• Need to Know | Changing Consumer Behavior

    Tea industry news for the week of April 20

    • Monitoring Consumer Behavior
    • Record Prices at Colombo’s Digital Auction
    • Kenya May Ban Direct Tea Sales
    • Physical Distancing on 1,500 Acres in Assam
    • Private Investors Back Millennia Flash-Frozen Tea

    Monitoring Consumer Behavior

    Datassential surveys consumers weekly and hosts a Friday webinar Food + Coronavirus to share what they have learned about fast-changing consumer behavior. The presentations are free. Mark DiDomenico is director of consumer solutions at Datassential. He told participants during a webinar hosted by the National Coffee Association last week that American consumers at this point are more worried about their health than wealth (health concerns peaked at 67% April 1 and remained at 61% the week of April 8). Respondents (64%) consistently say they will “definitely avoid” eating out.

    When asked “since the onset of social distancing, where have you cut back on spending?” eating at restaurants topped the list at 57%.

    “Consumers are avoiding risk but also seeking ways to adjust,” said DiDomenico, who cited examples such as cooking from scratch (42% say they do this more often), eating comfort foods (+33%), stress eating (+24%), and drinking alcohol more often at home (+14%). Moving forward? “Consumers are likely to avoid buffets and salad bars. Half say they will order for delivery (and disinfect delivery packaging), he said. Shopping for food online (+22%) is a new behavior that is very likely to stick, he said.

    Global Impact

    David Parnham, Research Director at Café Culture in Australia, recently completed a report on the immediate impact of lockdowns. The impact is sobering. While Australians were not strictly confined to their homes (New Zealand is in lockdown), a survey of cafe owners found that 19% experienced a 70-90% decline in sales, with an additional 19% reporting declines of 50-70% and 29% reporting declines of 20-50% in sales. Café Culture Managing Director Sean Edwards posted several helpful suggestions from café owners for “Staying Afloat in Tough Times.”

    Business News

    Sri Lanka is embracing a digital future for the Colombo Tea Auction according to Sri Lanka Tea Board Chairman Jayampathy Molligoda. The country’s first three electronic auctions in April resulted in sales of 16.5 million kilos of tea. Efforts to switch from outcry to electronic bidding span 20 years, according to Jayantha Karunaratne, chairman of the Colombo Tea Traders’ Association. “Changing the mindset of some players is not an easy task, said Karunaratne, adding, “Our vision is to go online because it provides advantages such as lower cost, greater efficiency, and more transparency.”

    As soon as the auction opened demand from Russia, Turkey, and the Middle East drove record prices. An Uvakellie from Vellapatna Estate, owned by Madulsima Plantations, sold for SLRs810 ($4.21) per kilo and a Uva High from Finlays Oodoowerre Estate sold for SLRs980 ($5.10) a kilo, a record for FBOPF1 grade tea at auction. Akbar Brothers purchased the lot. Dickwella Estate then broke the SLRs980 mark at SLRs1000 ($5.20) per kilo for an FBOPF1 bought by Ceylon Tea Marketing.

    “The response from industry stakeholders has been fantastic. The Sri Lankan tea industry has once again proven its resilience to upheavals,” said Dhammike Wedande, senior vice president of Asia Siyaka Commodities, a leading tea broker.

    Direct Trade Ban
    Kenya’s Ministry of Agriculture intends to ban direct tea sales. New regulations state that “henceforth, sale by private treaty (direct sales overseas) is outlawed,” forcing growers to sell exclusively through the auction process.

    The new regulations raised concerns voiced by the East African Tea Trade Association (EATTA), which manages auction and direct tea sales in Mombasa.

    “Exporters who have long-term contracts with international buyers might have to review those contracts, and we don’t know how this is going to affect the market,” EATTA Managing Director Edward Mudibo told Business Daily.

    The Tea Auction in Mombasa, the world’s largest by volume, is experiencing difficulties associated with the spread of the coronavirus and was relocated to a hotel.

    The entire auction system is “dysfunctional,” according to small growers who appealed to Kenya’s President Uhuru Kenyatta to intervene to curb predatory behavior amid falling prices. Reformers agree and hope to automate bidding.

    Kenyatta’s reforms, announced last week by Agriculture Cabinet Secretary Peter Munya, require the Kenya Tea Development Agency to pay 50% of the price of monthly deliveries. The remainder is to be paid as an annual bonus. In the past, KTDA factories paid farmers KS14-16 per kilo. Buyers will now pay 10% down with the balance due before export. Factories must pay farmers within 30 days after receiving auction proceeds. Also, brokers representing factories will be limited in the number they represent (no more than 15 factories in the current proposal).

    Physical Distancing on 1,500 Acres

    India reported more than 1,500 new COVID-19 cases in the 24 hours ending Monday, April 20, bringing the national total to 17,656 confirmed cases with 559 deaths. There is no indication of a “flattening curve” with the contagion likely to peak in four to six weeks. West Bengal, which includes the fabled Darjeeling growing region, has 339 reported cases with 12 deaths. Assam reports 35 cases with one death.

    Samar Jyoti Chaliha, who manages the Dikom Tea Estate near Dibrugarh in Assam, harvested only 17,000 kilos of tea in March due to government-ordered lockdowns. Usually, the garden produces 40,000 kilos of first flush tea. The early harvest typically yields 70,000 kilos, “but this year, I may be able to make a max of 45,000 to 50,000 kilos,” said Chaliha. The workforce is a concern. “I am limited to 50% of peak season’s employment (3,800 workers),” he said. Chaliha is currently paying 1,800 workers, but few are plucking tea. “Overgrown bushes take a lot of time. Right now, it is more slashing/skiffing and hand breaking overgrown leaves and branches which are tossed to the ground. We cannot make tea out of this stuff,” he said.

    Restoring the bushes should be complete by April 23 or 24. It will then take another 15 days to come up with succulent leaves, which brings us to the beginning of the second flush, he explained. A typical second flush yields approximately 260,000 kilos (2.6 lakhs) during May and June.

    “I don’t know how the bushes will behave after skiffing at this time of year (pruning is normally done in winter when the plants are dormant). Dikom produced an average of almost 3,000 kilos per hectare last year, a highly productive yield. “If all goes well, the second flush should be fine,” he said.

    The garden currently has 1,500 acres (635 hectares) under tea. Given the vast area, instead of limiting the number of workers to one per acre, when they are most needed, consideration should have been given to simply assigning smaller numbers of workers within each block (say 100 vs. 200). Growers could assign 100 masked pluckers to each of two widely separated sections and maintain safe distancing of 10 feet between pluckers. Even with 3,800 workers in the field at the same time, in most of Assam’s licensed tea gardens, there would only be two workers per acre. “Apparently, no one took this up with the government,” he said.

    Production News

    India will take additional steps to spot-check tea to ensure it complies with the Food Safety and Standards Authority of India (FSSAI ) norms. Random checks should result in higher prices a necessity given the lower volumes at auction. “Tea failing to adhere to the FSSAI parameters may not be allowed to be offered in the auctions depending on the extent of the violations by the producers,” according to the circular issued to planters. Tea Board Deputy Chairman Arun Kumar Ray told the Deccan Herald, “right now, the priority is to comply with the health safety norms and hygienic practices in tea gardens to combat the COVID-19 crisis.”

    In Sri Lanka, February Yield Marks Decade Low

    Sri Lanka harvested only 17.9 million kilos of tea in February, down 3.8 million kilos from February 2019. High grown and medium grown tea showed marginal gains, but tea from the lowest elevations declined 28.3% due to drought. Forbes and Walker Tea Brokers report the first two months of 2020 yielded only 39.8 million kilos, down 5.1 million kilos compared to the first two months of 2019.

    Health News
    Sri Lanka is promoting black tea as an immunity booster with the slogan: “Double Your Protection” The campaign online and in print states that “Black tea is not only delicious but packed with immune-boosting theaflavin antioxidants. Enjoy 3 to 4 cups daily, and be protected both inside and out.”

    The Times of India reports that the Indian Council of Medical Research (ICMR) will study the antiviral properties of theaflavin-3, a compound found in black tea. The United Planters’ Association of South India (UPASI) circulated a press release citing work by researchers in Taiwan and China, suggesting replication of SARS CoV-2 is inhibited by polyphenols commonly found in tea. These include Theaflavin-1, Theaflavin-2, and Theaflavin-3, all of which are abundant in black tea.

    The European Journal of Preventative Cardiology reports fewer heart attacks and a lower risk of dying of heart disease among tea drinkers participating in a Chinese study of 100,000 adults over seven years. Those who consumed three or more cups of tea per week had a 20% lower risk of heart attack or related cardiac incidents and a 22% lower risk of dying of heart disease.

    Retail News

    Millennia Tea, a Canada-based supplier of flash-frozen tea leaves, closed its first private funding round at $500,000+. The pioneering brand, based in Saint John, processes tea much like leafy produce at origin where it is washed and frozen to preserve antioxidants destroyed during the drying process.

    Tea cubes
    Millennia also markets cubes of fresh tea leaves

    Shelly King, CEO of Natural Products Canada, a key investor and strategic advisor, told Huddle that “today’s health-conscious consumer has embraced ‘food as medicine’ and is looking for ways to optimize the nutritional value of their everyday pleasures like a simple cup of tea.”

    “Millennia TEA has a category-changing product that ticks all the boxes for today’s consumer,” said King.

    Upcoming Events
    The United Nations has designated May 21 as International Tea Day to raise awareness of the need for sustainable production and to honor those working to supply the world with tea. The British have a reputation for never enough when it comes to tea, so they also celebrate National Tea Day (Tuesday, April 21). The Sun once again published a chart of tea in 16 shades from red amber to milky white. The article always leads to squabbles over exactly how much is too much dairy. Historian Seren Charrington-Hollins explains why milk is added last:

    “One of the fiercest topics is whether to put the milk in the cup before or after the tea. In the early days of British tea-drinking, when the china we had was of such poor quality that it would crack under the heat of boiling water, milk was always put in first to cool the tea.

    “But in the 18th century better china started to arrive and those who could afford it switched to putting milk in after the water, as a social signifier. Continuing to put milk in first was associated with the lower classes.

    “Tea tastes better if you put the milk in after the hot water because you avoid scalding the milk. You also maintain the perfect temperature for brewing, which is 95C,” advises Charrington-Hollins.

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    Dan Bolton

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  • A Call for Standards – Need to Know

    What tea professionals need to start the week of Dec. 8, 2014 —

    A Call for Standards

    By Austin Hodge

    The last decade has seen a boom in what the industry calls ‘Specialty Tea’, but if you ask for a definition you will come away confused.

    What is so special about ‘Specialty Tea’?

    Not much. A close examination reveals commodity tea that has been adulterated in some way, typically by blending ingredients such as pieces of fruit, exotic herbs or flower petals. Since the ingredients are dried, tea blenders spray (yes, spray) on lots of flavor. I’m using the word “commodity” to include any large-scale tea where the production goal is quantity over quality. There are great quantities of traditional tea growing in every tea producing country. These include green tea, puer tea, wulong tea, white tea well as black tea. There are also an endless variety of herbals incorrectly labeled teas.

    Why set standards for ‘Specialty Tea’?

    Without standards, the market faces chaos. Where would France be if it had not established standards for wine almost 500 years ago? Italy followed suit and prospered. Stop and think, would the debate over which is better — Italian or French wine — have turned out differently if the Italians had been the first to set standards?

    Picking Standard for Breakfast Qimen Tea
    Picking Standard for Breakfast Qimen tea is two leaves and bud

    It’s important to understand that standards not only define products, they establish markets, and whoever defines a market, controls it. It is undebatable that the French have created admirable markets for their wine, as have, more recently, specialty coffee retailers.

    The chaos in the ‘specialty’ tea market comes from the fact that no one, from buyer to seller, actually knows the value of the tea they are buying or selling, or how to clearly establish its value. Price is derived mostly from marketing — price is certainly not based on the quality of the tea. In a practical sense, words like “quality”, “value”, and, “excellence” have been watered-down into obscurity as much as “specialty.”

    Nowadays, tea is whatever the merchant says it is, opening a lot of ground for dubious interpretation. In contrast, standards are consistent and independently verified. The specialty coffee industry has done an excellent job of establishing standards, which has lead to levels of excellence and increased profitability enjoyed by the entire coffee industry.

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    Coffee and tea both began as rarities for the rich, evolved into commodities for the masses and are gradually becoming artisanal offerings – the choice of connoisseurs.

    Everyone my age remembers that back in the day, coffee was either the Red Can (Folger’s) or the Blue Can (Maxwell House). There were neighborhood diners and corner cafes where a cup of coffee cost a quarter. This was coffee’s “First Wave.” Americans annually drank an average of 10 lbs. of coffee per person. Per capita consumption was measured by the gallon because the efficiencies of the commodity model made it cheap.

    The turning point was 1974 when independent coffee shop owners established a standard for “Specialty Coffee.” The adoption of standards launched the “Second Wave.” Pioneers such as Alfred Peet at Peet’s Coffee & Tea, Starbucks, and Coffee Bean & Tea Leaf would not exist without these standards. Innovations in growing, sourcing, roasting, packaging, and coffee brewing followed.

    The market for specialty coffee was more sophisticated, resembling its European counterparts. Coffee of this quality command a higher price; it no longer had to be cheap. Thus “quality” coffee became easily distinguishable from commodity coffee.

    The term “Third Wave” was coined around 2002 when small coffee businessmen traveled to coffee farms to source direct and eventually became experts in every aspect from growing to roasting to brewing. This took the small retail coffee businesses to a new profitable level that could differentiate itself from the like of Starbucks and company. Once in control of the entire supply chain, not only did standards raise retail margins for retailers, the discovery of great coffee also opened the door for a respectable wholesale business selling to other quality businesses whose business models did not include working the complete supply chain.

    The “Third Wave” aspires to an even higher level of coffee experience. It begins with direct sourcing. Only direct sourcing can insure quality and answer questions about fair trade and farming methodology with confidence. Third wave coffee also places high value on production and preparation: the goal is to get the best possible cup. Third wave coffee owes its existence to Starbucks for building the market for better coffee, and for establishing the benchmark. Retailers exceeding that level could not profit in the market that Starbucks created. Third Wave roasters realized they needed to get a whole lot better to beat Starbucks, and to do so they needed expertise and transparency along the entire supply chain.

    Similarly, two years ago Starbucks changed the tea market dramatically for small independent tea businesses when they bought Teavana. From here on, every small tea business is going to be defined in relation to the nearest Teavana, like it or not.

    Picking standard for LiLi Xiang tea
    Picking standard for LiLi Xiang tea is three top leaves

    The difference between coffee and tea is that there are no standards that give tea business the tools to beat Teavana. Starbucks redefined the market for coffee on almost every level. They will do the same for tea. Small tea businesses and major tea corporations alike are going to feel the heat. Without standards, Teavana, with its extraordinary marketing muscle, can define tea quality any way they want.

    If standards for specialty tea mirrored the standards for specialty coffee the only tea that could quality as “specialty” is tea judged to be within the top 20%. Most of the tea sold as specialty tea in the West would be disqualified. Just as there is with coffee, few multimillion dollar companies are going to support standards for quality in the tea industry.

    Why would they?

    Tea’s “Third Wave”

    In the spring of 2014, Jesse Jacobs of Samovar Tea, wearing a cream-colored canvas apron over a fashionable t-shirt, announced the coming of the tea industry’s Third Wave.

    But can the tea industry really be on the verge of entering into a movement equivalent to that of the coffee industry? Even though both tea and coffee have the Starbucks Corporation in common, it is going to take the tea industry a very long time to catch up to the sophistication of the coffee industry. The discussion about standards for ‘Specialty Tea’ has not even begun.

    Picking Standard for Liu An Gua Pian. The second opened leaf is picked as soon as it matures to the size of a pickers thumb
    Picking standard for Liu An Gua Pian. The second opened leaf is picked as soon as it matures to the size of a picker’s thumb

    Looking forward, a profitable market for small tea businesses will require standards. These need to be objective, understandable, and replicable. Standards provide growers with a definable goal for crops and harvesting. Standards enable tea makers to formulate products clearly identified by buyers, which give the producers incentive to get better. Direct sourcing will become increasingly important for the tea businessman. Consumers will actually know what they are paying for and where it originated.

    Establishing standards brought extraordinary advantages to coffee growers including unimaginable financial success. A small Brazilian coffee grower this month won the Alliance for Coffee Excellence’s 100th Cup of Excellence (COE) competition to earn $50.20 per pound at auction, the highest price ever paid per pound for COE coffee. He took home $106,000 in a country where the per capita income is less than $1000 per month. What is noteworthy is that Brazil is the largest commodity coffee producer in the world. Think what standards for quality would mean for small holders in India and Africa, areas still economically strangled by the colonial commodity system. Establishing an objectively evaluated standard establishes value that can be communicated thru the supply chain to the customer. Excellence is the reward.

    China is realizing the benefits of standards in its domestic market for tea right now. Their tea industry was destroyed through a 150 years of war and internal strife. As China recovered following World War II and the Mao era, tea was mediocre at best across the country. More than a decade ago China set standards for quality and freed tea makers to create and profit from their own business. Since then, China has experienced a renaissance in tea making: tea being produced for the domestic market is the best it has ever been in history; China has become the largest tea producing country in the world, gets the highest prices for its tea, and has the highest average price for tea. China has the best teas in the broadest categories; it has defined standards, and grows the largest percentage of tea using traditional, chemical free growing practices.

    The coming of standards is inevitable. Small businesses that are dedicated to quality in real terms, not just in the marketing of their products, will benefit.

    It took years for standards to impact coffee, but things will move quicker with tea due to the benefits of the information age. The tea industry is ready for professionals to lay the groundwork for “Third Wave” tea. Let’s leave it to Teavana to push the second wave along in building the market, like their parent company did.

    What is great about getting the ball rolling towards standards for quality and, eventually — excellence — is that small businesses that are struggling to establish new business models need not worry, for the best practices for quality in the tea industry go beyond the reach of corporations, economies of scale, and deep pockets of marketing departments. Standards are the essential tool for the tea entrepreneur.

    So become a pro, take some Chinese classes, and get you passport up to date, and by all means study the Specialty Coffee Industry. They have become experts in coffee on every level. You might want to remember that this year Peet’s hired a woman that is fluent in Chinese and has a masters degree in tea from Zhejiang University.

    Standards, direct sourcing, transparency, expert level knowledge about tea and its culture, logistical mastery, inventory management expertise, and tea preparation skills are all requirements for ushering in tea’s third wave. Herein lays opportunity, challenge, and the promise of excellence. Let’s hope tea entrepreneurs’ passion for tea is strong enough to take them where they’ll have to go.

    Austin Hodge is the founder of Seven Cups Fine Chinese Tea in Tucson, Ariz. www.sevencups.com

    Copyright Austin Hodge.

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    Tea Biz serves a core audience of beverage professionals in the belief that insightful journalism informs business decision-making. Tea Biz reports what matters along the entire supply chain, emphasizing trustworthy sources and sound market research while discarding fluff and ignoring puffery.

    Tea Biz posts are available to use in your company newsletter or website. License reprint and distribution rights for single articles or commission original content.  Click here for details.

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    Dan Bolton

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  • Impact of Climate Change on Tea — Need to Know

    What tea professionals need to start the week of Sept. 15, 2014 —

    Honest Tea in Keurig K-Cups… the North American Tea Conference beings Tuesday… the fast-growing bottled water market in China… this month’s HerbalGram features the research of Dr. Selena Ahmed who is studying the impact of climate change on tea.

    Honest Tea in K-Cups

    Coca-Cola’s licensing agreement with Keurig Green Mountain to offer Honest Tea in K-Cups is a very important validation of the Keurig beverage delivery system.

    Honest Tea in K-Cups
    Honest Tea in K-Cups

    In 2013 Keurig-licensed teas generated 6.5% of sales in the bagged/loose tea category, according to Packaged Facts. Keurig partnerships with Snapple, Lipton, Bigelow, Celestial Seasonings, Harney & Sons, Twinings, Teavana, Tazo and Tetleys “are only now gaining traction in the marketplace, which will translate to even stronger sales in 2014: 10% of 2014 sales seems quite reasonable,” according to Packaged Facts: Tea and Ready-to-Drink Tea in the U.S.: Retail and Foodservice, 5th Edition.

    Celestial Seasonings was early to the format, packaging a significant selection of its herbal blends for the Keurig machines. Bigelow Tea was another to enjoy first-mover advantage, locking in a contract with Hilton Hotels to put its tea in K-Cups in 89,000 hotel rooms equipped with K130 K-Cup brewers. Coffee selections vary throughout the U.S., guestrooms at Hilton Gardens Inns; for example, include Diedrichs regular and decaffeinated Coffee, in Canada Van Houtte’s or Timothy’s Rainforest Alliance Certified coffee but rooms in both the U.S. and Canada feature Bigelow Black Tea K-Cup packs.

    Higgins & Burke is another early adopter but chose RealCups capsules instead of licensing through Keurig. Snapple (DrPepper) and Lipton, Twinings and Tetley and a growing number of smaller brands are packing tea in Keurig-compatible capsules.

    “Keurig Green Mountain and Honest Tea share a longstanding commitment to organics and fair trade,” said Seth Goldman, Honest Tea co-founder and TeaEO. “We’re excited to make our tea available in this new convenient format.”

    Keurig brewers are now in 18 million American homes.

    Honest Tea sold 100 million bottles last year and more than 1 billion since its founding in 1998. It is the nation’s top-selling organic bottled tea. Count on boxes to crowd out other brands and carve some additional space from the coffee-centric selections at Bed, Bath & Beyond, Target and Walmart. Honest Tea will feature Just Green and Just Black organic, Fair Trade Certified tea to be brewed hot over ice and enjoyed unsweetened – the alternate and some say the antidote for carbonated sodas.

    Honest Tea is the first Coca-Cola brand to appear in K-Cups since Coke purchased 16% of KMG. Look for FUZE Tea to follow when Keurig unveils its new cold brewer.

    Source: Packaged Facts, Honest Tea

    North American Tea Conference

    The magnificent horseshoe of cascading water is spectacular, driving spray as high as my perch 37 floors above Niagara Falls. The 5th North American Tea Conference, an annual gathering jointly sponsored by the Tea Association of the USA and the Tea Association of Canada (TAC), opens this week on the Canadian side of the border.

    TEABIZ_NiagaraFalls
    Horseshoe Falls, Niagara Falls, Canada

    Canada’s Tea Association President Louise Roberge and her able staff have organized a number of interesting and timely sessions that I’ll report on this week.

    Roberge chose the theme “SolidariTEA” for this year’s event which draws producers and manufacturers from around the globe. North America is now a top export destination for several countries as noted by Norman Kelly, with the International Tea Committee based in London. Rick Winslow with Nielsen Canada will present a state of the industry report on retail tea sales and Shimona Mehta of the NPD Group, Inc. will lead a discussion of key trends in the foodservice industry.

    One session I’m sure to attend is Kevin Gascoyne’s pairings of tea and scotch. Gascoyne is a co-founder of Camellia Sinensis in Montreal.

    This is the 60th Anniversary of the Tea Association of Canada, a milestone celebrated Wednesday at an award banquet where winners of the 3rd Gold Medal Tea Competition will be announced. The Tea Association of the USA hosted the last session in Bermuda where Peter Goggi was handed the baton as executive director.

    Bottled Water in China

    In a country awash in tea bottled water is a refreshing alternative. Tea is safely consumed throughout the country when boiled but in many parts of rural China breaking the seal on a bottle of water is reassuring. China has developed a thirst for Western bottled waters. Boreal Catskill Mountain Spring reported a $24 million 36-month deal with SOHO Corp. for distribution of the Boreal Water Collection, premium water previously unavailable in China where it will be branded as Catsky.

    A report from Transparency Market Research identifies China as the most active market worldwide for bottled water. The Asia Pacific region accounts for 33% of global demand with sales of $157.27 billion in 2013, according to TMR. The region, led by China, is expected to experience an estimated compound annual growth rate of 10.5% in revenue from 2014 to 2020 with sales of $279.65 billion by 2020.

    Source: Transparency Market Research

    Climate Change Impact on Tea

    The chemistry, taste, and health effects of tea can vary with changes in climate, says a new article published by the non-profit American Botanical Council (ABC). Recent research by Selena Ahmed, PhD, on climate change and its effects on the phytochemical compounds in tea (Camellia sinensis) is part of an extensive study conducted by Dr. Ahmed in the Yunnan province of southwestern China and has implications for the future of medicinal botanicals. Dr. Ahmed’s report on her ground-breaking research is the cover article for the current issue (#103) of HerbalGram, ABC’s peer-reviewed, quarterly scientific journal.*

    Dr. Ahmed has worked in the Yunnan province for eight years, studying how weather pattern variations impact the naturally occurring phytochemicals and beneficial health properties of tea. Her forthcoming research will investigate how the effects of climate change could alter the benefits of other medicinal plants.

    TEABIZ_NTK_140915_BOTANNICALCOUNCILSELENAAHMEDChinese tea farmers have a finely attuned sense of how differing weather patterns affect the taste and quality of their crop: In the dry seasons, the tea leaves are more potent; in the wetter monsoon seasons, the leaves have a gentler taste and aroma. “The majority of tea farmers I have interviewed state that climate patterns have shifted noticeably over their lifetimes; such observed changes include warmer temperatures, greater unpredictability of weather such as increased variation of rains, and changing phenology of plants (i.e., the effect of weather patterns on plant growth cycles, including flowering and fruiting seasons, etc.), including earlier bud burst,” wrote Dr. Ahmed. The idea that weather patterns could noticeably change the taste, and thus the quality, of crops and influence the livelihoods of the farmers prompted her to analyze samples of tea from successive growing seasons to ascertain what differences are present on a chemical level.

    “A vast body of scientific and medical research in the past several decades shows many strong correlations between tea, particularly green tea, and abundant health benefits” said HerbalGram Editor-in-Chief Mark Blumenthal. “Dr. Ahmed’s research has compelling implications not only for tea, but for other food and medicinal plant crops, for which changes in climate can cause alterations in taste, and, accordingly, the plants’ nutritional and medicinal values,” he said.

    Dr. Ahmed writes about her tea research and connects the phenomenon in China with tea growers in other regions, including Sri Lanka, Hawaii, and Japan. In collaboration with researchers from Tufts University and the University of Florida, she studies the chemistry behind the shift in functional quality and secondary metabolites in the tea plant. Plants produce secondary metabolites as a defense mechanism in response to environmental stressors, and a high concentration of these metabolites often correlates to higher nutritional and therapeutic benefits for the consumer.

    Through laboratory studies of extracts made from tea samples collected from the Chinese farms, Dr. Ahmed discovered that tea’s key health compounds (called catechins) can decrease by almost 50% when the leaves are harvested after the monsoon season as compared with leaves harvested after a drought. This is consistent with anecdotal observations concerning changes in tea flavor noted by the farmers she interviewed; the differences in flavor correspond with her analyses of the plants’ overall chemistry, including the catechins.

    Dr. Ahmed is an assistant professor of Sustainable Food Systems at Montana State University.

    *Ahmed, S. Tea and the taste of climate change: understanding impacts of environmental variation on botanical quality. HerbalGram. 2014;103:44-51.

    Source: HerbalGram is available at some bookstores and natural food stores and is mailed to members of ABC. Dr. Ahmed’s feature article is posted on the ABC website, accessible here.

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    Tea Biz serves a core audience of beverage professionals in the belief that insightful journalism informs business decision-making. Tea Biz reports what matters along the entire supply chain, emphasizing trustworthy sources and sound market research while discarding fluff and ignoring puffery.

    Tea Biz posts are available to use in your company newsletter or website. Purchase reprint and distribution rights for single articles or commission original content.  Click here for details.

    •

    Dan Bolton

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  • Global Consolidation of Tea & Coffee Goliaths – Need to Know

    What tea professionals need to start the week of May 12, 2014 —

    Global consolidation in the coffee and tea segment has led to more than 100 deals valued at $23 billion the past five years. Last week’s proposed combination of Mondelez International’s coffee brands (Maxwell House) with D.E. Master Blenders 1753 BV (Douwe Egberts) will create a $7 billion behemoth that owns dozens of leading brands in the major coffee drinking countries… Oprah surprises Teavana customers in NYC… Kenya intends to increase local tea consumption by building new factories that add value to its largely bulk production of black CTC (cut, tear, curl).

    Once investors identify a golden opportunity it soon catches the attention of bigger investors.

    14i3_NEWS_MaxwellHouseRebrands_tinIt is a little like the shiny minnow that darts harmlessly in the sea grass near the bottom of the pond. None of the really big fish pay much attention until a curious few one-pounders gather.

    It is they who get gobbled.

    In the past five years 100 deals valued at $23 billion have consolidated coffee and tea globally. Merger and acquisitions with the significant investment that follows, made a big impact on specialty tea brands. Coffee chains and juice ventures have been expanding so successfully they have now caught the attention of global firms.

    Teavana’s acquisition of Teaopia followed by Starbucks’ acquisition of Teavana comes quickly to mind but Pickwick tea in Europe, Tea Forte, Talbott Teas (acquired by Jamba Juice) and the Unilever purchase of T2 are other recent examples.

    In the $81 billion coffee market and $90 billion market for tea – size matters. Once a business has demonstrated that it is scalable it becomes edible.

    The proposed combination of Mondelez International’s coffee brands with those of D.E. Master Blenders 1753 BV follows the acquisition of relatively small fry including Peet’s Coffee & Tea, Caribou Coffee and Tea Forte by Joh. A. Benckiser (JAB Holding Co.)

    Douwe Egberts CoffeeJAB paid $10.4 billion for D.E. Master Blenders and now owns Douwe Egberts, Senseo (single-serve coffee machines), Pilao, Merriild, Friele, Harris, Moccona, L’OR and Pickwick Tea. The company sells coffee in 45 countries and has leading positions in Norway, Denmark, Belgium and the Netherlands. The $3.4 billion DMB employs 7,500. It is the world’s No. 3 coffee marketer.

    Mondelez, which owns Maxwell House, Tassimo and Jacobs Coffee, Carte Noire, Grande Mere, Kaffee HAG, Kenco and Gevalia, has the top selling brands in 10 countries including France, Sweden, Poland and Austria. The firm holds a second place in Germany, Greece, China, Ireland, Russia and Denmark. The company split from Kraft in 2012 and maintains its largest holdings in snack foods. It is valued at $64 billion. Mondelez is the world’s No. 2 coffee marketer earning $3.9 billion last year.

    Master Blenders offered $5 billion for the Mondelez coffee unit. If approved the new company, to be known as Jacobs Douwe Egberts (JDE), will be the largest pure-play coffee venture in the world. Annual revenues would top $7 billion with a global coffee market share of 16.3%.

    That makes JDE a big fish but dwarfed nonetheless by Nestle, the world’s largest coffee supplier.  Nestle sells $20 billion a year worth of coffee, about one fifth of its $100 billion annual food and beverage sales.

    Nestle accounts for 22.7% of the $81 billion global coffee market, according to Euromonitor International, a market research company headquartered in London.

    The company earns 40% of its annual coffee sales from roast and ground, and owns several billion dollar brands.  Its Nescafe soluble coffee business is immense. Nespresso remains the top selling single-serve brand and Nestle is building boutiques and marketing its espresso home brewers in Canada and the U.S. Nestle maintains excellent margins and it is broad based – but it is not nimble.

    Rapid expansion of the middle class in Brazil, India and China is opening opportunities to sell coffee to millions of new consumers.

    Merging the coffee units allows the combined company “significant growth opportunities in a highly attractive market,” said Pierre Laubies, CEO of Master Blenders and prospective head of the new entity which expects to save $1.5 billion annually once the merger concludes early next year.

    Jacobs Douwe Egberts will benefit from its focus on coffee in identifying future acquisitions. There are many mid-sized retail and roast coffee ventures thriving in the emerging coffee drinking countries.

    In North America DAVIDsTEA in Montreal has demonstrated that it can scale and so has Argo Tea in Chicago. Second Cup in Toronto is another potential target.

    Next year when life in the pond begins to settle look for JDE to grab another bite.

    Learn more: www.demasterblenders1753.com and www.mondelezinternational.com

    Oprah Surprises Teavana Patrons

    Oprah Winfrey is having a great time marketing her new Oprah Chai with pal Howard Schultz CEO of Starbucks.

    The other day she surprised patrons at the new Teavana store in New York City, chatting and laughing and enjoying her new role as the nation’s spokesperson for tea. And on Sunday she donned the Green Starbucks apron and served customers a Mother’s Day buy one and get one free Teavana Oprah Chai Tea Latte.

    The visits were a perfect photo opportunity with staff eager to make her tea strong to order. On her way out the door she handed out gift cards.

    Curious about the combined power of television ads, promotions, TV interviews, personal appearances and hundreds of media reports on Oprah Chai I emailed the Teavana publicists at Starbucks a note requesting information on total sales (or charity contribution). I think first week sales will top $500,000.

    What’s your best guess?

    [polldaddy poll=8039270]

    Tapping Kenya’s Internal Tea Market

    Kenya, which relies on small holders to grow black tea for export, has experienced a difficult period due to declining prices, high production cost, climate change, narrow market outlets and limited diversification and value addition.

    This week Kericho county Governor Paul Chepkwony announced his jurisdiction plans to build a new tea factory on its 450-acre Kabianga tea farm for an estimated $3.4 million (Sh300 million).

    The county is undertaking feasibility studies to determine whether the processing factory will turn a profit producing higher grade “value-added” teas suitable for export to international markets.

    Tea grown in this region is currently processed as CTC (cut, tear, curl) at the nearby Momul Factory owned by the Kenya Tea Development Agency.

    The project is worthy of note because value-added processing is the key to generating profits. It is also central to increasing domestic consumption. About 5% of Kenya’s tea is sold in the domestic market earning $250 million, a small number compared to India where almost 90% of the locally grown tea is sold within the country. Chinese companies have created many profitable brands for various segments of the market consuming 82% of China’s 1.85 billion kilo annual production.

    Kenya’s Ministry of Agriculture is currently formulating a ‘national tea policy’ to encourage tea drinking. Principal secretary Sicily Kariuki told the Kenya Star on Saturday the policy will seek solutions to sustain production of high quality tea and reduce the cost of production, processing and marketing. The policy will also look into tea trade and value addition.

    Kenya earned $1.3 billion from tea exports in 2013.

    Learn more:  Kenya Star

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    Dan Bolton

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  • Survey Shows Tea Topping Soda Among Adults

    NCA Coffee Drinking Trends_Illustration
    Adult Tea Drinkers Exceed Soda Drinkers in National Survey

    NEW ORLEANS, LA– The National Coffee Association’s survey of drinking trends for the first time in decades revealed the number of past-day tea drinkers is greater than adults choosing soda.

    What did you drink yesterday? is one of the National Coffee Drinking Trends questions: Soda fell to 41% behind coffee, tap water (54%) and tea (44%). Coffee topped the list with 61% of those queried. The survey engaged a nationally representative sample of about 3,000 people 18 and older. It is conducted in January and February each year.

    Coffee has often been the first choice in surveys dating to 1950. Water is subdivided into tap water 54% and bottled water (46%) for a total 100%. Past-day incidence of tea drinking was next ahead of soda, milk, juice and alcohol. The big change was in carbonated soda which fell 9 points compared to last year’s survey. Tap water is up 7 percentage points in part due to economic conditions and as the most popular soda alternate.

    Individuals 40-49 years of age are the most frequent coffee drinkers at four cups per day. The average number of previous day cups was 3.4 for past day drinkers.

    Sports, energy drinks and energy shots were consumed by 14% of respondents (totals do not sum to 100 as many respondents reported drinking several different beverages the previous day). The percent of people drinking coffee is on the rise as well as tea and hot drinks in general. Past day drinkers are predominately hot coffee drinkers (93%) with 7% drinking iced or frozen coffee. In the 2014 survey 73% of Americans reported drinking coffee in the past week and 79% in the past year.

    Also significant is the fact that 34% of coffee drinkers drank a gourmet/specialty coffee the previous day. Daily non-gourmet coffee drinking is down to 35% from last year’s 39%. Most coffee is prepared at home (85%) but 35% of previous day coffee drinkers report they purchased coffee away from home. The total exceeds 100 as many respondents drink coffee prepared at home as well as the office, restaurants and coffee shops.

    Single-serve continues its meteoric rise, 29% of previous-day coffee drinkers reported their coffee was prepared with a single-cup brewer. The study showed 15% of American households now own a single-serve brewer with 25% of those who do not have a brewer indicating they will purchase one within six months. Only 53% of those who brewed coffee at home used a drip brewer. The remaining coffee at home is prepared on an espresso machine (12%) or from instant, 12%.

    To learn more: NCA MarketResearchSeries,

    Full tabular data are also available.

    By Dan Bolton

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