What you need to start the week.

• Tea research points to memory benefits
• Price stable for India’s orthodox teas
• Tea Conference attendees consider future of tea

Tea Health

Medical researchers in China report that a cup of green tea improves memory, cognitive abilities and spatial awareness.

The study, published in the journal Molecular Nutrition & Food Research, was done on mice in a laboratory at the Third Military Medical University in Chongqing, China.

Lead researcher Yun Bai said “We ran tests on two groups of mice, one which had imbibed ECGC (epigallocatechin gallate, the catechin that is most prevalent in tea) and a control group. First the mice were trained for three days to find a visible platform in their maze. Then they were trained for seven days to find a hidden platform.”

The mice that were given EGCG found the hidden platform faster than the ones that were not, which suggested that EGCG boosted memory and learning by helping the mice recognize the object and improving their spacial memory.

“We proposed that EGCG can improve cognitive function by impacting the generation of neuron cells, a process known as neurogenesis. We focused our research on the hippocampus, the part of the brain which processes information from short-term to long-term memory,” Bai reported.

Medical News Today reported that the researchers discovered that EGCG helps to promote the making of neural progenitor cells, which are similar to stem cells, that can turn into many different kinds of cells.

Learn more.

Tea Import/Export

KOLKATA, West Bengal – Tea production has so far kept pace with India’s domestic demand stabilizing prices and insuring sufficient crop for export.

Higher prices for orthodox suggest the country is producing better quality tea.

Tea Board Chairman M.G.V.K. Bhanu told The (Calcutta) Telegraph that tea production is up by 25 million kilos through July.

“In the current financial year, I see tea prices to be slightly higher than the previous year, though not exorbitantly high. The price of exportable tea has increased 25 per cent. Orthodox tea prices will firm up. It is the high-quality tea that is going to cost more,” Bhanu told reporters during the 44th annual general meeting of the Tea Association of India.

Tea production reached 1,126 million kg in 2012, of which about 100 million kg was orthodox.

Arun N. Singh, chairman of the Indian Tea Association, said the year had so far seen CTC prices down by INRs 6-7 (9- to 10-cents) a kilogram while the orthodox variety was up INRs 25 (40 cents). About 20 million kg of orthodox tea has been produced this year compared to the first six months of 2012.

Learn more.

The Future of Tea

BOSTON, Mass. — The North American Tea Conference is the annual gathering of tea executives vested in tea.

A highlight is Thursday’s breakfast session organized by incoming Tea Association of the USA President Peter Goggi and John Snell, Director of Tea Procurement and Development at Mother Parkers Tea & Coffee, one of Canada’s thought leaders in tea

Breakfast organizers invited participants to answer a series of tough questions on the future of the tea industry.

“Our discussion last year revolved around economic sustainability and focused less on the human impact for the future,” Snell writes.”What lies ahead will have an uneven impact on people if we are not careful and mindful of our implementations.”

He challenged attendees to offer their collective wisdom in hope of instituting a broad discussion to bring about essential change.

Q:  Given the record tea crops in the world today and the softening of markets in all but a handful of places, are we seeing the rise of an industry dichotomy, where producer’s needs to be more efficient actually has a deleterious effect on the market? Is efficiency creating an untenable over supply or is this just a blip on an otherwise northerly trajectory?

If rising costs in origin countries continues to erode tea industry margins, how does the world expect producers to address this without harming returns to their workers, green leaf small holders and shareholders?

LinkedIn discussion.

My assumptions: Points of view vary among stakeholders. I answered  from the vantage of a tea retailer and wholesale supplier to tea vendors. I make two assumptions. The first is that the plantation model as it currently exists is unsustainable. The second is that the industry must see that tea supply remains well below demand until the price of tea doubles.

My belief: The tea industry from seed to shop must take steps to insure demand outpaces supply, initiating an upward climb in commodity prices.

My reasoning:

Oil now trades at a relatively stable $100 a barrel that was painful to achieve. The resulting equilibrium in the market insures sufficient revenue for production and sufficient incentive for innovation such as oil-sands exploration and spurring alternative energy produced from wind and solar and geothermal sources. Commodity tea should find a similar price point to insure that the existing plantation system, which is currently unsustainable, has the opportunity to evolve.

Selling commodity tea at double the current rate will make a difference. In the last five years rubber prices doubled. Wheat prices doubled. Sugar cane prices more than doubled. Cultivating the right cash crop in the right locations is critical. When coffee and tea producers in Indonesia weighted the profitability of tea against several cash crops tea, output declined.

How will the cultivation of tea evolve? As a first step, producers should either abandon marginal tea land or invest enough to make them profitable. Start by replacing aged stock with higher quality tea at improved yields. Introduce mechanization and soil and water conservation with greater emphasis on biodiversity and less reliance on mono-agriculture; irrigate to preserve tea land in prime growing regions that are drying due to changing climate; explore less labor intense methods of cultivation, such as applying organic fertilizer via irrigation to lower labor expense; educate small holders in best practices; and establish standards that emphasize quality over quantity. Consider the possibility that sophisticated tea farming on a small scale, 25- to 500-acres (as seen in wine country), may ultimately prove more sustainable.

Pricing is arbitrary without a futures market and with no benchmark grade of tea. Coffee is undergoing massive swings in pricing, but the ability to hedge has enable the largest suppliers to operate without devastating effect.

A universal benchmark could evolve from guidelines for quality within a country as India has done. The India Tea Board’s efforts to train groups of small holders and a recent decision to publish average prices strengthen this segment by help prevent small holders from falling prey to unscrupulous middle men.

Ultimately tea is traded among companies not governments. Companies that profit will pay more.

Demand is growing, but even more critical, consumers are more discerning and willing to pay more for tea. Consumption is rising at twice the rate of global production which is estimated at 1.87 percent annually for the next 10 years according to the United Nations’ Food and Agriculture Organization (2012). Consumption in 2010 grew by 6 percent. In Canada sales from specialty tea, which amounts to about a third of volume, exceeds those of commodity tea. In this I see hope.

Q: Are consuming countries responsible for this quandary and should minimum pricing be established or should market economics be allowed to marginalize certain growers and their communities?

My answer: Multinational tea suppliers are closely aligned with the consuming countries. When the greatest profits lie in cheap-cheap tea, these companies exert their influence politically and within the market to deliver cheap-cheap tea. When demand shifts to higher quality tea, these same corporations will meet that need. Low-as-you-can-go prices are not the inevitable consequence of global capitalism. Policy is complicated by the fact that governments in producing countries encourage the labor-intensive production of tea, staunchly defend the auction system, and in some instances even litigate against mechanization. The pursuit of desirable hard currencies in the third-world has fueled the rush to boost production, knowing full well that overproduction will result.

When major producers* meeting in Colombo in January 2013 created the International Tea Producer’s Forum they were mimicking the Organization of Petroleum Exporting Countries without production quotas and without China. Cartels are invariably shaky structures but trading tea at $2.75/kg or less ensures the entire plantation system remains at risk. Prices are rising. India has seen a 40 percent increase in the past five years. Average prices were $2.25/kg in 2012. Success depends in great part on whether countries agree to production quotas and whether the industry can establish a better alternative than price setting at auctions.

There is no question that paying higher prices for tea in consuming countries will bring relief.

Perhaps our greatest hope is the emergence of a massive middle class in BRIC. Producers that add value to meet consumer demands for convenience with products like Snapple; blending mid-range tea with fruits and florals like Gold Peak flavored teas and the popularization of premium at retail by chains such as T2 and Teavana and DAVIDsTEA (should) lead to better prices for producers. In the past 12 months investors and large corporations including Unilever and Starbucks put $1 billion into the expansion of tea retail. The introduction of packaging that makes tea a popular gift (China) and the abandonment of tariffs that discourage tea imports to protect native suppliers will all play a part.

[*Signatories: India, Kenya, Colombo, Sri Lanka, Malawi and Rwanda produce 1.9 billion kilos which is more than 80 percent of the world’s tea – mainly CTC black. An executive committee is to be named in November. The effort draws attention to the plight of tea producing countries but seems unlikely to succeed. A comparable effort 80 years ago led by Finlays raised prices by curbing exports for a time but today there are thousands of sellers to fill a self-imposed void. It seems unlikely producers will accept a quota. Tea yields are unpredictable and the finished product grows stale within a year losing its value. Growers cannot store tea awaiting a more favorable price. You have to sell what you produce.]

Tea Biz serves a core audience of beverage retailers in the belief that insightful journalism is one of the most effective forms of professional education. We write about what matters along the entire supply chain, emphasizing trustworthy sources and sound market research while discarding fluff and ignoring puffery. If there is nothing we can add to your understanding of the issue, we leave it alone.

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

What you need to start the week.

• Big Investment Consortium Backs Coffee Bean & Tea Leaf
• World Tea Expo | Healthy Beverage Expo Move to Long Beach in May 2014.
• India Green Leaf Price Minimums a Pittance

Retail News

LOS ANGELES, Calif. – Investments, mergers and acquisitions fueling tea retail during the past 18 months are approaching an unprecedented $1 billion.

Remarkably, investments in coffee retail during this same period top $10 billion.

The latest move is a sizable (but undisclosed) investment in California-based Coffee Bean & Tea Leaf. The deal was disclosed Friday by a consortium led by private-equity firm Advent International in Boston and CDIB Capital (the overseas investment arm of Taiwan-based China Development Financial Holdings Corp.) along with Mirae Asset Private Equity, a Korean venture.

The privately held Coffee Bean & Tea Leaf was founded in 1963 and has a large-scale tea blending facility in Camarillo, Calif. The company owns 178 stores and franchises 764 stores in 30 countries with 250 in Korea. It opened its first Asian store in 1996.

Victor Sassoon and his brother Sunny remain significant shareholders, according to a Sept. 12 release.

“Since 1996, we have worked very hard to build The Coffee Bean into the global and innovative company it has become today that touches the lives of millions of guests every week. The Coffee Bean & Tea Leaf® celebrates its 50^th anniversary this year and we feel very blessed and excited to join our new partners in continuing to realize the Company’s significant potential as we look forward to the next 50 years of growth on all levels,” according to a joint statement by CBTL Executive Chairman Sunny Sassoon and Victor, who is CBTL CEO Asia.

“The Coffee Bean is the largest independent global player in a dynamic industry,” said Jeff Case, a Principal at Advent International. “The coffee and tea market is poised for continued growth, driven by rising coffee consumption globally and an expanding middle class in Asia and other growing economies throughout the world. We believe this investment will serve to accelerate the brand’s development and market share and we look forward to working with the management team to accomplish that growth.”

Will Kussell, a member of Advent’s Operating Partner program, will serve as Vice Chairman of The Coffee Bean Board of Directors. Kussell was previously president and chief brand officer of Dunkin’ Donuts Worldwide where he led the successful repositioning of the company as a coffee and bakery segment leader, increasing U.S. sales from just over $1 billion in 1994 to more than $5 billion in 2009. He also established an international growth strategy for Dunkin’ Donuts that led to a 60% sales increase from 2004 to 2009.

CBTL President and Chief Executive Mel Elias told Nation’s Restaurant News “The brand was well accepted in Asia, in part because The Coffee Bean had long focused on premium tea in addition to coffee — offering a leg up in a part of the world that had yet to adopt coffee-drinking ways.

The brand’s emphasis on tea will also be an advantage in the U.S., where consumer interest in tea is booming, Elias said. “When I started about 15 years ago, tea was about 4 percent of sales. Now it’s 15 percent, and it’s our fastest growing category,” he told NRN reporter Lisa Jennings.

Coffee Retail Investments

CBTL (Private) – $undisclosed – Advent International (Sept. 2013)
Master Blenders 1753 (Public) – $9.8 billion – Joh. A. Benckiser Group (April 2013)
Caribou Coffee (Public) – $350 million – Joh. A. Benckiser Group (Jan. 2013)
Peet’s Coffee & Tea (Public) – $974 million Joh. A. Benckiser Group (July 2012)

JAB paid $73.50 a share, a 29 percent premium for Peet’s in July 2012 and $16 per share for Caribou, a 30 percent premium. The company then paid $9.8 billion or $16.71 a share for Master Blenders, the largest coffee acquisition in history. Illinois-based Sara Lee Corp. became Hillshire Brands last year, spinning off its international coffee and tea business in June 2012 to create DE Master Blenders 1753. The previous high was the $3 billion paid by JM Smucker Co. for the Folger’s coffee brand which it purchased from Procter & Gamble Co. in June 2008.

Tea Retail Investments

T2 (Private) – $80 million est. Unilever (Sept. 2013) – See Tea Biz T2 Post
Teavana (Public) – $620 million Starbucks Coffee (Nov. 2012)
DAVIDsTEA (Private) – $14 million (April 2012)

Tea represents at least 10 percent of sales at the coffee firms listed above with greater margin contribution than coffee. This means the Peet’s, CBTL and Caribou deals represent at least a $150 to $200 million investment in tea retail. Tea represents much less of the the Master Blenders portfolio which include Tea Forte and Pickwick Tea, a multimillion dollar brand with about 70 percent of the Dutch market and 12 percent of Europe’s tea sales. If you assume Unilever paid at least $80 million for Australia’s T2 the total investment in tea retail tops $1 billion. Unilever did not disclose what it paid for T2.

Accolades

LONG BEACH, Calif. – Tea is only one of several categories of beverages eroding carbonated beverage’s 45 percent share of throat.

Ready-to-drink teas, sparkling teas and juice fusions, bottled and fortified waters; natural juices like coconut and juice blends all bring health benefits welcomed by young and old.

Healthy Beverage Expo focuses on better-for-you beverages with healthful ingredients, facilitating the dialogue surrounding what “healthy” means to the industry and ultimately the consumer, according to organizer George Jage, founder and director of The Beverage Group (formerly World Tea Media).

The Healthy Beverage Expo and World Tea Expo will co-locate at the Long Beach Convention Center May 29 – 31, 2014, Jage announced last week.

“Moving World Tea Expo and Healthy Beverage Expo from Las Vegas to SoCal is a strategic decision that many industry leaders asked us to consider,” he said.

The combined theme for the event: “ReThink Your Drink: Better Beverages, Better Business,” was inspired by Long Beach’s own “ReThink Your Drink” efforts to encourage healthier consumption.

The event will generate an estimated $2.3 million for the local economy, according to the Long Beach Business Journal. “The World Tea and Healthy Beverage Expo is a cutting-edge-type of program, so it brings people who are innovators and are trendsetters into our city,” Convention and Visitor’s Bureau President Steve Goodling told Business Journal Assistant Editor Tiffany Rider.

“I’m delighted to welcome World Tea Expo and Healthy Beverage Expo to Long Beach,” said Long Beach Mayor Bob Foster. “Long Beach is the perfect fit to host these two expos as our City is certainly a health-minded community, and I look forward to showcasing our City’s waterfront, attractions, local businesses and beaches.”

The decision to relocate World Tea Expo is a smart move for these reasons.

• Long Beach is a great venue. The downtown is vibrant, the waterfront lovely and the facility is first-rate. Accommodations are reasonably priced, there are great restaurants in walking distance of the venue and the weather and cooling onshore winds combine to make Los Angeles quite pleasant that time of year. More significant, the move encourages a wide range of beverage retailers to attend. I exhibited at the convention center for several years as publisher of Natural Food magazine, a trade publication circulated among grocers. Specialty and natural grocery buyers are far more likely to travel to Long Beach. In addition Southern California is a hub of beverage distributors including some of the nation’s largest bottlers.
• There are 460 tea retailers headquartered in Southern California. Expo has always been the ideal place for exhibitors to spend a few minutes face-to-face with their key customers. The move to Southern California won’t change that. The region is home to some of the largest specialty tea importers (International Tea Importers) and blenders (QTrade Teas & Herbs) wholesalers (Sungarden Tea) and retailers (Coffee Bean & Tea Leaf) all staunch Expo supporters. Together these firms supply much of the nation’s premium teas.
• While World Tea Expo remains the leading trade show and conference focused on premium teas, its foundation is enhanced by exposing retailers to innovative products with consumer appeal. Parent company F+W Media rebranded the division to emphasize this broader range of “good-for-you” drinks. Healthy beverages are of growing importance to beverage retailers who wish to generate most of their income from non-alcoholic drinks. The alternative is to serve food which changes the character of the establishment as food sales exceed 50 percent of total revenue. The two shows share a theme this year but The Beverage Group will continue to emphasize the importance of premium tea hosting the World Tea Expo and World Tea East and producing the North American Tea Championships, operating the World Tea Academy and publishing World Tea News.

“We’re thrilled about the new opportunities and business this will bring attendees and exhibitors, and the Expos will see more ‘walk-ins’ and local ‘traffic’ from SoCal, as the area is one of the west coast’s most dynamic beverage marketplaces,” said Jage. “In addition, Long Beach is the perfect host city with its ideal climate, charismatic city-center and numerous attractions. We know the tea and healthy beverage communities will be excited about the Expos’ move and how it positively impacts their participation in the shows and their organizations,” he said.

Learn more.

Origin

KOLKATA, West Bengal, India – This week marks the debut of a minimum benchmark price for green leaf in several of India’s tea growing regions. The Tea Board of India notice insures small growers will be guaranteed at least the average sales price at auction from the previous month.

The prices are announced by district. In Darjeeling and North Dinajpur the August price averaged INRs 11.15 per kilo (18-cents/kg) and in Jalpaiguri (Doers) INRs 11.72 (19-cents/kg). In Assam prices were generally higher ranging from 21-cents to 29-cents per kilo. It takes 4.6 kilos of green leaf to make a kilo of tea.

Learn more.

Tea Biz serves a core audience of beverage retailers in the belief that insightful journalism is one of the most effective forms of professional education. We write about what matters along the entire supply chain, emphasizing trustworthy sources and sound market research while discarding fluff and ignoring puffery. If there is nothing we can add to your understanding of the issue, we leave it alone.

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

What you need to know to start the week.

• Unilever buys T2, Australia’s $50 million market leading tea retailer.

Retail News

COLLINGWOOD, Victoria – Unilever kicked off their retail shop game with a Lipton store 15 years ago but later fumbled the ball in Belgium and stumbled with Bru World Cafes in India. Last week’s surprise acquisition of T2, Australia’s top specialty tea retailer, puts Unilever’s retail team back in the game.

Unilever has much to learn from T2, a premium tea retailer founded in 1996 by Maryanne Shearer in Fitzroy, Australia. The company currently operates 40 stores, mainly in Melbourne. T2 reported 12-month sales of $52.5 million through June of this year. The tea company offers a range of blended teas found in specialty grocery as well as many leading cafes, restaurants and hotels in Australia and nearby Asian countries. The company, which employs 300, opened 11 retail stores in the past year including its first in New Zealand and “has been growing double-digit and has significant potential,” according to the Unilever press release announcing the deal Friday, Sept. 6. The purchase price was not disclosed.

The acquisition “will allow us to bring the benefits of scale and access to new markets to the T2 business and for both businesses to share tea category expertise,” said Unilever’s President of Refreshment Kevin Havelock.

“We also like the fit with T2, bringing a fast-growing, premium tea business to complement our portfolio that we can leverage like we have done with other acquisitions in other categories (e.g. TRESemme that came with the Alberto Culver acquisition and which we have quickly launched in new countries like Brazil and Indonesia),” added Trevor Gorin, Unilever Head of Global Media Relations.

“We are delighted that we have found a home for T2 that has such a depth of knowledge of tea and has pioneered sustainability in the industry,” said T2 Managing Director Shearer. “Both I and the T2 team are looking forward to working alongside new colleagues in Unilever’s tea business to realize the full potential of the business we have spent the last 17 years building.”

Dynamic Business reported that “Shearer’s teas enjoy cult-status amongst connoisseurs and modern drinkers alike, and she’s built a booming retail business at a time when many are folding… using her product development and visual merchandising skills (Shearer) created a retail experience Australians hadn’t seen before.”

Shearer, 50, who has twin boys and a 12-year-old daughter, is recognized as one of Australia’s top entrepreneurs. She operated a homeware company prior to founding T2 and worked in the fashion and interior design industry early in her career.

“Maryanne Shearer has created a whole new retail category and built a powerful brand in her T2 business,” said Janet Holmes à Court, chair of the Australian judging panel that awarded Shearer the 2012 Veuve Clicquot Business Woman Award.

“What was the hardest part about establishing T2?” Dynamic Business asked her in 2012.

“In the beginning it was convincing everyone that a retail tea concept was a viable business idea, then once we were trading and the idea took off, it was understanding the importance of a healthy business and finding the balance between left and right brain priorities,” she answered.

Shearer clearly gets it. T2’s teaware selection is functional with vibrant eye-catching design. Her first shop featured daily in-store tastings, open canisters displayed on tables and staff trained to encourage customers to smell, touch and compare teas. The shops are a model of what is unfolding in the United States and a tested platform for Lipton to expand globally.

While the company is smaller than either the 100-store DAVIDsTEA headquartered in Montreal, Canada or the 300-store Teavana, T2 similarly pioneered the winning retail concept in its home market and is now Australia’s leader in specialty tea.

Blends like Strawberries and Cream (which retails for $31 for 250 grams) and Citrus Punch ($12.80/100 g), Organic Chai ($12.40/100 g) and orthodox teas like Iron Goddess of Mercy ($45/100 g) are marketed at prices familiar to Teavana or DAVIDsTEA customers. Stores feature a tea wall, offer samples and tastings as well as more formal personalized training for their best customers.

The hip three-tiered loyalty program rewards 25 credits after $500 in purchases. Points are worth $1 each and redeemable in-store and online. T2 customers are invited to the Secret Tea Society after buying $2,500 in goods, a threshold that earns private tea training and “a multitude of niceties.”

Last November Starbucks paid $620 million for Teavana, a publicly traded company with margins superior to the coffee giant. Acquiring T2 (regardless of price) is a potential game-changer for Unilever which is not known for its loose leaf offerings and must expand its range to include premium tea brands. The T2 brand will add retail dollars to an already lucrative Australian portfolio that includes 125-year-old Bushells, a national brand founded in Queensland.

See: How much of a premium does it take to make premium tea special?

According to Euromonitor International, the Lipton and Bushells brands led Australia’s tea market in 2012 with 31% off-trade value share.

“Despite gaining in actual sales terms, Unilever’s value share slipped one percentage point from 2011, as the instant tea category expanded beyond Lipton Chai Latte and Bushells, resulting in the company’s off-trade value share dropping from 66% in 2011 to 58% in 2012 within instant tea despite gains in actual sales terms.

Details on the market can be found in the April 2013 report: Tea in Australia.

The purchase brings to mind Lipton’s two-year experiment in tea retail in Old Town Pasadena, Calif. The Lipton Tea House opened in 1997 with 52 kinds of loose leaf teas unavailable in other channels. The storefront’s light wood and chrome interior resembled Starbucks coffee houses. Patrons could order scones and a tea latte ? made from tea, milk, cinnamon and other spices.

“The idea is to show consumers how interesting and diverse tea can be,” Gasper Ferraro, then-director of finance for Lipton’s food service division, told London-based Design Week in February 1999.

The venture could not meet revenue targets and was closed in 1999. Unilever’s Bru World Café a small chain of coffee shops that opened in July 2011 in Mumbai, now with three locations, continues to struggle. These attempts at store front retail and a European retail concept that failed in Belgium take on new relevance as Starbucks tweaks the already-successful Teavana model, with plans to expand into urban and suburban lounges in America as well as overseas.

Rumors this time last year predicted Unilever would open retail tea shops in Britain in 2013. Will Unilever instead supercharge T2’s already ambitious expansion plans?

Tea is a strategically important category for Unilever Australia, said Unilever Australasia chairman, Clive Stiff, “Our Lipton and Bushells brands are two of Australia’s oldest and best loved tea brands … We know tea drinkers are increasingly looking for new and diverse tea flavors, so we are delighted to be bringing T2’s premium and exciting range into the fold. T2 is a great Australian success story – a story that we now intend to continue with Unilever.”

The company website notes: “T2 has unfurled and blossomed over the last 17 years, and now sells enough tea per month to make 8 million cups!”

Australia has a population of 22.7 million who share a British tea habit that once rivaled the motherland. Per capita tea consumption was 2.67 kilos in 1964 but dropped by half to 1.3 kilos in 1985 as coffee became popular and soda sales rose to 73.10 liters per person. Consumption at half a kilo still lags the 1.9 kilos per capita consumed in the U.K., according to statistics compiled by the Food and Agriculture Organization of the UN.

Tea is making a strong showing in the market with a health and wellness message that resonates with young people, according to Shearer who credits travel for inspiring her creativity.

“Creating a wonderful taste experience with teas from all over the world gives T2 the opportunity to educate, excite and surprise T2’s customers,” she writes. “The customer experience is always our priority and that’s why we love what we do.”

Online the company states that: “Tea lies at the very heart of the T2 philosophy. Sourced from all over the globe, there are over 200 teas in our ever-expanding range, embracing all varieties. From the fanciful flavors and scents of herbal and fruit tisanes, to the revered tender white teas, the herbaceous greens, to the strong and heady popular blacks, the T2 tea range is multifaceted and full of adventure.”

The acquisition is subject to customary closing conditions, according to the release. Learn more.

Export News

HAMILTON, New Zealand – Zealong Tea Company continues in business despite reports of its demise, according to its owners.

The miscommunication stems from the arrival of bulldozers at the estate’s original farm on the northern edge of Hamilton. The 27-acre parcel was sold to residential developers following complaints from neighbors that the company used noisy helicopters to combat frost on the fragile leaves of its oolong stock.

Spokeswoman Gigi Crawford told NZ Farmer that the Gordonton house and Discover Tea experience remain in operation. Ten years ago when planted the farm was well removed from housing. It was subsequently zoned for residential use. Neighbors in the vicinity complained at the use of helicopters to circulate air and prevent frost damage.

The company which exports premium organic oolong and other teas to Asia and Europe will focus its attention on developing lands near Gordonton, investing up to $5 million in a new visitor center and leaf drying plant, according to Crawford.

Health

HOBART, Tasmania – A doctoral student at the Menzies Research Institute has demonstrated green tea prevents rats from getting diabetes.

Helena Ng, a doctoral candidate at the Institute, told The Daily Telegraph that her discovery in rats was made possible by a new test that detects early signs of diabetes. Her work adds to studies that suggest components in green tea may prevent, but not cure diabetes.

Rats fed an unhealthy diet that normally led to the early stages of diabetes avoided the condition when the diet included concentrated green tea, the equivalent of 200 cups a day.

Tea Biz serves a core audience of beverage retailers in the belief that insightful journalism is one of the most effective forms of professional education. We write about what matters along the entire supply chain, emphasizing trustworthy sources and sound market research while discarding fluff and ignoring puffery. If there is nothing we can add to your understanding of the issue, we leave it alone.

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

What you need to know to start the week.

• CTC prices are sliding due to disruptions in trade with Egypt, the world’s fifth largest tea importer. Kenya, India and Sri Lanka are experiencing falling prices amid declining sales of the low- to medium-quality tea which they have in abundance. India is on track to export 230 million kilos and Sri Lanka has seen five-fold growth in production. Egypt normally imports 100 million kilos a year.
• The U.K. is backing Canadian researchers who demonstrated iron-fortified tea could save the lives of hundreds of thousands of babies and their mothers at childbirth.
• Tetley successfully convinced a U.S. Court to dismiss a lawsuit alleging it misled consumers with ‘antioxidant, nutrient content and health claims’ for tea products.

Health

TORONTO, Canada – Researchers at the University of Toronto have discovered a method of fortifying tea that could annually help save the lives of 600,000 babies and 100,000 anemic mothers.

This week the U.K. Department for International Development announced a $250,000 grant to develop the idea. Citing World Health Organization statistics in their announcement, International Development Secretary Justine Greening said a woman dies in childbirth every two minutes.

Dr. Levente Diosady, who conducted the research, discovered a new process to coat tea leaves with iron that is released when it comes in contact with hot water. The coating imparts no flavor. When it reaches the lower intestine it dissolves, providing essential iron.

The grant is part of a five-year “Saving Lives at Birth” program jointly financed by USAID, the Government of Norway, The Bill and Melinda Gates Foundation, Grand Challenges Canada and the World Bank. Learn more.

Retail News

Lipton, Rishi Tea and Ten Ren Tea all faced possible Federal Drug Administration fines in the past few years due to label claims that make the case that tea is rich in antioxidants and nutrients that contribute to good health. All three quickly complied with changes in wording on labels, online and in promotional literature.

In 2005 FDA concluded that existing evidence does not support qualified health claims for green tea consumption and reduced risk of certain types of cancer but last year the language was made less restrictive as follows:

• Green tea may reduce the risk of breast or prostate cancer although the FDA has concluded that there is very little scientific evidence for this claim.
• Green tea may reduce the risk of breast or prostate cancer. FDA has concluded that there is very little scientific evidence for this claim.

Last week Tata Global Beverages, on behalf of its Tetley USA subsidiary, succeeded in convincing a federal court to dismiss a lawsuit claiming the company’s labels and website statements were misleading and amounted to deception under California and Federal law.

In August 2012 the plaintiff, Daryl De Keczer, filed a formal complaint with U.S. District Court, Northern District of California, alleging that Tetley ‘Misbranded Food Products’ including Tetley Classic Blend Black Tea, British Black Tea, Pure Green Tea, Iced Tea Blend Tea and Iced Tea Mix.

In a report published by Beverage Daily, De Keczer alleged claims such as ‘natural source of antioxidants’ were illegal under the Food Drug & Cosmetic Act as adopted in California law.

Tetley “utilizes improper antioxidant, nutrient content and health claims that have been expressly condemned by the FDA in numerous enforcement actions and warning letters,” she wrote.

But in dismissing the 2012 complaint on August 16, US District Judge Edward Davila ruled De Keczer did not give a clear, unambiguous account of allegedly fraudulent, deceptive, misrepresentative or other allegedly unlawful statements.

Moreover, Davila said that statements on food or beverage labels – like the Tetley ones at issue – did not constitute express warranties against a ‘product defect’ under the Song-Beverly Consumer Warranty Act or Magnuson-Moss Warranty Act, De Keczer’s eighth and ninth causes of action, as reported by Beverage Daily.

Origin

Leaf quality is a good indicator of the care taken during the plucking and manufacture and while taste is paramount in selecting fine teas, a standard for green leaves is a useful measure of quality.

This is why the Tea Board of India is circulating guidelines that call for 65 percent of the each lot, by weight, to consist of very small soft leaves (called banjis) and fine shoots consisting of 2-3 leaves and a bud. Soft leaves make up the remaining 30 percent. No more than 5 percent of the lot can be coarse leaves.

Bought leaf factories must reject substandard lots and growers are forbidden to “shop around” seeking buyers that bend the rules. Factories that accept substandard leaves can lose their permit to operate.

The intent is to force small growers to carefully cultivate the tea, plucking only the best leaves. The incentive for improvement is better prices and greater price transparency. The Tea Marketing Control Order (TMCO) mandates that factories post average prices determined at auction for each district, a practice welcomed by the All Assam Small Tea Growers’ Association (AASTGA).

But the guidelines came under immediate criticism by growers represented by the North Eastern Tea Association (NETA). The group points out that 65 percent small leaf is fine for the spring harvest when leaves are small, but mid-summer and autumnal teas contain larger, mature leaves.

Leaf tea is currently selling at a very low rate INRs 12 ($0.18 per kilo). Many buyers annually negotiate mutually-beneficial rates with small growers that should be allowed to stand regardless of monthly variations in price, say critics.

NETA Chairman Bidyananda Barkakoty told The Times of India that growers welcome a minimum quality standard, but one that “provides appropriate allowance of unavoidable seasonal variations and ground realities.”

In his letter to Tea Board Chairman M.G.V.K. Bhanu, Barkakoty wrote that not just factories, but “all agents and suppliers, should be registered, trained and made responsible for quality improvements.

“The quality parameters should not only be confined to green leaf buyers; they should also be applicable to the estate factories manufacturing tea from their own leaves,” he wrote.

West Bengal Chief Minister Critical of Gorkha Leaders

The chief minister of West Bengal called on the people of Darjeeling to disregard calls to shut down the tea and timber operations by a political group seeking a homeland for Nepali-speaking Indians living in the foothills of the Himalayas. There are 10 million so-called Gorhkas living in northern India.

Minister Mamata Banerjee said the Gorkhaland Janmukti Morcha (GJM) is hindering development in the region. She called for a peaceful resolution that leaves West Bengal united. Banerjee also said the autonomous Gorkhaland Territorial Administration is stalling investment of $4.5 million which is exacerbating the situation. Learn more

Accolades

STONINGTON, Maine — Teas from Stonington’s Tempest in a Teapot will be featured in the swag bag given to celebrities at the 65^th Emmy Award ceremony next month. The owners of the small start-up were shocked when they got the news, according to a report in the Bangor Daily News. “I thought it was a hoax,” co-founder Jennifer Larrabee told the newspaper. She launched the loose-leaf tea company with friend Sarah Burrin a year and a half ago.

Their blends of traditional teas with local herbs such as rugosa rose hips, which they grow on Deer Isle and procure from farmers, caught the attention of Tinseltown. Tempest in a Teapot makes more than 13 blends from Earl Grey to peony tea with blueberry, sweet mango and lime.

“We are a very small company owned by two stay-at-home moms. For us to be asked to do this is an incredible opportunity for us and our community,” Larrabee told the newspaper. “We are ecstatic.”

Tea Whimsy

Japanese hobby shop ACG will release in October a clever tea strainer and mug combo featuring the Colossal Titan from the popular manga and animé series Shingeki no Kyojin aka Attack on Titan cartoons.

You can pre-order the Tea Strainer and Mug from AmiAmi for $18. Learn more.

Tea Biz serves a core audience of beverage retailers in the belief that insightful journalism is one of the most effective forms of professional education. We write about what matters along the entire supply chain, emphasizing trustworthy sources and sound market research while discarding fluff and ignoring puffery. If there is nothing we can add to your understanding of the issue, we leave it alone.

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What beverage professionals need to know to start the week.

Tea trade in the Middle East is disrupted again by Egyptian unrest and harvest challenges in Iran compound that countries ability to meet domestic needs. Protests for a political home for the Nepali-speaking Gorka in the far northern portion of West Bengal, India continue to disrupted Darjeeling commerce.

Import/Export

MOMBASA, Kenya — Thirty percent of Kenya’s tea exports are usually destined for Egypt, but political protests and clashes with the military in that troubled country has halted auction purchases.

The capitals of the two African nations are only 2,400 miles apart and relations are generally cordial but there are signs a gap in trade between the two countries is growing due to the upheaval.

Last year Egypt purchased $252 million of the $1.14 billion Kenya earned on tea exports. So far this month, Egyptian buyers have not even bid at the weekly tea auction in Mombasa. During the first half of the year Egyptians ordered 10 million kilos of Kenyan tea, making the country Kenya’s third largest export destination but since then Egypt has fallen to 6th place, according to the All Africa news service.

The sudden reduction in demand cannot be quickly replaced with new markets and will likely destabilize prices. Raw tea leaves are currently selling for $2.50 a kilo and processed tea prices fell to $6.50, a drop of 23-cents per kilo since July. Further declines are expected.

There are about 420,000 small growers in Kenya under the control of the Kenya Tea Development Agency. In response to weak demand growers will soon be limited in how many kilograms of tea they can deliver to tea collection points, creating an unwelcome surplus and making it unlikely they will be able to recover their production costs. Learn more.

Health News

FLORENCE, Italy – Researchers in Italy found that green tea extracts are useful in treating malaria. The in vitro study indicates “…a crude extract of green tea as well as two of its main constituents, epigallocatechin-3-gallate (EGCG) and epicatechin gallate (ECG), strongly inhibit Plasmodium falciparum growth. Both these catechins are found to potentiate the antimalarial effects of artemisinin (a key malaria treatment).”

Malaria parasites infect 219 million  people each year, killing 660,000. Ninety percent of malaria deaths are in Africa, according to the World Health Organization.

Used in combination with artemisinin the crude extract showed 12 times greater efficacy in killing the malaria parasite.

Plandai Biotechnology reports similar findings in a study at St. George’s London School of Medicine. Tests there showed the company’s Phytofare™ Catechin Complex was effective in killing malaria parasites. The company is growing 3000 hectares of tea for extract and hopes to soon bring a refined extract to market.

The authors at the University of Florence study conclude tea extracts “are very abundant and widespread in the malaria endemic countries, are cheap and easily accessible, safe and virtually lacking of systemic toxicity. Our results might pave the way toward the development of these substances into effective antimalarial agents. Moreover, the additive/sub-synergistic interaction observed between EGCG or ECG and artemisinin might be conveniently exploited to design new and/or more effective combination therapies.”

Antimalarial Properties of Green Tea, Department of Infectious, Parasitic and Immunomediated Diseases, Vector-Borne Diseases and International Health Section, Istituto Superiore di Sanit, Florence, Italy.

Origin

COIMBATORE, India – Incessant monsoon rains have dampened supply and significantly cut South India tea exports. The auction center in Coimbatore has seen volumes drop to 320 metric tons a week, down from 500 metric tons during the same period last year, according to the United Planters’ Association of Southern India (UPASI). Prices are holding after climbing 17 percent last year; however, export totals are likely to fall when compared to 2012 when South India’s gardens exported around 80,000 metric tons of the 240,000 metric tons the gardens produced. Learn more.

Retail News

Two-quart Chefmate tea kettles pose a burn hazard and are being recalled. The $9 kettles, made by Wilton Industries, were sold exclusively at Target stores in the U.S. and Canada and on Target.com between January 2006 and May 2013.

The U.S. Consumer Products Safety Commission advised that steam can travel up the stove top kettle’s handle and hot water may spill from the spout. Whistles in the 700,000 kettles also may not sound due to steam leaks. As a result if the water evaporates the bottom of the aluminum kettle could melt. Anyone who owns of these kettles should stop using it and return it to Target for a full refund. Learn more from the CSPC or by calling (866) 255-9237 toll-free between 8 and 4:30 p.m. CST Monday through Thursday and 8 to 1 p.m. Friday.

Innovation

Stevia, a natural no-calorie sweetener growing in popularity and used in bottled tea, is sometimes criticized by consumers for a lingering and somewhat bitter aftertaste.

In response, Treatt Innovation Manager Michael Britten-Kelly said the flavors and fragrances company has created a new tea formula that accentuates tea’s natural astringency.

New additions to the company’s product line include Green Tea TrueTaste® Natural 200 which is a 200-fold iced tea concentrate made with natural tea ingredients and White Tea Type WONF (With Other Natural Flavors).

When reconstituted the RTD tea contains a minimum of 0.04 percent tea solids which impart the authentic color of tea without adding caramel coloring, according to the company.

These blends of tea and other botanicals soften “harsh undertones” and allow more subtle flavors to come through when combined with stevia, he said. The white blend preserves the delicate aroma traditionally associated with white tea while conferring subtle, fruity white tea notes and a more robust, tenacious finish in ready-to-drink applications. Dosage levels vary from 1000 to 5,000 parts per million in the finished beverage depending on the intensity desired, according to Britten-Kelly. Learn more at Treatt.

Tea Biz serves a core audience of beverage retailers in the belief that insightful journalism is one of the most effective forms of professional education. We write about what matters along the entire supply chain, emphasizing trustworthy sources and sound market research while discarding fluff and ignoring puffery. If there is nothing we can add to your understanding of the issue, we leave it alone.

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