| Omicron Cancels Restaurant Reservations | Sri Lanka Barters $5 Million of Tea Monthly to Settle Iran Oil Debt | Foodservice Tea Still Recuperating, a TEAIN22 Forecast
Seven-minute Tea News Recap
Caption: Two years of COVID reset tea consumption at restaurants and cafés, initially reinforcing traditional expectations of comfort and warmth but evolving to permanently disrupt delivery, takeaway, menu choices, and celebratory occasions with tea.
This week Tea Biz travels to the Republic of Ireland to visit Teacraft founder and research scientist Nigel Melican who explains the necessity of mechanical tea harvesting and describes an innovation in two-man harvesters that features a rotating head that simulates a “selective” pluck without shearing leaves.
| TEAIN22: Bulk and Specialty Tea Prices Diverge | France Will Pay €1 Million to GI Certify Ceylon Tea | Sotheby’s Inaugural Tea & Teaware Auctions Total HDK8 Million
PLUS Frugal Innovation, Part 2
Seven-minute Tea News Recap
Caption: A few of the 24 rare Puerh cakes and aged teas that were auctioned at Sotheby’s first tea auction. Photo replicated from Sotheby’s auction website.
This week Tea Biz travels to Asheville, North Carolina to meet teaware potter and ceramist Mary Cotterman who discusses the artisan spirit and state of mind of those embracing native clay and how COVID-19 lockdowns focused her attention like a monk…
…and then to Assam, India to hear Part 2 of the series Frugal Innovation. In this segment, Aravinda Anantharaman explores the application of Frugal Innovation in the tea garden and factories. Shekib Ahmed of Koliabur Tea Estate explains that “Objective data changes the conversation in the factory from vague concepts to thresholds and parameters. It makes operations scientific so that we can improve.”
Mary Cotterman turning a teapot lid at her studio in Asheville, North Carolina
Aritisan Teaware Born from Native Mud
By Dan Bolton
Mary Cotterman was 12 when she learned to throw clay on a potter’s wheel. In the decades since, that wheel has never stopped spinning for this accomplished teaware artisan. She describes the foundation of her work as functionality, “because for me, no matter how it looks, if I’m making a piece of teaware it needs to be a precise tool for pouring tea, so a lot of my design I take from traditional Chinese vessels, but I have learned small techniques and vernacular from all over.” Read more…
Listen to the interview
Mary Cotterman on crafting teaware in the US and the state of mind of artisans embracing native clay.“Technology has become much more affordable today than what it was 5-10 years ago because processing power has made it affordable. Devices are more affordable. Technology has become simpler,” says Shekib Ahmed.
Embracing Simple Technology with Scalable Impact
By Aravinda Anantharaman
Frugal innovations utilize simple technology to address some of the most vexing challenges facing the tea industry. It’s an umbrella term for innovations that do not require much capital, carry a low financial risk, and can be done safely with high reliability. Abhijeet Hazarika, former head of process innovation at Tata Global Beverages, describes several innovations that have moved from the drawing board to become successful pilots at partner estates. explores the application of frugal innovations in the tea garden. Shekib Ahmed of Koliabur Tea Estate in Assam talks about experimenting with frugal innovations in the field, but it’s in the factory, he says, where these simple technologies show the biggest impact. Read more…
Listen to the interview
Frugal Innovation
In Part 1, Aravinda Anantharaman explores the application of Frugal Innovation in buying and selling tea with Abhijeet Hazarika, former head of process innovation at Tata Global Beverages. Listen to Part 1 in Episode 47 of the Tea Biz Podcast
News
TEAIN22: Bulk and Specialty Tea Prices Diverge
By Dan Bolton
The combined annual growth rate (CAGR) predicted for tea in 2022 suggests consumer preference for health enhancements and premium taste will widen the profitability gap separating bulk CTC (cut, tear, curl) from whole leaf and specialty grades.
The fortunes of the tea industry are cyclicalwith better prices ahead.
Demand in recent decades has been resilient, including during the Great Recession – some would say relentless. During the five years ending 2019, demand grew at around 4.5% per year. The pandemic slowed that pace but consumption in 2022 will top 6.5 billion kilos, enough to make three billion cups a day. Until recently growers managed to quench that thirst.
What disrupted that equilibrium in 2020 is that tea output declined for the first time in 20 years. The resulting scarcity in domestic markets including India and China boosted prices. ICRA, a division of Moody’s Financial Ratings, in October 2020 predicted correctly that the bulk tea segment would report the highest operating profits in recent history.
In 2021 the situation reversed as more tea became available and prices declined.
Compounding the supply-demand equilibrium is the fact that consumer behavior rapidly changed consumption habits as office drinkers vanished, foodservice sales plummeted, and health and well-being became a daily concern.
Better tasting teas triumphed
Once content with commodity offerings at the office and in restaurants, the pandemic accelerated growth in the residential segment. Sales of botanicals and blends in grocery and online spiked. In Germany for example, per capita consumption of teas and botanicals increased by an average of two liters to 70 liters per person per year.
Market research firm Techanvio writes that “consumption of tea for residential use is significantly growing as consumers are continuously seeking changes in their lifestyles and food habits and experimenting with cuisines & beverages. Moreover, the rising at-home consumption of tea is expected to grow at a steady rate owing to increasing urbanization and the changing eating habits of consumers across the world.”
Technavio predicts recent growth rates of 3% to 4.5% per year will accelerate to 6%+ (or greater) for the specialty tea market through 2026. The segment will add $5.5 billion in sales from 2021-2026, according to Techanvio.
In contrast, bulk tea is predicted to have a challenging year, according to ICRA and The Associated Chambers of Commerce of India (ASSOCHAM). In a joint report titled Tea Industry at the Cross Road, ASSOCHAM predicts that declining prices and increasing energy and labor costs will be a drag on financial performance.
ICRA Vice President of Corporate Sector Ratings, Kaushik Das says, “Players who are focused on producing quality teas are likely to witness a much lower decline this year as average auction prices of teas manufactured from own garden leaves of the top 50 estates of Assam and Dooars have witnessed a decline of only 8.5% against 25% for the overall auction average during the first half of the fiscal year 2022.”
In North India prices during the first half of the fiscal year declined 23% year-over-year, a drop of 60 rupees per kilo on average compared to 2020. Declines are even more severe in the bought leaf segment, dominated by smallholders. Averages in that segment fell 77 rupees per kilo, down 33% year-over-year. In Kenya, auction prices dropped 8% to $2.18 per kilo in the 12 months ending July 1.
Globally tea production has now returned to pre-pandemic totals, increasing 13% during the first six months of 2021 as growers in India and Sri Lanka adjusted to the pandemic. Output in 2021 is expected to top 15% in Sri Lanka and India has so far produced 100 million more kilos of tea than during the same period last year. Output declined by 10% in Kenya but exports grew 19% helping keep demand and supply in balance.
Biz Insight – The Economist Intelligence Unit first reported tea deficits in 2019 and 2020 and now forecasts demand will exceed supply in 2022 and 2023 by 427,000 metric tons. Warehouses are filled with tea so a shortfall of a few hundred thousand metric tons will not lead to shortages in the grocery aisle, but when combined with the cumulative harm from climate change and with food inflation at record levels, disrupting the long-standing equilibrium will certainly firm up prices that had fallen well below the long-term average of US$2.85 per kilo.
TEAIN22 is one of a dozen New Year Tea Biz forecasts
Tea remains unearthed from ancient tombs in Zoucheng, Jining City, Shandong Province, China. /CMG
Sotheby’s Inaugural Tea Sale
Legendary auction house Sotheby’s concluded its first rare tea and teaware auctions in Hong Kong this week. Sales totaled HDK$4 million for the teas. Reserve prices approached $1 million Hong Kong dollars for Puerh, some aged for more than a century. Teaware as old as 1000 years was featured in a parallel auction titled Echoes of Fragrance: Tea Culture from the Tang to the Qing Dynasties. Sales of teaware totaled HDK$4.3 million (about $552,000 in US dollars)
The online catalog included a 1900 Chen Yun Hao puer cake and a 1950 Jia Ji Blue Label Tea that sold for HKD562,500 ($72,000). Bids for a 1937 basket of Sun Yi Shun (aged Liu An) opened at HKD $240,000 and sold for HDK300,000 ($38,000). A bid of $500,000 Hong Kong dollars is equivalent to about $65,000 US dollars and while that threshold was met for only the rarest of teas, all but two of the 24 lots were sold. Several of the more recent teas including a 1985 Snow Label sold for $112,500 Hong Kong dollars (about $14,000 US).
The companion teaware auction featured 63 lots including a Jian black-glazed bowl dating back eight hundred years to the Song Dynasty and a rare iron-red crane cup dated to the reign of Emperor Jiajing in the 1500s. Temmoku patterns include a “hare’s fur” (that sold for HDK189,000) and a “partridge feather” (that sold for HDK403,200). Also purchased were celadon cups and stands, Yixing teapots, and a carved Tixi lacquered tea bowl that sold for HDK529,200 (about $70,000 in US dollars). During the Tang Dynasty, beginning about 1,400 years ago, tea was boiled and served as a soup with condiments. Examples from that period include conical tea bowls, unique utensils, tea caddies, trays. Winning bids ranged from HDK 25,000 to HDK50,000 (about $6,000 US)
? By Dan Bolton
Yi Chang Hao (Jing Pin-Song Font) 1999 – HKD40000
Blue Label Tea Cake (Jia Ji) 1950s HKD562,500
Sun Yi Shun Aged Liu An (Five tickets) 1937 – HKD300,000
France Will Pay €1 Million to GI Certify Ceylon Teas
The four-year grant finances technical assistance to enable the Sri Lanka Tea Board (SLTB) to protect its national brand from counterfeiters while assisting the Ceylon tea value chain “to become more productive, inclusive and sustainable,” reads the AFD press release.
Eric Lavertu, Ambassador of France to Sri Lanka, said that “France has been a pioneer in the establishment of Geographical Indications to create added value to its quality products and to preserve the reputation of French gastronomy over the world. I am confident that the solid experience of CIRAD in partnership with the… [tea board] will allow a broad endorsement of the Geographic Indication by all stakeholders, based on high-level product quality, together with sound environmental and social standards.”
Currently, Ceylon tea does not have protection to uphold and authenticate its quality, resulting in counterfeit sales in various consumer countries.
Biz Insight – Sri Lanka is Heading for a Fall | Fertilizer banned earlier in the year is now available but the cost has risen from SLRs1500 rupees a kilo to SLRs6600 rupees, about $33 US dollars per kilo and rising. A ban on the herbicide Glyphosate that was eased in November was reversed in December. Output recovered in 2021 but that recovery is highly unlikely to continue due to ongoing economic problems with widespread protests by farmers over the cost of food and unions pressing for a big wage increase. Sri Lanka, where tea is hand plucked, has the highest cost of production in the world, averaging SLRs 269 ($1.33) per kilo.
– Dan Bolton
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Kolkata Sale 49 saw good demand for all teas. The Middle East was active for orthodox tea. Sales of Darjeeling and Dust relied on local buyers. Hindustan Unilever was active in Dust. Prices dropped marginally when compared with Sale 48; Darjeeling saw the biggest price drop of INRs 50. However, there were fewer out-lots of Darjeeling this week, compared to Sale 48. In Guwahati, the market opened to good demand with major blenders active for both CTC leaf and dust. Read more…
India Tea Price Watch | Aravinda Anantharaman
Upcoming Events
January 2022 Tea and Beyond! | GTI 7th Annual Colloquium | January 13 | UC Davis | Day-Long Virtual | Tea and Beyond: Bridging Science and Culture, Time and Space, exploring differences between tea and herbal infusions around the world and in terms of medicine and health, ceremony, traditions, sustainability, marketing, and more.| Program | Register FREE (Zoom)
| Economic Forecasters Predict Higher Tea Prices in 2022 | As Holiday Orders Ease, a Delivery Crisis Looms | Germans Tea Drinkers Set a Consumption Record
PLUS Frugal Innovation, Part 1
Seven-minute Tea News Recap
Caption: Scanning tea fields at different wavelengths to assess plant conditions. Using cameras to monitor crop conditions, in order to identify threats from disease and pests at an early stage, enables a more targeted (and effective) use of pesticides, lifting productivity and profits.
Tea Biz this week travels to Assam, India to explore “Frugal Innovations” that utilize simple technology to address some of the most vexing challenges facing the tea industry. In Part 1 of the series, Aravinda Anantharaman talks with Abhijeet Hazarika @TeaSigma, an IT analyst and former head of process innovation at Tata Global Beverages, and with growers Saurav Berlia and Shekib Ahmed on cost-efficient experiments and pilots that demonstrate why tea producers should embrace simple technologies with scalable impact.
Monitoring quality with inexpensive cameras and laptops, a centrifuge, and microwave ovens.
Bringing Technology into the Tea Value Chain
By Aravinda Anantharaman
There are few entry barriers to tea. It does not demand heavy infrastructure. But a complaint shared by smallholders selling raw leaf to large-scale tea producers operating multiple factories is that for the past decade, farmgate prices are not commensurate with costs. Now the economics of the tea trade is gradually shifting from oversupply to scarcity. At the same time, some quiet work underway in India is yielding encouraging results that lower the cost of tea production, improve quality, and ease a shortage of labor. The most powerful driver for change is revenue. Prices globally, on average, increased by $0.21 cents per kilo during 2021, according to Trading Economics. Abhijeet Hazarika, IT analyst @TeaSigma and former head of process innovation at Tata Global Beverages, observed that “Tea is not a very high profit yielding commodity and will not be so in the foreseeable future until some tech breakthrough happens.” The frugal innovations described in this series, combined with higher prices may herald that breakthrough. Read more…
Listen to the interview (Part 1)
Abhijeet Hazarika on promising new Frugal Innovations
Frugal Innovation
In Part 2, Aravinda Anantharaman explores the application of Frugal Innovation in the tea garden and factories. Shekib Ahmed of Koliabur Tea Estate explains that “Objective data changes the conversation in the factory from vague concepts to thresholds and parameters. It makes operations scientific so that we can improve.” Listen to Episode 48 of the Tea Biz Podcast
News
Higher Tea Prices Forecast for 2022
By Dan Bolton
Globally tea export prices are edging upward, driven by combined spikes in transportation and logistics, more costly fuel and petroleum-derived fertilizer, and increased labor expense.
Regionally the trend is mixed. Exports through September are down 10% by volume but up in value in India, which produces 20% of the world’s tea. India reports falling domestic prices following a pandemic year that boosted prices through the first half of 2021. In November, auction prices for CTC in Kolkata fell to an average of $2.78 (INRs209) per kilo, down from $2.97 during the same period in 2020.
In contrast, last week Kenya auctioned tea at a five-year high of $2.40 (KSH271) per kilo, according to the East African Tea Traders Association (EATTA). Production there is also down 10% overall.
Declines in production are an early sign that the economics of the tea trade is gradually shifting from oversupply to scarcity. The Economist Intelligence Unit (EIU) predicts output globally will increase slightly to 6.279 million metric tons (6.3 billion kilos) while consumption rises to 6.538 million metric tons, creating a deficit of 260,000 metric tons. That deficit will increase to 363,000 metric tons in 2022.
There remains a glut of low-grade tea, but demand for inferior tea is slack.
Globally, tea prices, led by China, have increased by $0.21 per kilo since the beginning of 2021, up 7.32% according to Trading Economics. The analytics firm, using macro models and analyst expectations, based on benchmark CFDs, predicts tea will trade at $3.30 per kilo in 2022. A contract for difference (CFD) is an agreement between a buyer and seller stipulating that the buyer will pay the seller the difference between the current value of an asset and its value at contract time (if the difference is negative, then the seller pays instead). Trading Economics forecasts tea prices could reach an average of $4.10 per kilo by year-end.
If that comes to pass it will be only the second time tea has crossed the $4 per kilo threshold in the past decade. More likely is that rising prices will trigger increases in production. A study by the Indonesian Board of Trade using United Nations FAO data calculated the impact of increased production on prices.
“If there is an overreaction to recent high prices which, for example, would result in a 5% increase in production, the results can be quite different…. the clearing price would be 17% less than the baseline price at $2.54 per kg,” writes Iwan Cahyo Suryadi, Chairperson, Board of Commissioners Indonesia Board of Trade
“If the reaction to the current high prices is even stronger, resulting in a 10% increase in production over the baseline increase, then prices could be 38% lower,” according to Suryadi.
EIU estimates a price increase that is close to the long-term average, “we expect concerns about supply and a gradual recovery in demand in some markets (particularly in Europe and North America) to provide some support to prices in the remainder of 2021. We estimate that prices will average $2.69 per kilo in full-year 2021, representing a 0.5% decline from 2020. We are forecasting an 8.7% increase in average prices in 2022, to $2.92 per kilo.”
Biz Insight – The long-term average price of commodity tea at auction is $2.85 per kilo. Quality tea is more likely to be sold direct and at significantly higher prices. Sales of tea exported by all countries totaled $7.1 billion in 2020, down 4.3% by value since 2016. Year-over-year the value worldwide of tea exports declined an average of 8.6% from 2019 to 2020, according to the website World’s Top Exports. China (dominant in green tea) accounts for 29% of global sales of tea exports by value followed by Kenya with a 16% market share (dominant in black tea), Sri Lanka 10%, and India 9.7% both have about a 10% share.
Tea remains unearthed from ancient tombs in Zoucheng, Jining City, Shandong Province, China. /CMG
Germany Reports Record Tea Consumption
The German Tea & Herbal Tea Association (Teeverband), based in Hamburg, reports that consumption of tea grew by two liters per capita in 2020 to a record of 70 liters per capita. East Frisians averaged an astonishing 300 liters per capita during the stay-at-home year. These totals include the consumption of black, green, herbals, and fruit teas. The report’s authors write that declines in out-of-home consumption, “triggered by the pandemic-induced closure of hotels, restaurants and canteens, were offset by increased demand in food stores, chemists and specialist shops.”
Hamburg is a global hub for the tea trade, importing 41 million kilos and shipping 22 million kilos of teas to 108 countries. India is Germany’s most important tea trading partner, sending 6.7 million kilos so far this year, China and Sri Lanka follow. The tea association’s managing director Maximilian Wittig said that organic certified black teas now account for a 12.9% share of the market. Organic herbal teas increased their market share to 13.5% a 2.5% gain compared to 2019.
Black tea is favored by 73% of Germans with 90% steeped in tea bags. Germans buy 57% of their tea in grocery and department stores and 12.4% at tea shops with the biggest increase in channel purchases online at 8.2%.
Download the 20-page Teeverband report on the Tea Biz blog.
As Holiday Orders Ease, a Delivery Crisis Looms
Logistics experts in November who predicted everything that could possibly go wrong ? were right.
Jason Walker at Firsd Tea, the US office of the world’s largest green tea exporter, writes that “the burden of moving holiday retail goods has shifted from the ships to the warehouses and trucks. Major players and industry experts still do not anticipate any significant, overall easing of rates and more reliable delivery speed until at least Q1 of 2022.”
Until then buyers are advised to place their orders months in advance, be willing to pay exorbitant rates ($10,000 for a 20-foot trans-pacific container), and order tea in much larger quantities than in past years to ensure sufficient inventory. Wholesalers report waiting 62 days for shipments to arrive from China. Bloomberg writes that ports serving Southern California by November had offloaded a record 17 million 20-foot equivalent units and then loaded 3.3 million empty containers for the return trip. Los Angeles has 2 billion square feet of warehouse space that is now renting at a 30% premium. An additional 20 million square feet is under construction.
Deliveries that took truckers two days in 2019 now take up to 10 days before arriving in Chicago as congestion at ports and warehouses and a shortage of drivers combine to more than double delivery times. Walker cites a shortage of warehouse workers and the added expense of overtime as the ports, as requested by President Biden now operate 24/7. On-time arrival is virtually impossible unless delivered by air freight, in which case it’s unaffordable.
When will it end? Ship jams are now visible at ports in Japan, Taiwan, and Mexico. November marks a turning point. But experts predict the transport crisis will remain through spring and once again ? they’re probably right.
– Dan Bolton
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India Tea Price Watch | Sale 48
Responding to the tea producers’ concerns over rising imports against declining exports, the Tea Board of India passed an order on November 11, by which tea importers are mandated to mention the origin of the tea on the sale invoices. Importers cannot blend imported tea with GI-protected Indian tea (Darjeeling, Kangra, Assam (orthodox), Nilgiris (orthodox)) and pass it off as Indian-origin tea. Producers of Darjeeling tea have been asked not to procure green leaf from outside the GI area. This is expected to act as a clampdown on cheap imports into India from Nepal and Vietnam, and allow Indian exports to keep their quality, markets, and prices. Read more…
India Tea Price Watch | Aravinda Anantharaman
Upcoming Events
January 2021 Tea and Beyond! | GTI 7th Annual Colloquium | January 13 | UC Davis | Day-Long Virtual | Tea and Beyond: Bridging Science and Culture, Time and Space, exploring differences between tea and herbal infusions around the world and in terms of medicine and health, ceremony, traditions, sustainability, marketing, and more.| Program | Register FREE (Zoom)
| Ekaterra Tea CEO John Davison Gets Underway | India Steps up Efforts to Halt Illegal Tea Imports | Chinese Archaeologists Discover Oldest Tea Yet
Seven-minute Tea News Recap
Features
This week Tea Biz travels to Singapore for a conversation with John Davison, CEO of ekaterra tea, soon to be the largest tea company in the world. Ekaterra is currently a division of Unilever that houses 34 tea brands including Lipton, PG Tips, TAZO, Brooke Bond, Lyons, and Red Rose. In November CVC Capital Partners, a multi-billion private equity firm headquartered in Luxembourg, paid $5.1 billion for Ekaterra tea, outbidding several competitors and establishing a valuation based on 14x earnings before taxes and depreciation.
Ekaterra Tea CEO John Davison discusses his plans for re-energizing the Unilever tea portfolio.
Ekaterra tea CEO Re-energizes World’s Largest Tea Company
By Dan Bolton
John Davison joined Unilever in March 2021 to carve out the company’s underperforming tea portfolio. Davison was formerly CEO at Zuellig Pharma, a $13 billion pharmaceutical distribution company employing 13,000 workers in 12 Asian countries. Davison, who is British, is a graduate of Cambridge University and Harvard Business School. He began his career with UK retailer Marks & Spencer before joining McKenzie & Co. in 1991. He was global head of strategy at Diageo in 1995 during the Guinness merger and a regional president at Danone for 11 years beginning in 2003. Davison, who lives in Singapore, will relocate to Europe after Christmas. Davison discusses the urgency of improving tea quality and adopting sustainable initiatives along the entire supply chain. Listen to his plans for re-energizing the world’s largest tea company. Read more…
Listen to the interview
John Davison on re-energizing the world’s largest tea company
India Steps up Efforts to Halt Illegal Tea Imports
By Dan Bolton
India’s food safety and customs officials have stepped up inspections of tea imports targeting Nepal and citing complaints that large quantities of Himalayan grown tea are being illegally passed off as origin protected Darjeeling tea.
It is not clear how great a quantity is involved but CBIC is asking for proof of export license and sanitary and phytosanitary certificates after customs authorities discovered that only 23.4 million kilos of the 60.4 million kilos imported into India during the past three years for re-export had been re-exported. The Darjeeling Tea Association asserts most of this tea arrived from Nepal and was sold as if India produced it.
Growers describe a porous border that makes it possible for raw tea leaves to cross from Nepal. Unscrupulous factory owners can confidently process the leaf and pass it off as Darjeeling in the domestic market, reaping a significant difference in price. Tea vendors are in on the game, offering as little as 600 rupees [about US$8] per kilo to producers and then doubling the price for unsuspecting customers.
Larger quantities of bulk processed tea can also cross the border as a bilateral trade agreement waives tariffs and prevents arbitrary inspections that could be viewed as harassment.
India is the largest market for Darjeeling with 5 to 6 million consumers. As India’s premier growing region, Darjeeling has focused mainly on controlling overseas exports to protect its name and reputation for purity and taste. Joining us today is Sparsh Agarwal a fourth-generation Darjeeling grower at Selim Hill Tea Estate who articulates a domestic threat, which is the import of teas blended to dilute the Darjeeling brand.
Listen to the interview
Sparsh Agarwal explains how a porous border with Nepal dilutes the Darjeeling brand
Agarwal reports “The crux of the problem is that if you have spent any time in Darjeeling, you know that the border between Nepal and Darjeeling is super porous, right? So there’s a large problem of green leaves being smuggled in and then being produced in Darjeeling tea factories. The second-degree problem is that tea shops are buying Nepal teas at a fraction of the price of Darjeeling teas. This is not the problem of the growers, to be honest, it’s not the grower’s fault that this is happening. Ultimately we will all have to go towards better, more established sourcing of teas using technology. We are looking into how technology like blockchain can be used to be able to improve these things. We are right now in advanced conversations with one particular company to be able to do better sourcing for our customers so that they know that this tea is not only coming from Salem Hill, it’s coming from these sections within Selim Hill.”
Biz Insight – India is also aggressively challenging importers to monitor Kenyan tea, threatening to cancel their operating license for violating new rules that require labeling by origin. Kenya had hoped that India would establish a minimum import price, a solution endorsed by the Indian Tea Association. Instead, India stepped up inspections taking a closer look at quality and quantities to slow a recent surge of low-value teas. Kenya shipped to India 2.8 million kilos of tea from January through June, up from 1.5 million kilos in the same period last year.
Tea remains unearthed from ancient tombs in Zoucheng, Jining City, Shandong Province, China. /CMG
Chinese Archaeologists Discover the Oldest Tea Yet
Archaeologists extended the age of prepared teas to the early stages of the Warring States, circa 453 to 410 BC, a period 2,400 years ago, according to a report by the Xinhua News Agency.
The samples were discovered in tombs excavated in Shandong Province in the remains of a city built 2,800 years ago. [during the Spring and Autumn period (770-476 BC)]. Stem and leaf carbonized residues were found in an inverted porcelain bowl. Researchers led by Professor Wang Qing at Shandong University said the residue is likely dregs left by ancient people after boiling tea. Tests for theanine confirmed the substance as tea. The findings advance the age of prepared teas by more than 300 years in a study published in the Chinese-language Journal of Archaeology and Cultural Relics. –Dan Bolton
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Nov 27 – Sale 47
India Tea Price Watch | Sale 47
Tea Biz caught up with tea exporter Pranav Bhansali of Bhansali and Company to review the Indian tea industry’s past year. He said, “Quality teas have been selling at fantastic premiums for CTC and Orthodox teas, even at this late stage of the season. This is surprising, especially for CTC teas, since it is unusual to see the major packeteers and blenders being this aggressive and active on quality produce at this time of the year.” Bhansali says, “Indian tea exports have taken a hit due to high CTC prices and weather disruptions.” The Tea Board estimates a decline of 8-10% in calendar 2021 compared to the same period last year. “Supply chain disruptions and container shortages are expected to continue into 2022. On the bright side, Iran continues to be the largest consumer of Indian Orthodox teas,” says Bhansali. Read more…
Aravinda Anantharaman
Aravinda Anantharaman introduces the two-part series Frugal Innovations with Abhijeet Hazarika and Indian tea growers Saurav Berlia and Shekib Ahmad who describe cost-efficient experiments and pilots that demonstrate why tea producers should embrace simple technologies with scalable impact. Listen to Episode 47 of the Tea Biz Podcast | Friday, Dec. 10
Upcoming Events
December 2021
Sips & Bites: Exploring the World of Artisanal Tea | December 15 | Virtual | Director Dr. Katharine Burnett will share an overview of the Global Tea Initiative. Manik Jayakumar, Founder of QTrade Teas & Herbs, and Rona Tison, Executive Vice President of Corporate Relations at ITO EN, North America, will discuss their work in the tea industry and walk attendees through a tasting of their exquisite teas. The Global Tea Initiative (GTI) for the Study of Tea Culture and Science was established in 2015 to promote evidence-based knowledge about tea. | Register FREE (Zoom) | 6-7 pm PST | Sponsored by the Robert Mondavi Institute for Wine and Food Science, University of California, Davis.
| In the Black: Holiday Sales Surge | CVC Capital Pays $5.1 Billion for Unilever’s Tea Portfolio | Weather Stations: A Climate Change Adaptation Essential for Tea
Seven-minute Tea News Recap
Features
This week Tea Biz travels to Brisbane, Australia where East Forged Tea co-founder Kym Cooper reminds us that innovation need not be at the expense of the timeless taste of tea. East Forged preserves that taste ? with no sugar, coloring, or artificial flavoring ? in a convenient, slightly fizzy, nitro-infused, cold-brewed iced tea that pours a craft-brew-like head of foam.
… and then to Boston, Mass. to learn how Evy Chen, facing an 82% decline in foodservice sales of her signature cold-brewed tea, reformulated, rebranded, and relaunched online as a successful direct-to-consumer brand.
Manufactured in a brewery and then canned, the teas get a burst of CO2 for fizz and nitrogen to add texture and a creamy head. Photo courtesy East Forged
A Fizzy, Foamy Innovation in Tea
By Dan Bolton
East Forged teas, launched in Australia in 2020, are nonalcoholic sparkling adult beverages cold-brewed for 12 hours from organic whole leaf green, black, and white teas and blended with low-sugar Calamansi, Pitaya, or Yuzu juice. Manufactured in a brewery and then canned, the teas get a burst of CO2 for fizz and nitrogen to add texture and a creamy head. The black tea tastes of citrus and is dry, not sweet, the Fujian-grown white tea is flavored with calamansi, a mild, wild citrus-hybrid from the Philippines ideal for social occasions. Read more…
Listen to the interview
Kym Cooper describes the importance of making teas that taste like tea
Resilient & Resourceful
The tea industry globally demonstrated its ability to recover quickly during two years of disruption. Less is said about individuals who overcame pandemic-related obstacles and the resourcefulness of people that grow, process, and trade tea. To remedy that, Tea Biz is sharing stories of resilience, reinvention, pivots, and clever workarounds that exceeded expectations.
Evy founder Evy Chen
A Story of Reinvention
By Dan Bolton
In 2020 US restaurant and foodservice sales declined by $240 billion (22% for the year) placing unprecedented stress on food and beverage suppliers. In Boston, Evy’s Tea founder Evy Chen watched as standing orders for her organic, sustainable, artisan cold-brewed bottled teas cease overnight. Revenue fell 82%. She persevered, observing that COVID lockdowns led to a surge in online transactions and altered long-established consumer buying habits. Within a year she had reformulated, rebranded, and relaunched online as a successful direct-to-consumer brand known as Evy. Read more…
Evy Chen on bouncing back after a dramatic drop in sales of her namesake cold-brewed tea.
News
Unilever spent the past year consolidating its 34 tea brands into a single division launched as ekaterra Tea.
CVC Capital Pays $5.1 Billion for Unilever Tea Portfolio
By Dan Bolton
CVC Capital Partners last week paid $5.1 billion to acquire legendary tea brands Lipton, PG Tips, Brooke Bond, Lyons, Bushells, and Red Rose as well as relative newcomers TAZO, T2, and Pukka Herbs culminating Unilever’s corporate carve-out.
The portfolio of 34 brands was christened Ekaterra Tea following a year-long restructuring with the intent to either sell or separate the division from Unilever’s core offerings. Ekaterra is now the world’s largest tea company with approximately 10% global share and the leading tea brand in 58 markets. Unilever retained its tea business in India and Indonesia along with the PepsiCo-Lipton partnership headquartered in the US.
Ekaterra CEO John Davison welcomed the acquisition: “ekaterra is a strong business with positive momentum and has an exciting future ahead under the new ownership of CVC Fund VIII. We look forward to the next stage of our journey as the world’s leading Tea business.” Read more…
Biz Insight – Bold big-scale investments in tea companies are rare. Five years ago Unilever spent a combined $500 million acquiring retail chain T2 in 2013, completing the roll-up in 2017 when it bought the TAZO brand from Starbucks and Pukka Herbs.
But these acquisitions were tactical and defensive, designed to stimulate revenue in light of a moribund black tea category by diversifying an aging stable of legacy brands from Lipton to Lyons. The $5.1 billion deal announced by Luxembourg-based CVC Capital this week is 10x greater, signaling an intent to revitalize and elevate the portfolio. Unilever spent the past year shaping a new corporate model for the large-scale production of sustainable tea but was unwilling to finance it. Ekaterra’s vision could only be realized if the corporate carve-out attracted aggressive bidding. Fortunately, it did. Finalists CVC Capital, Carlyle, and Advent International each spent time and money evaluating the potential rewards for investors. The low bid of $4 billion demonstrates that independently they agree that Ekaterra is headed in the right direction. CVC’s winning bid was 14 times (EBITDA), a measure of the portfolio’s basic contribution to Unilever’s earnings. All three bids embraced the complexity of re-imagining tea at scale. Insiders say CVC won the day with determination and grit.
Ekaterra Tea CEO John Davison and Dan Bolton met virtually for an hour-long interview last week in which Davison discusses the urgency of adopting sustainable initiatives along the entire supply chain. Listen to his plans for the company in Episode 46 of the Tea Biz Podcast | Friday, Dec. 3
Restaurant reservations are up 4% in the US and are now 7% higher globally compared to 2019, according to OpenTable. Recovery is uneven. During the past two years, 90,000 US restaurants closed permanently and the omicron variant has heightened concerns about future lockdowns.
In the Black: Holiday Sales Surge
By Dan Bolton
Shoppers are exceeding expectations for the holidays.
Americans spent an estimated $5.1 billion on Thanksgiving Day and nearly twice that on Black Friday sales that extended through Sunday. Adobe’s Digital Economy Index estimated total sales will reach $9.2 billion. Small business Saturday will net $4.5 billion. Toy sales are up 256%. Barclaycard Payments reported a 16.7% increase in volume compared to the same period on Cyber Monday 2020 and a 4.5% increase in payments compared to pre-pandemic levels.
US consumer spending online rose 20% in the first three weeks of November, according to the Adobe Index which predicts a record $207 billion in e-commerce sales this holiday season, up 10% compared to 2020. The US Census Bureau tallied $214.6 billion in third-quarter e-commerce sales, which now account for 13% of total US retail sales. The National Retail Federation projects holiday sales will increase 8.5% to 10.5% totaling $859 billion over the forecast period, compared to 2020.
Consumers appear to be heeding the advice to shop early. The Guardian reported a Deloitte survey that showed people spent 80% to 85% of their holiday gift budgets before Black Friday. Read more…
Africa has only one-eighth the minimum density of weather stations recommended by the World Meteorological Organization (WMO) leading to inaccurate forecasts and unreliable early-warning systems. Kenya’s government currently maintains only 22 rainfall stations in a country spanning 225,000 square miles.
Weather Stations: A Climate Change Adaptation Essential to Tea
The Glasgow Climate Pact calls for doubling the developed world’s investment in climate adaptations for poor nations.
Farm-level mitigation is underway as tea gardens dig ponds to capture rainwater and plant trees for shade but generalized weather forecasts focus on changes in average conditions and are of little help alerting growers to heatwaves and frost.
Africa has only one-eighth the minimum density of weather stations recommended by the World Meteorological Organization (WMO) leading to inaccurate forecasts and unreliable early-warning systems, according to the Washington Post.Kenya’s government currently maintains only 22 rainfall stations in a country spanning 225,000 square miles.
As it turns out, the gardens themselves are repositories of great volumes of “hidden” weather data used by the University of Leeds to develop high-tech computer simulations capable of providing climate information that is both useful and usable for tea growers in Kenya and Malawi.
The Conversation explains that understanding what future conditions will be like is particularly important for tea growers because the tea plant has a long lifespan, of more than 80 years. “That means it is critical to take decisions now that will continue to be sound in the future, like replanting with better and resilient cultivars, planting shade trees and crop diversification,” according to researchers.
The site-specific modeling establishes a temperature threshold specific to tea varieties. In Kenya’s Rift Valley growers are alerted when projections show several consecutive days of temperatures exceeding 27 degrees Celsius. In Malawi, the threshold temperature is 35 degrees Celsius.
“Projections from a suite of 29 global climate models offer projections for the 2050s and 2080s,” according to the Leeds University researchers.
Biz Insight – In January the Kenya Agricultural and Livestock Research Organization (KALRO) signed a two-year contract with aWhere of Denver, Colo. to monitor 6,787 virtual weather stations in Kenya that provide advanced weather data and analytics that support climate-smart agricultural decisions. aWhere maintains 1.7 million virtual weather stations worldwide according to CEO John Corbett, who writes that “Having accurate weather data and analytical tools to generate actionable insights for the food sector positions Kenya as a leader in climate adaptation.”
–Dan Bolton
Read more…links indicate the article continues. Learn more… links to additional information from reliable outside sources.
Nov 20 – Sale 46
India Tea Price Watch | Sale 46
This week saw good quantities of tea on offer, with an all-India sale percentage at 80%. Prices were marginally higher than Sale 45. Kolkata saw good demand for all CTC, Orthodox, and Dust. Hindustan Unilever was active for CTC while the Middle East was active for Orthodox. The quantity of Darjeelings on offer this week was higher and prices were up marginally. In Assam prices remained largely the same as the previous week, however, they are better than corresponding 2019 prices. Analyst Abhijeet Hazarika @TeaSigma notes that high sales volume in the last two weeks with increased offerings has eased pressure on supply. Read more…
Aravinda Anantharaman
Upcoming Events
December 2021
World Tea & Coffee Expo | Gandhinagar, India | December 2-4 Launched in 2013 and now operated by Messe Muenchen India, this hybrid virtual and in-person event for tea and coffee professionals is now scheduled for the Helipad Exhibition Centre, Gandhinagar, Gujarat, India. Website | Register Click to view more upcoming events.
