lead generation,” according to Questex, organizers of the event. Guests include Sebastian Michaelis, head of tea at Tata Global Beverages; Peter Goggi, president of the Tea Association of the USA, and Tony Tellin, co-founder of A. Tellin Co.

    The agenda of three half days offers an opportunity to “learn from peers, share ideas, network virtually and safely, and support one another as we continue the shared journey through COVID.”

    The next live, in-person event is scheduled for July 14-16, 2021.

    Learn more: World Tea Conference + Expo

    Made in America

    Great quantities of tea are blended in America but according to the Made in America Act, a product manufactured in the US that claims to be American made, must contain at least 50% US ingredients.

    A Lexology post this week discusses a class action suit “that calls out Bigelow Tea for pushing unpatriotic tea.”

    The post summarizes a report by Linda Goldstein and Amy Ralph Mudge with the Washington D.C. based law firm Baker & Hostetler.

    The complaint, filed in California’s Central District Court, by Kimberly Banks and Carol Cantwell, alleges that by promoting their tea as “Manufactured in the USA 100% American family owned” and “America’s classic” Bigelow violates provisions of the California Consumer Legal Remedies Act, False Advertising Law, Unfair Competition Law, and Breach of Express and Implied Warranty.

    Plaintiffs allege themselves and other consumers, “purchased the Bigelow Tea products because they reasonably believed, based on the packaging and advertising, that these products are American-made. However, the products are comprised solely of foreign-sourced and processed tea.”

    Had plaintiffs known the truth “they would have paid less for them or they would not have purchased them at all,” reads the complaint.

    Bigelow Tea responded Friday with the following statement: “Bigelow unequivocally disputes the allegations in this California based lawsuit.”

    “Every box with our statement of being “Manufactured in the USA” refers to the fact these teas are produced and distributed by one of our three Bigelow owned and operated manufacturing facilities, located in Connecticut, Kentucky, and Idaho.  In addition, our packaging clearly states that our teas are “Blended and Packaged in the USA”.  Bigelow continues to be open and transparent about our global sourcing of ingredients (many of which come from the United States) on both our website and the packaging of select varieties of our teas.”

    “Frivolous lawsuits such as these are designed to purposefully damage the reputation and finances of the companies they target. Bigelow Tea is proud to be a 100% American family owned and operated manufacturing company and we are prepared to vigorously defend ourselves against this meritless lawsuit,” writes Bigelow.

    While Bigelow owns the largest US tea farm, The Charleston Tea Garden, located in Charleston, South Carolina, the tea garden markets its tea under its own brand. The plantation website makes it clear that “Bigelow Teas are not made from any of the tea leaves grown or harvested here at the Charleston Tea Garden. Charleston Tea Garden teas are the only teas made from the tea leaves produced by the Camellia Sinensis plants grown in the fields of the Charleston Tea Garden.”

    DMCC Expansion Plans

    UAE Prime Minister and Ruler of Dubai Sheikh Mohammed tours DMCC’s tea and coffee centers. Photo courtesy DMCC.

    Fifteen years ago, Ahmed Bin Sulayem, executive chairman and chief executive officer of Dubai’s Multi Commodity Centre (DMCC) envisioned a tea trading hub that would service the world’s largest growing regions.

    Today DMCC processes 48,000 metric tons of tea annually, accounting for 60% of global re-exports. The facility has processed 320 million kilos since its inception. The modern port facilities and airfreight capability attracted 800 new companies during the first half of 2020, said Bin Sulayem, adding that the months of May and June saw a “noticeable uptick despite an overall softer business climate.”

    The tea center and atmospheric-controlled warehouse, which stores 5,000 metric tons, has a turnover of $184 million annually.

    Commodity teas from 13 origins are blended for consistency and these blends, are often mixed to make herbal, floral inclusions sold as some of the world’s most popular teas. Examples include Earl Grey and the many breakfast blends distinct to markets in Ireland, Scotland, and England. Classic brands processed include Lipton and Red Rose as well as local blenders such as Tea Trading International DMCC, a Dubai-based British SME that markets brands Vertea and The Leaf to food-service catering, hotel, and resort customers.

    DMCC’s tea and its new coffee center drew the attention recently of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE, during a visit reported by Gulf Today.

    “Under the guidance of His Highness Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, DMCC is fast becoming the global hub for the tea and coffee industry. Our ambitious plans to triple our capacity in the near future are strategically anchored in Dubai’s drive and ability to facilitate world trade,” said Bin Sulayem.

    In a release by Arjun Katyal, of McLeod Russel Middle East DMCC, said, “The DMCC’s expansion plans are incredibly exciting, and represent a huge boost to Dubai’s status as a leading global trade hub. We have been a DMCC Tea Centre member since 2011, and have seen, first-hand, the expertise, experience and vision that has shaped the success of this facility. McLeod Russel Middle East DMCC has its sights set on continued growth, and we will continue to engage new markets and reach a wider customer base than ever before. The DMCC Tea Centre has an important role to play in our success story, and we congratulate them on their latest announcement.”

    Since 2005 DMCC has become one of the fastest growing free zones in the world with more than 17,000 companies conducting business in a number of sectors including precious metals, tea and coffee, and food commodities. Establishments and individuals operating in DMCC are exempt from all taxes including income tax, for a period of 50 years.

    Testing tea for trace elements

    Measuring Elements in Tea

    Minerals are essential to the heath of tea plants and for tea drinkers to experience the full range of tea flavor, but too much of even the best of things in life can create problems.

    Researchers Dr. Ying Guo, Dr. Seungjin Lee, and Dr. Tae Lee at Georgia Gwinnett College are currently engaged in testing five commonly available tea brands using a handheld Laser Induced Breakdown Spectroscopy (LIBS) unit manufactured by SciAps. The Z-300 analyzer detects very low concentrations of mineral and potentially harmful heavy elements.

    The team, whose lab work is temporarily suspended during the pandemic, detected all of the following minerals and alkali metals (Cs, K, Li, Na) in five popular tea brands. The three most common minerals were carbon, calcium, and magnesium in all five samples. Several heavy metals were also present in all five samples including Cd and Cr which are toxic in very low concentrations.

    “(Before the shutdown), we obtained the spectra of tea samples and were able to qualitatively determine the elements present,” Guo says. The next step will be to calibrate and complete the quantitative analysis, she says.

    ElementDaily Intake Thresholds
    Al (Aluminum)0.10–0.12 mg Al/kg/day for adult
    C (Carbon)None
    Ca (Calcium)1300 mg/day [harmful > 1500 mg/day]
    Cd (Cadmium)FAO/WHO rules limit Cd to 0.2 mg/kg
    Cr (Chromium)120 µg/day [harmful > 200 µg/dan
    K (Potassium)4700 mg/day [harm depends on weight]*
    Li (Lithium)Lithium toxicity level is 1.5 mEq/L
    Mg (Magnesium)320-420 mg/day (varies with age)
    Na (Sodium)Less than 2300 mg/day
    P (Phosphorus)1000 mg/day [harmful > 250 mg]
    Si (Silicon)Elemental silicon is an inert material
    Source: US FDA and National Institute of Health

    Researchers pelletized tea grains from each brand and measured the intensities of emission spectra at different wavelengths to determine the presence of elements of interest in the samples. Results were validated by inductively coupled plasma mass spectroscopy.

    Analyzer manufacturer SciAps notes that “minerals play an important role in maintaining the human body. For example, Ca helps with the functions of muscle contraction, enzyme activity, healthy bones and teeth, blood clotting, transmission of nerve impulses, and regulating heartbeat. K can help reduce risks for certain diseases such as stroke, kidney stones, and hypertension. Even though those are beneficial elements to the human body, there is still a suggested daily intake limit.”

    Dr. Ying Guo

    The article states that “additionally, tea may be contaminated by heavy metals, “either as a result of uptake from soil or from atmospheric dispersion due to vehicular or human activities,” according to Guo. This is what led them to investigate the levels of both the beneficial minerals

    (e.g., potassium and calcium) and unwanted contaminant elements (e.g., cadmium and chromium) present in different tea brands. Heavy metals can be highly toxic even at a very low concentration. LIBS was able to detect the presence of these metals in all five samples.

    The following table lists the quantities of each element by relative abundance for each tea brand.

    Table courtesy Dr. Ying Guo, Georgia Gwinnett College

    The research has not been published, but once reviewed, “By comparing with recommended daily intake limits and reference dose, we’ll be able to provide insights on daily consumption limits of tea in order to avoid too much intake of toxic elements,” says Guo.

    [Editor’s Note: Tea Biz will follow up once the research is published]

    Reversal Forces New Lockdowns

    After flattening the COVID curve in April and May it began sloping upward in June in the U.S. while Europe continued to suppress spread of the coronavirus. July has since become the worst month on record for COVID spread with 1.9 million new infections and 1,000 deaths per day, bringing the U.S. total to 4.5 million who have tested positive. The virus is now present in populations young and old in every state with infections rising in more than half the U.S. states. Globally there are more than 18 million cases with deaths approaching 700,000. About 6% of those who have tested positive perished. On a hopeful note, 94% (11 million) have recovered. The U.S. continues to lead country totals but Brazil (2.7 million) and India (1.8 million) are hot spots. The UK, Spain, Peru and Chile experienced death rates greater than 500 per 1 million population. More than 250,000 have died with a high of 6,900 per day in April that dipped for about a month before moving seven-day average of 5,600 globally in July.

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    Dan Bolton

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  • Europe’s invigorated speciality tea proponent

    The European Speciality Tea Association casts aside the aura of elitist tea in favor of inclusion. Learn why during a webinar July 8 at 7pm | London | 2pm EST

    In July, the European Tea Society transitions to a more inclusive European Speciality Tea Association. “The rationale is to reflect the nature and purpose of the association more accurately,” writes executive director David Veal. Members of the Society, founded in 2018, overwhelmingly voted for the change, said Veal.

    “Whilst the logo, branding, and house style will remain unchanged to help promote consistency and continuity; there will be significant changes in many areas of the association, writes Veal, who outlined a three-year plan.

    Here are the highlights:

    • Education and Research: Education is central to the association’s value and mission, he said. The Association in July will introduce its first online basic module: Tea 101, developed in conjunction with Australian Tea Masters. “It is aimed at beginners and is really to help people who because of current restrictions of movement are not able to partake in more traditional methods of tea education. This module will be free of charge to European Speciality Tea Association members,” writes Veal. A standalone “Introduction to Tea” will be available after June, and the main program will be launched as soon as things are back to normal, most likely in early 2021.
    • Competitions: Increase the number of tea competitions that we organize, this being such an excellent tool for improving the quality of tea and bringing communities together.
    • Certifications: Delivered through our members who are trainers, or who have schools or academies, and will cover a number of disciplines at two different levels including Camellia sinensis, brewing skills, sensory skills, botanicals, tea barista skills, health and agronomy.
    • Tea Research: The association is based at the University of Chester and has access to sensory laboratories for European Speciality Tea Association research and that of our members. Research objectives include developing a greater understanding of many aspects of tea, including claimed health benefits and the importance of full understanding of water.
    • Advocacy: The European Speciality Tea Association aims to be at the forefront of the growth and development of the community, working closely in forming, and indeed leading relationships with other tea associations and organizations.
    • Promoting Excellence: The Association seeks to be in the forefront of the continuing quest to improve standards, quality, knowledge, information interest, and enthusiasm for specialty tea.

    Click here to register for the July 8 webinar

    David Veal

    Veal, who formerly led the Specialty Coffee Association of Europe (SCAE), and more recently served as executive ambassador for the Specialty Coffee Association (SCA), described his vision of “a modern, efficient, inclusive, ethical, professional, member facing, committee-driven and volunteer led membership association.” The European Speciality Tea Association’s great asset is members respected throughout the tea community with strong credibility and reputation and is an inspiration to others, he said.

    “Our members continue to make a real difference to the quality of products in our industry and the end-users in and out of the home; internationally through innovation, research, education, communication, collaboration, support, and knowledge; for all sectors of members from farmers to consumers,” writes Veal.

    The association’s “strategic focus in Europe, our core market,” but the Association “will be active, either independently or in collaboration with others, opportunistically in other areas around the world commercially and in accordance with our values.”

    “In order to grow our membership, to make the association stronger, and to assist in our mission to promote speciality tea, we will be initiating a major membership drive to reach new and potential members across Europe,” writes Veal. Categories include producers in tea growing countries, and one for a new type of person in the tea community, the Tea Barista,” said Veal.

    When we have sufficient members in a given country, such as Russia, “we hope to open up a chapter to help those members network and organize events,” he said.

    “Once the world starts to get back to some sort of normality, we will resume our strategy of attending events around Europe to promote the association, promote speciality tea, engage with local tea communities, gain new members, and deliver knowledge,” writes Veal.

    The European Tea Society was first advanced by several specialty tea pioneers and launched in September 2018 at the Tea & Coffee World Cup Exhibition and Symposium in Birmingham, England, with Nigel Melican as president, Alexis Kaae as vice president, and Bernadine Tay was the founding director.

    www.specialityteaeurope.com
    [email protected]
    +44 (0) 1244 515610

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    Dan Bolton

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  • Need to Know | Boba Delivery

    Tea industry news for the week of May 18.

    • Boba Tea Tops Beverage Delivery Lists
    • East Africa Update
    • Turkish Tea Harvest
    • Robotic Waitstaff Serves Tea
    • Nepal Asks India to Resume Tea Imports

    Boba Tea Tops Unique Food Orders

    In March YELP! marketers decided to find out what food and beverages people across the country were being delivered right now! Data scientists tracked how frequently a dish is ordered in each state relative to its popularity in other states.

    “When we first looked at the results, pizza delivery reigned supreme, which is no surprise since it delivers well and it’s perfect for a family night in. However, we dug into the data to find the most uniquely popular delivery order in every state*, and that’s when things got interesting,” writes YELP!

    Winners include a run on crayfish in Texas, poke bowls in Indiana, pad thai in Washington, sushi in South Carolina and naan in Wyoming but guess what topped the list of delivery orders in California last week? How about Michigan? and Hawaii?

    Boba tea.

    “What we found was a mix of delectable dishes and drinks that tell a story of how American taste buds differ from state to state and region to region,” according to the company.

    Click here to see the full list.

    *Samuel Hansen at Yelp! employed a natural language processing technique called term frequency-inverse document frequency (TF-IDF), which quantifies how frequently a dish is ordered in a state relative to its popularity in other states.

    East Africa Update

    Rwanda’s tea sector, largely spared from lockdowns, saw a marked increase in production during the first quarter. The harvest totaled 9,000 metric tons generating $27.6 million in revenue, which is up by 15% from the same period in 2019.

    But there are still formidable challenges getting that tea to market.

    East African tea growers truck tea destined for export to the auction at Mombasa. Kenya’s borders remain open during the coronavirus pandemic, but Tanzania and Kenya required each driver be tested before crossing.

    The result offers a lesson in what can go wrong. A shortage of testing supplies and the sheer number of truckers led to delays that extended from hours, to days, to weeks. Few of those who were tested showed symptoms and none were quarantined while they awaited results. Unable to afford hotel rooms they slept in or under their trucks, cooked together and played sports to kill time. Some wore masks but many did not and very few practiced social distancing. During the two weeks ending last week 150 truckers crossing into Kenya at Namanga tested positive and were eventually ordered back across the border but by then they had infected hundreds of local merchants and fellow truck drivers.

    The Washington Post reports that beginning this week, only drivers that have tested negative prior to arrival at the border will be permitted to cross. Uganda has since discovered dozens of infected truck drivers crossing from Kenya. Zambia closed its border to Tanzanian truckers. Kenya is the largest tea producer in the region at approximately 500 million kilograms followed by Uganda which harvests 60 million kilos annually; Tanzania at 35 million, Rwanda at 30 million and Burundi at 9 million kilos per year.

    At the Mombasa auction Rwanda growers earned an average $2.68 per kilogram of tea last year, followed by Kenya growers who received an average $2.59, Burundi at $2.21 per kilo, Tanzania $1.36, and Uganda $1.21. The overall average price was $2 per kilo.

    Kenya currently has 1,214 confirmed COVID-19 cases, according to Johns Hopkins Coronavirus Resource Center. There have been 51 deaths. Tanzania is reported to have 509 confirmed cases with 21 deaths. Rwanda has 327 confirmed cases with no deaths reported as of the second week of May.

    Holiday Travel Restrictions Eased for Turkish Tea Growers

    Climate dictates that Turkish tea be harvested in three flushes, unlike Africa, Sri Lanka, and Southern India where plucking continues year-round. Tea is grown there on sparsely populate hills facing the Black Sea where growers depend on seasonal labor.

    This year’s spring flush was interrupted by a March 28 lockdown to prevent spread of the coronavirus. Fatma Genc, a researcher at Istanbul’s Marmara University, told The National, that 50,000 tea farmers were unable to prepare their fields for the harvest. Ramadan, which began April 23, complicated timing for Muslims.

    “The failure to harvest this year will make it difficult to meet even domestic demand,” said Genc told the newspaper. “Tea prices, which have been hiked twice in a row this year, will increase even more if the producers cannot go to the field.”

    This week farm owners and laborers from across the country were finally able to travel to northern Turkey on trips extending through the three-day Eid al-Fitr festival that follows the Muslim holy month of Ramadan. Seasonal labor from neighboring Georgia and Azerbaijan continue to face border restrictions leading to some creative solutions. The city of Findikli in Rize hired locals to harvest around half of the 30,000 metric tons produced nearby in an agreement that spans six months. Workers harvest for 10 days and while the leaves for the next flush are growing they complete municipal projects.

    In Rize Province, the heart of the growing region, 16,000 laborers were given permission to travel between fields and home. The Provincial General Hygiene Council required testing at least one member of each family, about 6,000 in all. Screenings continue.

    The provinces of Rize, Trabzon, Artvin and Giresun produce around 260,000 metric tons of tea annually, most of it sold domestically. Turks consume an average 3.5 kilos of tea a year, more than any other country. While much of the tea is imported, a significant shortfall is expected due to rising costs and the fact that much of the domestic tea went unpicked. Caykur, the state-owned producer that supplies 60% of the country’s tea is running a deficit and facing additional costs due to the pandemic. Caykur purchases tea from 200,000 independent farmers.

    Turkey has 157,814 confirmed COVID-19 cases with 4,369 deaths, making it ninth on the list of countries most impacted by the pandemic, according to the Johns Hopkins Coronavirus Resource Center.

    Tea garden in Turkey’s Rize Province, along the Black Sea.

    Robotic Waitstaff Serves Tea

    Tearoom Robot Reduces Contact with Waitstaff Easing Customer Concerns

    The Tea Terrace, a small London-based chain of tea rooms that was forced to close during the March outbreak intends to open this July with the assistance of family-friendly robots.

    Forbes magazine reports that managing director Ehab Shouly found while surveying customers that fear of crowding and contamination by waitstaff were their greatest concerns. Spacing tables was a relatively simple adjustment but a previous experiment with automated service at the company’s Surrey tearoom proved prescient. Last July The Tea Terrace became the first restaurant in the UK and Europe to introduce a robotic waitress, named Theresa.

    Theresa is summoned by guests using controls at the table. The robot responds to voice commands. Shouly has also introduced functional assistants such as Captain Tom, a bot that delivers up to four trays each with teapot, teaware, and food.

    Modifications are underway to expand robotic services to all four tearooms which serve 200 to 300 guests per day on weekends.

    Nepal Asks India to Resume Imports

    Tea growers in Nepal are seeking the resumption of exports to India, according to Nepal’s Ministry of Commerce and Supplies.

    India stopped importing tea the week of May 6 and has not responded to Nepali officials. Periodically India has shown its displeasure with Nepal by refusing entry of tea and other exports such as palm oil.

    Purna Kumar Karki, president of Jhapa Tea Entrepreneurs Association, told My Republica that Indian authorities impose non-tariff barriers on Nepali products from time to time “for no reason.”

    Sanjay Bansal, chairman of the Darjeeling Tea Association (DTA), recently appealed to West Bengal Chief Secretary Rajiva Sinha to regulate the sale of Nepal tea to save the Darjeeling Tea Industry. Darjeeling growers maintain that Nepal undercuts their unique tea which is protected with a global Geographical Indication certifying its authenticity.

    Bansal told The Statesman Nepal did not impose a lockdown and growers there have been producing at a high rate since February. “These teas are ready and are in the process of being shipped to India through the Indo-Nepal land borders in West Bengal to be sold in the local markets by taking advantage of the absence of Darjeeling Tea in the market due to the lockdown restrictions,” said Bansal.

    In a related matter, Federation of Chambers of Commerce & Industry, North Bengal (FOCIN), has requested Chief Minister Mamata Banerjee to allow small wholesale and retail shop owners to open their establishments.

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    Dan Bolton

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  • Tea Export Values Declined in 2019

    Tea Industry News for the Week of May 11.

    • Tea & Tariffs
    • Export Value of Tea Declined in 2019
    • U.S. Consumers Remain Wary of Reopening
    • Tea is Piling up
    • Attend the SofaSummit on International Tea Day
    Global Tea Exports Declined 18.8% year-over-year in 2019.

    Tea Export Value Declined in 2019

    Logistical hurdles in tea producing countries greatly complicated export this quarter as demand declines and prices remain low. Recessions in Russia, Europe, and North America dim prospects of a profitable return for the export segment where sales have declined in value by an average 12.8% since 2015.

    The declared value of global tea exports depreciated 18.8% year-over-year in 2019.

    Sales from tea exports totaled only $6.4 billion in 2019, according to analyst Daniel Workman at World’s Top Exports. Tea shipments worldwide were valued at $7.3 billion five years ago.

    China, at $2 billion in sales, remains the leading tea exporter, accounting for 31.8% of total exports by value, up 13.5% compared to 2018.

    China faced several impediments to growth prior to the coronavirus outbreak but retained its rank as the top tea exporter globally in 2019. Green tea exports, the main tea crop, totaled 304,000 metric tons and were valued at $2.02 billion. The average price of exported green tea was $4.34 per kilo in 2019.

    China’s tea exports were generally stable and of improved quality, despite the U.S.-China trade dispute and uncertainties in the world economy, according to agricultural and trade officials. Tea exports to the U.S. in 2019 were down 5.1% to 15,000 metric tons, but this was easily offset by a 15.6% increase in purchases by ASEAN nations. The 23,000 metric tons sold to ASEAN countries was valued at $400 million, up 55.7% compared to 2018.

    China reported a 13.6% overall revenue increase year-over-year. Black tea exports were up 6.7% to 35,000 metric tons increasing in value by 24.5% to $350 million, according to China customs statistics. Black tea averaged $9.92 per kilo, up 16.72% year-on-year.

    Yu Lu, vice president of the China Chamber of Commerce of Import and Export of Foodstuffs, Native Produce and Animal By-Products (CFNA) said the average annual compound growth rate of exports was 3% during the past three years. Green tea accounts for 82.8% of the total volume, which topped 367,000 metric tons last year.

    Trade with countries along the Belt and Road increased 4% last year, earning China $560 million, a year-on-year increase of 307%, according to Yu Lu.

    India exported $803 million worth of tea in 2019, up 4.6% compared to the prior year. India set a production record in 2019 growing by 3.8% thanks mostly to smallholders, but while volume reached 1,390 million kilos, the country accounted for only 12.6% of tea exports by value.

    Sri Lanka’s 11.3% market share by value and Kenya’s 5.7% share also contribute significant volume, but each saw steep declines in value as prices for cut, tea, curl CTC grades fell. During the past five years (2015-20), the value of Kenyan tea exports declined by 71.3%. During that same period, the value of tea sold for export by Taiwan increased 131.3%; sales of Japanese tea are up 59.6%, and the value of Chinese tea for export is up 46.5%, according to World’s Top Exports.

    Selling to domestic consumers is appealing in China and Japan, where higher prices are the norm, but India may benefit most from increasing domestic consumption.

    Tea & Tariffs

    The economic impact of the pandemic makes it unlikely that China will meet the expectations of a “phase one” agreement negotiated with the U.S. in January. As a result, U.S. President Donald Trump said he might initiate another round of tariffs targeting China.

    Or maybe, not.

    “I’m very torn, I have not decided yet, if you want to know the truth,” President Trump told reporters last week.

    On Friday, to keep what have been productive discussions on track, the U.S. Trade Representatives’ office released this statement: “In spite of the current global health emergency, both countries fully expect to meet their obligations under the agreement in a timely manner.”

    In January, China agreed to a 2020 increase of $76.7 billion over 2017 imports. China has since purchased less than $25 billion of U.S. goods, which is a decline of 5.9% through April compared to 2019, reports Bloomberg. The 2020 goal is almost $200 billion in sales.

    U.S. trade plunged in March. Overall the U.S. bought 6.5% fewer goods than during the same period in 2019. Imports of Chinese tea through March 2020 declined 23% compared to the same period in 2019, according to the Global Agricultural Trade System database (GATS). Lower sales are due, in part, to a 15% tariff imposed in September 2019. The duty was later reduced to 7.5% in February 2020, but by then, many blenders had switched suppliers. During the first quarter in 2019, the U.S. imported Chinese tea valued at $32 million, a total that declined to $24.7 million during the same period in 2020.

    Volume is down 31% from 8.7 million metric tons to 6 million metric tons through March. China is predominately a green tea exporter, but volumes of every category slid, except organic flavored green tea.

    Jason Walker, marketing director at Firsd Tea in New Jersey, the U.S. offices of China’s largest tea exporter, writes that while “U.S. imports of Chinese black tea have generally declined over the past five years. More recently, the U.S.-China trade war and coronavirus pandemic have contributed to this slowdown. However, organic black tea imports from China have been rising, with a 66% increase in volume.”

    Since workers were able to return to the fields before April, tea production China was spared the pandemic-associated drop in yield experienced in India and Sri Lanka. Imports recorded during the first quarter include little of the spring harvest. Second-quarter statistics will be more revealing as they will reflect the logistical challenges that are still rippling through the supply chain.

    “Firsd Tea has been watching the activity at U.S. ports for indications of delays and disruptions. We have not seen any to date,” writes Walker. “In terms of containers leaving China, we have not seen any disruptions since normal business resumed around the end of February in China. At this point, China operations have implemented monitoring systems and PPE (personal protection equipment) requirements for workers. We are watching for indications of flare-ups, but so far, we don’t see evidence of another wave of infection,” writes Walker.

    Blenders initially found themselves racing to meet the demand for packaged goods, particularly private label for grocery, but orders for foodservice grades has virtually disappeared due to the unprecedented restaurant and retail tea closures. This alone will substantially reduce tea imports from every producing country.

    Specialty tea importers receiving Chinese tea this spring say that demand remains steady despite a three-fold increase in airfreight, which is a far greater expense than the 7.5% tariff.

    “Importers were working with a three-fold increase in air freight delivery in April. Rates are still high, but at least cargo is moving faster now,” writes Andrew McNeill with Seven Cups Fine Chinese Tea in Tucson, Ariz.

    China recognizes the desirability of retaining a presence in the U.S. market as Europe is likely to experience a more severe recession than the rest of the world. The European Commission last Wednesday released projections that show economic activity shrinking by 7.4% in the 27-nation bloc, according to the New York Times. Economists predict the deepest economic recession in EU history.

    While the U.S. administration is angry at China, the escalation of retaliatory measures challenges the prevailing business assumptions guiding American companies in China. U.S. companies invested $14 billion in new factories and other long-term investments in China last year, according to the National Committee on U.S.-China Relations and the Rhodium Group, a consultancy that tracks foreign direct investment flows.

    Shawn Donnan, writing in Bloomberg Supply Lines, suggests, “it’s worth remembering every so often that it is still businesses and not governments that really make the decisions that drive globalization and supply chains and that they aren’t decoupling yet.”

    Reenergize Local Consumption

    Pradyumna Barbora, a specialty tea producer in Assam, points to a straightforward solution: Increasing average per capita consumption from 750 to 800 grams will “uplift the Assam tea industry,” he writes.

    “If every tea lover in the country increases their consumption by a mere 50 grams per month, and starts sourcing their tea locally, the gardens will be able to meet their expected minimum wages whilst creating a better living environment for themselves,” writes Barbora, spokesman for Tea for Unity, a group of Assam planters. “We are losing focus on a high-quality heritage product which fetches much more and is more valuable than commercially mass-produced tea,” writes Barbora. The tea industry employs more than a million workers,” he explains, “Investment will improve the mindset of the workforce, translating into greater efficiency and quality.”

    Learn more: Tea for Unity

    Tea is Piling Up

    Processed tea is piling up as demand declines, and transport is interrupted. Globally, warehouses usually empty by the start of the spring harvest. An abundance of tea stored in 2019 is compounding problems in India. Consider the 21 villages in Champawat, a tea-growing region where warehouses are bulging because drivers are not permitted to travel.

    Tea, valued at INRs360,000 ($4,700), was ready to be sent for auction in April, “but we have not been able to transport it due to the lockdown. If the stock is not sent to Kolkata soon, those involved in tea plantation and its selling may face a financial strain,” Desmond Brikbeck, manager of several local tea gardens, told the Times of India.

    U.S. Consumers Remain Wary of Reopening

    Datassential continues its weekly series of webinars tracking consumer behavior during the pandemic. The COVID-19 series is free and hosted by managing director Jack Li, whose company pioneered the use of menu data to predict flavor trends.

    The topic May 8 was “The Next Phase” (download PDF).

    Reopening is underway led by Starbucks, which announced that 85% of its corporate stores would soon resume operations.

    Li notes that concern has declined somewhat as some states reopen, “but America is still anxious, with slightly more than half of the people feeling very concerned and hugely worried about their own personal health.”

    “Avoidance of eating out is steady, but down from a month ago with 55% of those surveyed saying they will “definitely avoid going out” and 27% saying they are “nervous but will still eat out.” The number of individuals reporting “no concerns whatsoever” increased to 18%, up 2% since April 27 but down 23% since March 10, according to Datassential.

    Health remains the top concern, but economic worries are intensifying, according to Li, who found that 57% of respondents are more concerned about the public-health crisis (down 2% since April 27 and down 6% since April 10). Those who say they are most concerned about the economic crisis increased 2% from April 27 to 43% of respondents.

    “Not much has changed in the past month. America is still at home and still longing to get back out,” writes Li. “People are excited to get back to activities like dinner and a movie, or lunch and shopping at the mall,” he said.

    When asked: “Which of the following food & drink places or activities are you most excited to get back to?” 45% selected “dining at my favorite sit-down restaurant,” and 42% selected “visiting recreational places” with 39% longing to “meet family and friends at restaurants.”

    Going to coffee shops (20%) and drinking at bars (19%) ranked in the middle. Visiting nightclubs, concerts, and lounges appealed to only 10%. Visiting cafeterias (5%) was the least exciting activity.

    Editor’s note: Unemployment increased to 14.7% in April, the highest since the Great Depression. New claims topped 26.5 million during the five weeks ending April. The proportion of employed working-age adults (51.3%) is the lowest on record. Datassential found that 16% of survey respondents are still going to school or working as usual, with 16% stuck at home due to layoffs and furloughs. An additional 33% of those taking part in the weekly survey are working or attending school remotely, with 35% not working overall.

    Next episode: “What Consumers Want Right Now.”

    EVENTS

    Attend the SofaSummit on International Tea Day

    Thursday, May 21, is International Tea Day, a global event declared by the United Nations that will, for the first time, be celebrated in every county. The U.N. organized the event to elevate tea by drawing attention to “the importance of tea for rural development and sustainable livelihoods, and to improve the tea value chain to contribute to the 2030 Agenda for Sustainable Development.”

    To celebrate, the Tea & Herbal Association of Canada, in coordination with many prominent industry leaders, is hosting an all-day tribute May 21, beginning at 9 a.m. through 7 p.m. EST. The tea and chat will “circumnavigate the globe,” spanning 14 time zones with participants from 13 countries. Watch on YouTube live – no registration required.

    Shabnam Weber will host on THAC’s YouTube Channel: http://tiny.cc/gyqdoz

    Click to learn more: International Tea Day.

    UK Tea & Infusions Association

    Raising Our Cup to All Tea Drinkers

    The

    Participants (in order of appearance) include:

    Yu Lu, China Chamber of Commerce CCFNA

    Rajah Banerjee, Makaibari

    Arun Singh, Tea Vision

    Ketan Patel, Jalinga Tea

    Stephen Twining, Twinings

    Alfred Njage, KTDA

    Cindi Bigelow, Bigelow Tea

    Gabriella Lombardi, Cha Tea Atelier

    Joyce Maina, Cambridge Tea Academy

    Will Battle, Fine Tea Merchants

    Joe Panter, Camellia PLC

    Ramaz Chanturiya, Tea Masters Cup (Russia)

    Carolina Okulovich, Don Basilio

    Rona Tison, ItoEn

    James Norwood Pratt, Author

    Jane Pettigrew, UK Tea Academy

    Kevin Gascoyne, Camellia Sinensis

    Jeff Fuchs, Tea Horse Road

    Tania Stacey & David Lyons, Cuppa Cha & AUSTCS

    Cecilia Corral, Tian Té Mexico

    Fred Yoo, Myung Wong Cultural Foundation

    *Corrected 9/13 to clarify this event was organized solely by the THAC.

    Virtual Tea Tasting

    The Ceylon Artisan Tea Association is hosting its third in a series of virtual tea tasting webinars. Amba Estate was featured on April 30. This week features Forest Hill Tea, which was recently profiled in Tea Journey magazine.

    Click this link to join the meeting: https://us02web.zoom.us/j/9997849844

    Meeting ID: 999 784 9844

    The Zoom event begins at 5.30 p.m. Wednesday, May 13 in Colombo Sri Lanka (India|Asia) | 8 a.m. EST (New York) | 1 p.m. (London) | 2 p.m. (EU) | 8 p.m. (Singapore and Hong Kong) | 9 p.m. (Japan and Korea)

    If you miss the live event, recordings of these webinars are available for viewing at no charge.

    Enhance your well-being with tea. Tea Journey is a bridge connecting those who craft handmade teas in 35 countries with the growing number of premium tea consumers globally. Tea Journey educates readers not only in the selection and preparation of healthy whole leaf tea but also in the manufacture of authentic teaware and utensils designed to enhance the tea experience.

    Curious about tea? Subscribe free to Tea Journey Magazine

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    Dan Bolton

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  • Need to Know | Ominous Fiscal Impact

    Tea Industry News for the Week of May 4.

    • Ominous Fiscal Impact
    • Online Grocery Orders Up 37%
    • Tea Supply Not a Grave Concern
    • Post Offices on the Front Line
    • Seattle Caps Delivery Commissions
    Which are you more concerned about: The Economic or Public Health Crisis?

    The pandemic is advancing the role and reputation of specialty tea in protecting the health and enhancing human immunity. At the same time, the economic impact threatens every link of the tea supply chain.

    Marketers are wise to address health over wealth.

    Consumer marketing surveys in several countries, as well as professional opinion research, indicates a “high level of concern” about becoming infected.

    Last May, “health care emerged as the top policy issue for American voters at 36%,” according to Real Clear Opinion Research. Concern about the economy was the top issue for 26% of respondents. Health concerns are now top-of-mind for 66% of respondents in the U.S., according to the Edelman Trust Barometer.

    Edelman surveyed a representative sample of adults in 11 countries. In Canada, the United Kingdom, and France 70% or more of respondents favor prioritizing health concerns. In Japan, 76% of those surveyed by Edelman cited health concerns.

    “A substantial majority of people around the world want their governments to prioritize saving lives over moves to restart economies being hammered by measures aimed at halting the spread of the new coronavirus,” according to the Financial Post,

    Overall, 67% of the 13,200-plus people interviewed between April 15 and April 23 agreed with the statement: “The government’s highest priority should be saving as many lives as possible even if it means the economy will recover more slowly.” One third said it is more important that governments save jobs and restart the economy.

    Only 29% of those surveyed agreed that CEOs and business leaders were doing an “outstanding job” meeting the demands of the moment.

    “It’s complicated because you have two crises simultaneously – a health crisis and an economic crisis,” said Richard Edelman, CEO of Edelman.

    “Business will be looked at very closely in the months ahead,” Edelman said, citing how companies perform in areas such as retaining and reskilling workers or using small businesses in their supply chains.

    Between February and March 2020, total retail sales in the United States fell by 8.7%. During this period, retail sales of food and beverage stores grew by 25.6%.

    Dramatic Drop in Economic Activity

    Economic activity dramatically declined in late March, and consumer confidence plummeted in April as jobless totals soared.

    In April business activity at service companies fell to the lowest level recorded. The near-collapse in the service side of the economy has dragged the U.S. into what’s all but certain to be a deep recession. The government has rushed to aid hundreds of thousands of desperate companies with loans and other help, but it’s unclear if it will be enough, according to the Institute for Supply Management.

    In tea retail, suppliers that rely on foodservice sales are the segment most impacted. Blenders in the grocery segment are still playing catchup to the stocking-up rush that is now decreasing.

    Sales of tea in grocery and convenience will plateau until pantries empty. A fundamental shift away from traditional trips to the grocery store is underway, led by those who order online. Online market research specialists Brick Meets Click found that April sales of groceries sold online grew by 37% to $5.3 billion. Forty million Americans ordered groceries online in April, increasing both frequency and spend, according to the results of a natural consumer survey. Orders increased from 1.2 to 1.6 per month and spend rose to an average $85 per order, up from $82 in March

    The April wave of surveys looked at two additional factors to help us understand the health and economic motivators impacting shopper’s behaviors writes Brick Meets Click.

    • Health: 47% of the households surveyed indicated a “high level” of concern related to catching/contracting the Coronavirus.
    • Economic: 39% of the households surveyed indicated that their average monthly household income since the COVID-19 crisis started had dropped dramatically – 25% or more – compared to Jan/Feb 2020. 

    Reopen Now or Not?

    In the U.S., where the contagion has killed more than 70,000 people, about half of the states are easing restrictions on business.

    Retailers considering reopening should bear in mind that most Americans are not ready to risk infection by going out. While 56% say they are comfortable making trips to the grocery store, 78% indicate they would be uncomfortable eating at a sit-down restaurant. “People in states with looser restrictions report similar levels of discomfort as this in states with stricter rules,” according to a Washington Post-University of Maryland poll conducted last week.

    In announcing plans to ease the restrictions on businesses, governors have emphasized that their actions represent a gradual and cautious reopening of their economies. Nonetheless, when asked about eight different types of businesses, majorities of Americans say they oppose ending the restrictions on each of the eight.

    “Fear of infection, the poll finds, has not abated at all in recent weeks,” according to the Washington Post.

    Datassential polls 1000 consumers weekly, beginning in March. The chart below suggests consumer fears have plateaued with 94% either “very concerned” or “somewhat concerned.” Only 6% say they are not concerned.

    Note to Brands

    Consumer sentiment is clear: Businesses have a responsibility to ensure their employees are protected from the virus in the workplace and do not spread the virus into the community (78%). They want businesses to focus on solutions, not selling. In a survey of 12 countries, many consumers indicated businesses should shift to producing products that help people meet the challenges (89%). One in three (33%) say they have convinced other people to stop using a brand “that I felt was not acting appropriately in response to the pandemic.”

    Brands must do everything they can to protect the well-being and financial security of their employees and their suppliers, even if it means suffering big financial losses until the pandemic ends. – Edelman Trust Barometer 2020

    Tea Supply is not a Grave Concern

    Lockdowns in tea producing countries are gradually easing, permitting the harvest to resume, but logistical hurdles are mounting as the cost of airfreight, the preferred method of transport early in the season, tripled. The availability of cargo space on aircraft is greatly limited due to the virtual absence of commercial flights. Overburdened carriers are increasingly tasked with flying far more precious or urgently required goods. In India, the national rail service is shut down and trucking fleets are idle.

    Containers are piling up at ports, and ships lie at anchor awaiting medical clearances.

    Available airfreight on passenger planes in March was down 44% globally compared to the same period in 2019. Dedicated air freighters added more flights, but overall capacity was down by 25% in March, according to the Wall Street Journal.

    The cost of air freight from China to the U.S. increased from $3 per kilo in March to $11 per kilo in April and continues to climb.

    Paul Golland, owner of P.G. Logistics, a freight-forwarding business in Australia, told the Wall Street Journey that. “You used to get a quote valid for 30 days. Now you’re getting it valid for 24 hours, because tomorrow the situation may change again.”

    “International postal services have been among the hardest hit. Many have reduced or suspended international mail in recent weeks due to a lack of flights,” according to the article. The U.S. Postal Service last week said it would start shipping mail by sea to 10 European countries.

    In India, Amazon and Walmart are restricted from making deliveries except for food and medicine, which greatly increased the workload for that nation’s 400,000 postal workers in 150,000 branch offices. About the only service tea vendors can count on is mail delivery. India operates the largest postal service in the world and is rising to the challenge. As the Wall Street Journal reports, “courier competitors can’t deliver. They depend on commercial flights and trains, which aren’t running, their truck fleets aren’t allowed on their roads, and their employees can not get to work.”

    U.S. Postal Service employs 633,000 in 32,000 post offices, annually delivering 142 billion pieces of mail. But in April, due to the Coronavirus, Postmaster General Megan Brennan told Congress that volume declined by a third and is expected to fall by half by the end of June. E-commerce is surging, but bulk and business mail account for far more business. Postmaster Brennan estimates the shortfall at $25 billion.

    The Human Condition

    Datassential reports that only 15% of Americans are still going to school or working as usual. There are now 17% stuck at home due to layoffs and furloughs. An additional 37% of those taking part in a weekly survey are working or attending school remotely, with 31% not working overall.

    “While most Americans are apprehensive about the reopening of non-essential businesses, they favor people visiting open-air locations like parks and beaches, where they can keep social distance. As you might expect, people who are currently more concerned about the economic crisis are much more accepting of visits to all types of venues than those more concerned about public-health implications. Having guidelines in place for reopening and familiarity with grocery store precautions have likely also paved the way for other retailers. One-third of Americans are OK with visits to places like shopping malls, hair salons, and restaurant dining rooms,” according to Datassential.

    Jack Li at Datassential is optimistic that restaurants will remain a vital part of social life after the crisis eases: “People miss dining in restaurants, not just for the food, but also for the psychological benefits. When dining rooms reopen, there will be a heightened appreciation for them and the sense of normalcy they evoke. Americans associate dining in with better pre-COVID times and happy “milestone” celebrations. Restaurants will also provide an opportunity for people to do their part and reconnect with their communities.”

    How soon will this end? Simon Baptist, Chief Economist at EIU, writes that “even in countries where containment measures are being eased, economic activity will be slow to pick up. For instance, even though India partially eased restrictions on April 20, high-frequency data on electricity consumption shows no change in demand from the week before.

    Delivery Fee Caps

    Last week Seattle instituted a local ordinance capping third-party delivery service commissions at 15%. The intent is to address price gouging during lockdowns temporarily. Violators are subject to prosecution by the Seattle City Attorney’s Office and face steep fines. San Francisco is enforcing a similar ordinance capping service commission at 15%. Chicago and New York City are also considering enacting commission caps. In New York, the proposed cap is 10%. The Seattle ordinance mandates delivery drivers get the full amount of tips and makes it a crime for third-party delivery companies to cut drivers’ pay. The ordinance remains in effect until restaurants are allowed to resume unrestricted dine-in services.

    Best Retail Practices

    • Daily wellness checks for all employees (back of store and front line)
    • Provide ample (non-medical) masks, single-use gloves and additional PPE as required (plexiglass cashier shields etc.)
    • Clean high-touch surfaces every two hours.
    • Encourage hand washing every half hour for food handlers.
    • Seal orders in packaging and do not let cashiers handle food.
    • Apply social distancing floor decals and display distancing reminders.
    • Make sanitizer available at checkout and in stand-alone dispensers at entry.
    • Avoid cash transactions and sanitize credit-card terminals after each use.
    • Disinfect entire store at the end of each day and schedule periodic deep-cleaning

    Encourage customers to order online and at digital kiosks. Avoid face-to-face interaction by offering carry-out, curbside pickup, drive-thru, and contactless delivery. Customers should insert their own credit card into payment terminals (and stores should opt for “tap to pay” where available). Rely on video and remote methods of communication to minimize consumer contact with store personnel.

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    Dan Bolton

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