What tea professionals need to start the week —

Weathering the retail storm…Tea growers in Sochi share a cup with Olympic Winter Sports spectators and press… Art of Tea CEO Steve Schwartz sounds secure on CNBC… tea offers a welcome relief to snifflers during the latest cold snap... India sets production record in 2013 of 1.2 million metric tons of tea…Rishi Tea breaks ground on a 50,000 sq. ft. facility that opens in late summer.

A Cold Blow

January delivered a cold blow to retailers following a chilly December. Sales for the month declined in the U.S. by .4 percent which added to a somber .1 percent drop in December, according to U.S. Commerce Department figures. December sales were previously reported as positive.

Explanations for the declines varied — job growth slowed, consumer confidence waned, sales of new autos fell and wage gains are stagnant following a strong fourth quarter — but economists could all point a finger at the unusually cold weather.

Snowfall in January across the U.S. was almost four times greater than normal, according to HAM Weather. There were 1,073 snowfall records and 4,406 new cold temperature readings during the month, mainly in the eastern seaboard, Mississippi Valley and southeastern states. New York City reported 8 inches of snow in Central Park on Feb. 4., a record for the date while Chicago received 33.7 inches during January. It was the coldest January since 1994 on average based on a measure of energy demand. The Northeast is on track for the coldest winter since 1982 based on December to February temperatures.

Meanwhile in the West, cities in California and Arizona and the Pacific Northwest recorded 783 record highs during the month.

The Commerce Department said that spending at department stores decreased 1.5 percent in January. Foot traffic at malls continued off pace and McDonald’s Corp. said that same-store sales fell for the third straight month in January, blaming both the weather and declining consumer confidence.

February is looking up somewhat. The Thomson Reuters/University of Michigan index of consumer sentiment is stronger than projected for February, according to Bloomberg.

Sources: Bloomberg TV, HAM Weather

Tea Growers Welcome Olympic Tourists

SOCHI, Russia  — Reporters at the Olympics said they are enjoying tea and biscuits at a tea stall developed by people from Russia’s Kuban region. The region, which includes Sochi, is home to several tea gardens.

A reporter for the Boston Globe noted the tea corner in the media center is very popular with the press:

“Women (in traditional costume) pour piping hot cups of black tea, then serve the drink with piles of biscuits, cookies, and packets of honey. For free. “With love from the Kuban people,” the women say.

A Russian peasant who developed a winter-resistant tea hybrid in 1901 established Sochi as an important domestic supplier in a nation of tea drinkers. The region’s six gardens produce about 2,000 metric tons of tea.

Russia imports the largest quantity of tea in the world to serve a population that likes its tea full-bodied and hot. Russians consume 3 pounds of tea per capita to rank 4^th behind England among the world’s tea drinkers.

Visitors to the Olympic Games in this Black Sea resort town are discovering Sochi has a long history of tea growing and several tea chalets including the two-story Sochi Tea House where visitors can enjoy locally grown black teas.  Tours also stop at the Museum of Samovars and include a tea party in a Russian wooden Izba.

Tea drinkers will find the ever-present samovar in area restaurants and homes. This large urn is designed to keep water hot and tea on the boil in a kettle at the top of an internal chimney.  Today’s samovars are electrically heated but old style samovars have a fire bin where coal, charcoal and small sticks were burned for heat. The concentrated tea is then diluted about 10:1 and mixed with jam or lumps of raw sugar.

Green tea is preferred in the region bordering China but the people of Eastern Russia are largely black tea drinkers who sometimes place a cube of sugar in their mouth as they sip.

Vyacheslav Moroz, director of the Dagomy-chai tea garden, told USA Today that Sochi tea is grown with little interference from pests as the cold weather proved fatal to insects and also prevents the growth of many tropical blights, fungus and diseases. Tea is ecologically farmed, clean of pesticides, certified organic, harvested mechanically and sold internationally.

The tea is known as Krasnodar Tea after Judas Antonovich Koshman, the Ukrainian peasant whose plants stocked Sochi’s first successful tea plantation in 1905. It is the northernmost commercial growing region for tea in the world.

Tsar Nicholas II owned a large cattle farm and botanical garden in Dagomys, a section of Sochi about 870 miles south of Moscow. Located along the Black Sea coast with the Caucasus Mountains nearby, this former military outpost became a resort for the wealthy.  Since 1689 tea was largely imported from China along an 11,000 mile trade route and very expensive, according to the Liberty Voice. Tea was first introduced in Russia in the mid-1600s as a gift from Mongolia to Tsar Michael I and was used by the nobility for medicinal purposes.

“By the late 1700s, tea was gaining acceptance in Russian society which brought the prices down. It was during this time that the first factory production began of the uniquely Russian “teapot,” the samovar,” according to the Liberty Voice.

Tea growers that settled near Sochi were unsuccessful in the 1870s and 1880s due to the winter weather. The Tea Museum in Sochi tells the story of a Russian expedition in 1896 that purchased 2,000 kilos of Chinese tea seeds but fewer than 5% germinated. Koshman experimented with the stock and managed to grow 800 bushes in Solokh-Aul, a fertile region about 30 kilometers south of Sochi protected from the harsh winter.

Full scale commercial production began in 1936 in Dagomys-chai. By the 1980s the 5,000-acre garden was one of the largest suppliers of tea to the Soviet Union.

Source: Boston Globe, USA Today, Liberty Voice, Tula Museum of Samovars,

Invest in Security

Art of Tea founder Steve Schwartz was interviewed recently on matters of cyber security. His advice to small business owners:  Invest in online security.

Schwartz told a CNBC reporter that security is a priority because cybercriminals don’t discriminate based on business size. “We’re just as sensitive and susceptible to what’s happening with Neiman Marcus,” he said.

The Los Angeles-based tea importer and wholesaler said that his company’s online security software costs about $100 per month, plus an additional charge per online transaction. The system issues an alert when there is suspicious activity.

Two members of his staff of 25 monitor online security since the bulk of his business is online, he said.

CNBC reported that “roughly 77 percent of small firms believe their company is safe from a cyberattack — even though 83 percent of those firms do not have a written security policy in place, according to the National Cyber Security Alliance.”

Consumers are concerned following several high-profile breeches involving sensitive credit card transaction and personal information. According to security experts those who become victims switch banks, switch credit cards providers and they switch retailers.

Source: CNBC

Quell Winter Sniffles with Cup of Hot Tea

It is the season of snow angels, skiing and skating, and coughs and colds. When nasty sicknesses hit, many turn to the tea cabinet. While no tea or herbal remedy can cure a virus, some of them may be able to offer some comfort from the symptoms.

Sore throats can always benefit from warm liquids, so choosing tea is a natural. A dose of honey in the cup can help coat and calm a ticklish throat. Because lemon has natural antibacterial properties, some believe it can help fight the effects of illness. It is also possible that its acidity changes the general environment within the throat, impacting uncomfortable sensations. Licorice root tea helps to reduce inflammation and chamomile may help to relax muscles, easing pain. Tea’s flavonoids also offer anti-inflammatory properties.

Sinus pain is frustrating and uncomfortable. Ginger is a great help when congestion takes hold. The spicy smell opens stuffed sinuses. It also helps to loosen mucus and can serve to increase circulation. Cinnamon’s powerful aroma can also help open up those sinuses as well.

As tempted as one might be, cold sufferers shouldn’t sip too hot a cup or it may burn the throat, increasing discomfort, rather than easing it.

Read more about home remedies here.

Rishi Breaks Ground on Warehouse

MILWAUKEE, Wis. – Rishi Tea broke ground on a new 50,000 sq. ft. office, warehouse and blending facility last week

“We’ve laid a foundation for respect in the tea market, a respect for our quality distinction and innovative approach to tea making. Building this facility represents a renewed investment in our foundation – our customers. It also will enable us to improve our ability to deliver the very best tea products in the world,” said Joshua Kaiser, Rishi Founder and CEO.

The new building, located in the Menomonee Valley industrial park, is expected to be completed by mid-August. It is situated on a 3.8 acre site. The company last moved eight years ago when it leased a 13,000 sq. ft. property and quickly expanded to 38,000 sq. ft. of leased space. It has since outgrown its current home.

“We’re more than completely out of room,” Rishi Co-owner and Vice President Benjamin Harrison told the City of Milwaukee’s Redevelopment Authority in July. “We’re bursting at the seams and storing a lot of product off-site. … Quite simply, we are out of space, and we need to grow.”

Rishi now shops to 50 states and 10 countries. “We’re an international company with roots in Milwaukee. The decision to build a production facility here was very important to us. We’re glad to stay in our hometown,” said Harrison.

Briohn Building Corp. Brookfield, Wisconsin, is responsible for architectural design and construction of the pre-cast concrete structure. “They’ve understood our goals and are making it possible for us to achieve them,” said Harrison.

Although the new facility is only 10,000 sq. ft. larger than the space it current occupies, Harrison said Rishi will be able to use the space much more efficiently due to the building’s 24-foot clear height and layout.

In a report in the Milwaukee Sentinel, Harrison said the company currently employs 46 and “could easily add 20 more in the next five years.” The firm is growing at a rate of 10% per year, he said. The building could eventually be expanded by 20,000 to 30,000 sq. ft.

Rishi Tea obtained $1.86 million from a city-affiliated lender to help finance the project. The Redevelopment Authority sold the land for $120,000 per acre.

Sources: Rishi Tea, Milwaukee Business Times, Milwaukee Sentinel

India’s Domestic Consumption

MUMBAI, India – Thanks to the Herculean efforts of India’s small tea growers, the country is approaching China as the world’s largest tea producer.

The Indian Tea Association proudly declared this week that overall production grew by 6.5 percent last year for a record 1.2 million metric tons of tea. Small growers contributed more than 30% of the total according to India Tea Board estimates. India was the dominate producer and exporter for many years but China has since invigorated its production and desire to export.

Last year China produced about 1.75 million metric tons and is expected to produce at least 1.8 million metric tons in 2013 but an official total has not been released. China accounted for 35  percent of the world’s tea in 2012 and India accounted for about 21 percent of the 4.3 billion kilos produced. Kenya and Sri Lanka are distant third and fourth, each producing less than .375 million metric tons. Unlike China and India, relatively little tea is consumed in Kenya making it the largest exporter of black tea. China is the largest exporter of green tea.

China also has a much more robust tea manufacturing, bottling and packaging sector than India. Revenue for China’s Tea Production industry has been increasing at an annualized rate of 17.4 percent to an expected $14.7 billion in 2013. The industry has increased its share of China’s beverage market over the past decade to about a quarter, according to IBISWorld.

Kenya is the world’s largest black tea exporter but adds value to only 8% of its exports while India, the region’s other tea powerhouse adds value to only 11% of its tea exports.

The production increase had little impact on India’s exports however as the majority of this tea was CTC grade and virtually all was consumed by the fast-growing domestic market. India exports CTC mainly to Egypt, Pakistan and the U.K. with orthodox production to Iraq, Iran and Russia. North America is generally the fifth or sixth largest ranked export destination but demand here continues to increase.

Domestic consumption reached 856 million kilos in 2011 and 875 million kilos in 2012. Final numbers are not available but the Tea Board estimates consumption will top 880 million kilos. Growth continues at 2% to 3% annually which will mean India will have to begin importing tea to meet its domestic demand and maintain export targets. Per capita consumption rose to 718 grams (1.58 pounds) in 2011, about triple the U.S. Domestic consumption is rising steadily from a per capita count of 654 grams (1.44 pounds) in 2001.

Assam continues to lead the nation’s five growing regions with an April-December harvest of 607 million kilos, up 5% compared to the previous year. West Bengal tea growers increased yield by 11% to 290 million kilos according to Tea Board data.

The southern growing regions of Tamil Nadu, Kerala and Karnataka showed a 16% increase for the period to 196 million kilos.

Sources: Economic Times the Business Line and China Daily

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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.

What tea professionals need to start the week —

Coca-Cola’s decision to collaborate with Keurig Green Mountain could put a soda fountain in every kitchen and divert billions of bottles from landfills. The combination presents a great opportunity for tea companies with concentrates… Cupid is torn this week between a desire for chocolate with tea and tea in scrumptious chocolate… a 15% decline in holiday foot traffic slowed mall tea sales… Rabobank predicts slowing beverage growth in the middle class in BRIC nations… former Starbucks executive Alix Box has been named CEO of Canada’s Second Cup which has been bolstered with a large investment by Tailwind Capital.

Coca-Cola Teams with Keurig Green Mountain

The 10-year collaboration agreement announced by Coca-Cola and Green Mountain Coffee Roasters last week represents a significant endorsement of cold beverage dispensers for the home.

Coca-Cola purchased 10% of GMCR’s shares for $1.25 billion as part of the deal which calls for the introduction of a Keurig-made carbonated cold drink dispenser for the kitchen before September 2015.

Public validation of the concept will lead to innovation and a race by brands to develop concentrates and instant beverages previously sold only in grocery or food service.

Last summer Green Mountain Coffee Roasters President & CEO Brian Kelley, a former Coke executive, unveiled plans for a drink dispenser designed to produce a range of cold beverages from tea to soda while diverting billions of plastic bottles from landfills.

Green Mountain will be Coke’s exclusive partner for production and sale of the Coca-Coca Co. branded single-serve, pod-based cold beverages.

Tea could benefit greatly from the move as concentrates gain favor. Coke owns several tea brands including FUZE, Gold Peak and Honest Tea. GMCR has licensed its K-Cups™ technology to several hot tea beverage partners including Twinings, Lipton, Celestial Seasonings and Snapple.

Keurig is a personal beverage system company with a mission to put a Keurig brewer on every counter and a beverage for every occasion, Kelley told investors. He estimates the U.S. beverage industry at $150 billion with 7.5 8 oz. servings per person per day. Total servings are approximately 768 billion (excluding alcoholic beverages). In this tally carbonated soft drinks tie with tap water at 1,885 servings per household.

He presented a chart showing 14 beverage occasions per household and estimated 90 million households own a coffee brewer. The company has sold 30 million hot beverage brewers expects to sell 4 million more per year. He projects a Keurig hot-cold combination in more than 50 million homes.

Sales of carbonated soda have been declining for a decade as consumers question the health consequence of drinking heavily sweetened beverages. Sales of regular soda declined 3.3% in the year ending November 2013. Diet soda declined 7.2% during that same period. Coke’s entire range of brands will be available, a line that includes juices, colas and tea.

In home dispensers return control over calories to those seeking a refreshing drink. Younger drinkers welcome the ability to customize beverages and innovative manufacturers are already demonstrating the ability to deliver on the possibility of a soda fountain in every home.

Consumers have been warming to the idea of homemade cold drinks for some time. SodaStream International Ltd. is an Israeli company founded in 1903 with a growing reputation globally.  Its in-home carbonation system is installed in 7million homes in 45 countries. Sales revenue has average 33% growth during the past five years but the company is relatively small with 2013 earnings of $562 million. Coca-Cola earned $47 billion last year and GMCR earned $4 billion. SodsStream spokesman Yohah Lloyd told the Wall Street Journal that the at-home carbonated beverage industry is worth $260 billion. SodaStream is currently sold in 15,000 U.S. stores.

The move will likely force SnappleDrPepper and PepsiCo to enter the category, perhaps as licensed partners with Keurig or allied with SodaStream. Last summer PepsiCo appeared ready to acquire SodaStream for $2 billion. An acquisition or big-soda partnership is more likely as it could quickly put big brand concentrates in homes. Currently SodaStream uses generic syrups consumers add themselves. To insure consistent results, the big bottlers like Coke want greater precision so that the drink delivered at home tastes the same as canned or bottled soda from the store.

Left to be seen is the ability of Keurig to produce a machine that makes 2 liters of soda for around $1. Coke will not mark down its concentrate and undercut its bottling business. (Coke recently purchased its network of bottling companies.)

Keurig is likely to sell its cold beverage dispenser for around $200. It will take a lot of soda servings to justify that price.

Sources: Seeking Alpha, GMCR, Wall Street Journal

Tea Treats for Valentine’s Day

Gift givers will spend $1.6 billion on candy for Valentine’s Day according to CNN, and that includes 58 million pounds of chocolate. Tea lovers prone to a love of these tasty treats are fortunate that they can double their pleasure with chocolate-infused teas and tea-infused chocolates.

Chocolate teas have become increasingly popular as an entire segment of “dessert teas,” has taken off. Harney & Sons has Chocolate Tea which was created as a commission from Chocolatier magazine. Mighty Leaf developed a Chocolate Truffle Tea Collection which includes    an herbal concoction of chilies and chocolate chips and another with masala spices; a rooibos with mint and cacao nibs; pu-erh with cocoa; and a black tea with cacao nibs and orange and another with pear, caramel and chocolate chips. Numi Tea also offers its own version of Chocolate Pu-erh with cocoa, vanilla, and orange peel. Tea Forte’s Dolce Vita Ribbon Box is not only beautiful, but packs a chocolate punch with a Belgian Mint and Coco Truffle. The Art of Tea blended the flavor of bananas with chocolate and peppercorns in their Chocolate Monkey treat. Simpson and Vail will keep that sweet tooth satisfied with Chocolate Caramel Black Dessert Tea,  Chocolate Chai and Cinnamon Chocolate Brownie Organic Black Dessert Tea.

The other side of the menu reveals the decadent category of tea-infused chocolates. The Tea Room has a wide array of tea and herbal chocolate bars to tempt tea lovers: milk chocolate with mint tea, jasmine tea, chai, or honeybush; white chocolate with chamomile and honey; dark chocolate with earl grey, raspberry rooibos or Lapsang Souchong; or extra dark with green mate. Chocolatier Thomas Haas also has a line called “Tea” which offers bars of matcha with white tea, milk chocolate chai, and dark chocolate rooibos. If truffles hold more appeal, Arbor Teas offers a truffle 6-pack. Ogunquit, Maine’s Harbor Candy Shop offers molded chocolate infused with tea as well. The most striking in this category may be Charles Chocolates’ Tea Collection created in collaboration with Teance Fine Teas packaged in a stunning edible chocolate box.

The kitchen savvy could can take matters into their own hands and try making their own earl grey truffles at home.

Surge in Online Buying Decreased Holiday Foot Traffic

Howard Schultz voiced a warning last week that beverage retailers should heed.

During the company’s First Quarter earnings call the Starbucks CEO noted that in-store foot traffic at traditional mall and well-known department stores declined 15% in December.

He does not believe the reason was harsh winter weather or fewer shopping days. Instead he points to a surge in online sales that thinned crowds of holiday shoppers. Fewer shoppers meant fewer visits to coffee shops in malls and retail outlets this year.

Holiday spending increased to 10% on desktop devices with mobile purchases accounting for an additional 2% of holiday sales, according to comScore (SCOR), an internet data tracking service.  There were 10 days following Thanksgiving when online purchases exceeded $1 billion per day, according to comScore.

The U.S. Commerce Department estimates e-commerce accounts for about 6% of total U.S. retail sales. Three quarters of retail sales are still completed in-store. In fact, in-store retail sales increased 2.7% over the holidays, according to ShopperTrak. The bump was attributed to shoppers going online to research items and then visiting stores to complete the sale. Sales overall increased only 2.3% compared to 2012 according to data collected by MasterCard.

Of concern to beverage retailers are the number of mall anchors including Sears, J.C. Penny and Macy’s that announced hundreds of store closings in the aftermath, with Target eliminating jobs and even Wal-Mart reporting same-store sales declines at 100 stores in the U.S.  Amazon was the top rated vendor in mobile satisfaction and had the highest web satisfaction rating, according to analytics firm ForeSee. Keurig.com ranked third.

According ForSee’s survey of 67,600 shoppers, “the most satisfied shoppers this holiday season were the ones that interacted with a retailer across multiple channels.”

The smaller crowds were certainly still interested in sharing a cup of coffee, Schultz observed.

Revenue rose substantially for the coffee chain with same store growth of 5%; an increase in store visits and the fact that customers loaded $1.4 billion onto loyalty cards – a sum $230 million greater than last year. Starbucks revenue grew 8% in the Americas to $3.1 billion for the quarter with the opening of 142 new stores. Operating income grew to $732 million and margins improved to 23.8%.

“There’s no question that the month of December was an inflection point in the U.S. retail business,” said Schultz. He predicts declining in-store visits due to the so-called “Amazon effect” has permanently changed in-store shopping behavior regardless of season.

“What I mean by that specifically is the “Amazon effect” the power of e-commerce all over the country and the world is going to have a significant effect on pedestrian shopping, mall shopping just as it had in December,” Schultz later told CNBC.

“We are navigating through what I believe to be a significant sea change,” Schultz told CNBC. “We’re going to be talking about this for quite some time. I would not want to be a traditional brick-and-mortar retailer that did not have mobile payments and that did not have social and digital media. Those companies are going to find themselves significantly challenged in 2014 and beyond.”

Loyalty is low. ForeSee found that only 12% of consumers surveyed considered one company when making a purchase and that 49% viewed the company they visited as no better than the several other companies they considered when shopping.

“Since customer service is one of the primary drivers of in-store satisfaction, retailers that provide the best in-store service will reap the rewards,” according to ForeSee.

Retail experts recommend that brick-and-mortar ventures establish smaller networks of stores situated in highly visible locations with fewer square feet of space. These stores benefit from an extensive e-commerce business and less inventory in store rooms. Fulfillment centers carry additional stock which is delivered direct to customers or to stores for pickup.

Indoor malls are less appealing than outdoor malls and stand-alone stores. The last indoor mall to open in the U.S. was in 2006.

Rabobank Predicts Beverage Growth to Slow

NEW YORK, NY – Slower expansion of the middle class in four fast-developing countries means the “tailwind is moderating, leaving global beverage companies with the task of finding new market opportunities and growth strategies,” according to Rabobank Food & Agribusiness Research.

“Back in 2001, when the world was first introduced to the term BRIC, an acronym for the four fastest growing emerging markets of Brazil, Russia, India and China, few beverage industry executives could envisage just how profound an impact these countries would have on the global beverage industry’s growth in the decade ahead,” according to the eight analysts who compiled the just released report: Beyond the Yellow BRIC Road: Finding Growth in Global Beverages.

The largest economic transformation in modern history established an entirely new middle class, according to the report. The outlook suggests beverage manufacturers consider smaller markets and accept that in North America and Western Europe soft drink sales will remain stagnant, providing an opportunity for water and ready-to-drink tea.

“Bottled water is the clear leader in global soft drinks volume growth, with over 242 billion liters which was 38% of total soft drinks volume in 2012,”according to the report. Growth of 5% per year is expected through 2017. Water will deliver 55% of projected volume growth in soft drinks.

Due to the negative health image of CSDs (Carbonated Soft Drinks), volume of carbonated beverages will continue to slide and value is projected to decline 1% in North America through 2017 with less than 1% growth in China, according to Euromonitor.

“Both Coca-Cola and PepsiCo are struggling to find any growth in CSDs as consumers shift to healthier alternatives, such as bottle water and ready-to-drink (RTD) teas,” according to the report.

“Growth of soft drinks will continue to move to lower priced, emerging markets meaning volume growth will continue to exceed value growth,” according to the report.

Fruit juice volume is expected to grow by 3% in 2014. This growth is dominated by BRICs, which together account for almost 60% of the total increase in liters.

“The global tea marketplace remains highly fragmented and therefore provides ample room for large tea companies to expand across international markets in 2014. This is especially so for China, which is forecast to account for half of global tea growth through 2017, according to the report.

There has been limited merger-and-acquisition activity and industry consolidation in the tea segment has been slow, according to Rabobank analyst Ross Colbert. The top ten global tea brands account for 30% of the total tea market, estimated at $40.7 billion. Unilever (Lipton) holds an 11.7% share of retail value with Tata Global Beverages (Tetley) with a 3.1% share and American British Foods (Twinings) with a 2.5% share.

“These three are the only truly global competitors in tea, and while they remain strong in mature markets across western Europe and North America, their challenge is to continue growing organically and penetrate the important tea markets of China, Russia and Japan,” according to the report.

China, which is the world’s largest tea producer has a low per capita consumption outside the tea growing regions. The country is forecast to account for half of global tea growth through 2017. Unilever’s market share in China is 1.6% “and neither Tata nor Twinings have any presence there today.” These companies will have to acquire or establish partnerships with local players and develop new lines to meet the demand for products like Strong Milk Tea (black tea sweetened with condensed milk) and Xiang Piao Piao (instant milk tea).

“Beverage companies must now adapt to slower growth in BRIC markets by implementing new strategies to reach consumers more efficiently,” writes Colbert.

“Strategic initiatives such as direct-to-consumer selling, co-manufacturing and developing more efficient distribution platforms can help mitigate the impact of softer volumes in BRIC markets,” he said. Learn more: Rabobank Food & Agribusiness

Source: Rabobank

Alix Box Named Second Cup CEO

MISSISSAUGA, ON – Alix Box has been appointed President and Chief Executive Officer of Second Cup Inc., Canada’s largest independent chain of coffee shops.

Ms. Box, who will also serve on the board of directors, succeeds Stacey Mowbray, who will leave the company to pursue other opportunities. Box is a former Starbucks Coffee Co. executive responsible for managing 675 stores across Canada. Second Cup operates in every province and has more than 350 stores in Canada.

Tailwind Capital purchased 500,000 shares or about 5% of Second Cup’s shares after the announcement, paying $3.60 a share to Pheland Parties, the second largest investor in the chain at 28%.

During the past six years, Box has been a member of the senior leadership team at Holt Renfrew, most recently as senior vice president of retail at the luxury goods firm.  During this period, she helped lead a strong resurgence of service and sales growth, according to a company press release.

Ms. Box worked at Starbucks for 10 years and was vice president of operations of both licensed and company stores.

“Alix possesses the ideal combination of related retail experience and leadership attributes to lead Second Cup into a new era of success,” said Second Cup Chairman Michael Bregman. “She has an extraordinary track record and is driven to deliver sustainable, long-term value for Second Cup shareholders and franchise partners,” he said.

“I am very excited to join Second Cup.  Second Cup has an iconic Canadian history and I believe together we can build an even brighter future.  I am eager to work with our loyal franchise partners to improve café performance while providing Canadian coffee lovers with an upgraded, modernized vision for the future,” said Box.  She assumes her responsibilities Feb. 24. Learn more: www.secondcup.com

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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.

What tea professionals need to start the week. —

Teavana is on a roll a year after its acquisition by Starbucks… registration is now open for the World Tea Expo… Turks are tops in per capita tea consumption… scientists discover plant part that generates tea’s pucker… Kenya study points to gender inequality and shows that women make better tea… Ito En offers decaffeinated Teas’ Tea.

Teavana Update

Hard numbers are hard to find but a year after it was sold to Starbucks Teavana appears to be on a roll.

Last week during the company’s first quarter earnings call, CEO Howard Schultz, in his opening remarks, enthusiastically said: “A year after the acquisition of Teavana, we are more convinced than ever that we have the opportunities to transform the tea category in the way we have transformed coffee all around the world.”

It appears that Teavana’s two flagship stores in New York and Seattle are demonstrating that Starbucks’ single largest investment to date is beginning to pay off.

“Recent research confirms that Teavana now enjoys the highest level of awareness of any super premium tea brand and like Starbucks, Teavana had a solid Q1,” Schultz told analysts.

Starbucks reported a record $4.2 billion in revenue during the quarter including $159.2 million in the segment that includes Teavana. Overall the company grew revenues 12% with comparable store sales rising 5% in the Americas where store traffic increased 4%.

Financial record footnotes* state that an increase of 174% over Q1 FY13, “is primarily due to the addition of Teavana retail store revenues beginning in Q2 of FY13.” The $159.2 million combines revenue from Seattle’s Best, Evolution Fresh, Digital Ventures and Teavana. The first quarter includes holiday spending and is always strong but revenue in the segment is on track to post $630 in combined sales, most than half of which will be from Teavana.

In the company’s annual report, released in September, the financial segment that includes Teavana grossed $393.7 million for the year which was up 88.7% compared to the previous year largely due to the contribution from Teavana, but the exact amount Teavana contributed was not stated. Net revenue for the segment increased $185 million during the year, “driven by incremental revenues from the acquisition of Teavana in the second quarter of fiscal 2013 (approximately $156 million),” according to the financial filings.

Prior to the Starbucks acquisition Teavana reported quarterly earnings of $43 million and estimated annual sales of approximately $250 million. The company operated 284 stores at that time so a useful guesstimate is annual sales of at least $350 million. The final number will depend on how many stores are built. Teavana’s mall venues typically gross $850,000 to $1 million in sales. Going forward analysts will be able to compare year-over-year results.

Schultz said that “one year into the integration of Teavana, we are poised to begin the roll out of additional stores on the heels of the successful opening of our first two Teavana tea bars in New York City and Seattle.” The company, which currently operates 366 stores, intends to open 1000 more in the next five years. This averages 4 to 5 stores per week, a threshold easily met by a company that currently opens 1,500 coffee shops a year.

As it did with coffee, Starbucks is building gorgeous Tea Bars to showcase the brand in highly visible locations like New York City’s Central Park and Seattle. It will then roll out smaller venues in major cities around the country. These stores are cost-efficient and designed to drive profitability.

“These two beautiful new stores are already providing us the key insights that will help us achieve our goal of combining and leveraging Teavana’s strength and authority around loose-leaf tea and tea merchandising and Starbucks for entertaining its prudential consumer environment, innovative, handcrafted beverages and a retail store development to create a new retail platform and a unique international premium tea house experience.

Reading consumer response online offers a glimpse of these insights:

On Yelp! Jackie F. from Miami writes: “I had heard about this store opening and made sure that I visited on my weekend trip to NYC… love the environment, service and choices that were available.  I have purchased my first three loose teas and sugar and looking forward to buying more in the future.  Emily was extremely attentive and helpful during my selection process… she wasn’t pushy or overbearing.  Can’t wait to get home and make it on my own.”

Nathali Z. from Brooklyn writes: “I came here led by my cousin who is a Teavana aficionado. I was excited to be in this new space and have my first Teavana Tea. The place was busy with people being helped by sales associates. When we ordered our tea the staff was very friendly, cheerful and attentive. There is an area to sit down and have our “bites”. My cousin got a chocolate brioche and I had a croissant. They were yummy but not spectacular. The tea on the other hand delicious! It was very calm and my cousin and I were excited to be one of the first people here. Definitely coming back!”

Katie R. in New York writes: I LOVE THIS PLACE! I’m so glad that Starbucks has finally opened up its first tea location… Long overdue… I’d visit this over a Starbucks coffee shop any day. I’m tea obsessed and Teavana has the best teas, hands down. The chai latte was incredible. The food selection looked great, too! I just hope they expand to other locations in Manhattan, so I don’t have to make the trek to the Upper East Side.”

This is Yelp! after all, so there were also complaints: “Plenty of cash registers, not enough tables and chairs… “NO where to sit…. and “I really wanted to like this place, but my gut is that it is a concept that won’t work… and “Because there is no coffee, it is not a place to be patronized by groups of people together, because some will inevitably prefer coffee… but overall positive or benign: “Pretty spot! I got the coco caramel sea salt latte, which ended up being too sugary and sweet for me, even after they remade it without putting any syrup in it!! The jasmine silver needle in a pot was good, though!”

Marketing is much stronger under mighty Starbucks and the public relations team that handles the account at Edelman is first-rate. In January the timely introduction of Golden Dragon Yellow tea drew attention and the Chinese New Year loyalty card and teaware are further evidence of integration of the brand. Customers loaded $1.4 billion onto Starbucks cards last quarter, up $260 million from the previous year. Teavana branded cards are interchangeable with the familiar mermaid which means that 40 million cardholders can conveniently charge a drink. Customers activated more than 2 million new cards a day in the week before Christmas.

Premium single cup is the fastest growing segment in at home coffee and Starbucks has grown its share to 18% of the segment over the last two years, said Schultz. Last spring the company introduced Teavana flavors in K-Cups™ and this fall Teavana chai launched in Starbucks’ Verismo single-cup format.

The website has not undergone a lot of visible changes, but a close look shows an upgrade in teaware including an expanded number of exclusives. Porcelain and bone china are featured along with a packaging refresh with a QR Code and new graphics. The Teavana smartphone app has been updated to make it easier to locate stores. Teavana has 328,000 Facebook likes (Starbucks has 36 million and 5.6 million Twitter followers).

Mall-based stores as a whole were hard hit by a 15% slowdown in retail foot traffic and since the majority of Teavana stores are located in malls that had to hurt. Most of Teavana’s 366 stores in the U.S. and 62 shops in Canada are company owned. It also has 28 franchised stores in Mexico.

The tea market is a huge opportunity for the company. Globally tea is estimated at $90 billion with only a fraction of the tea sold as “value-added.” In fact, the majority is not even packaged. The success of the flagship stores means the company will expand more quickly now.

Two developments hint at the future for Teavana. During a major reorganization of the senior management last week it was announced Schultz “will expand his focus on innovation in coffee, tea and the Starbucks Experience as well as next generation retailing and payments initiatives in the areas of digital, mobile, card, loyalty and e-commerce.”

In his remarks Schultz promised “to bring breakthrough innovation to the tea category in the U.S. and Canada this spring and summer and to the international markets in the years ahead.”

A second clue is that Teavana is under the direction of Cliff Burrows, who is group president, U.S., Americas and Teavana. Burrows, 54, joined the company in 2001 and previously worked as managing director of the U.K. division where franchising is common.

Look for Teavana to expand overseas via traditional franchising. The EMEA region now has 2,033 stores of which 1,177 are franchised. Starbucks has very strong franchise relationships in both Europe and the Middle East. Sales growth in the region was 11% last quarter with revenues of $339 million. A turn-around in the EMEA results, which were previously slack, suggests an opportunity for expansion that would include Teavana.

Financial Footnotes:
The Teavana sale closed Dec. 31, 2012. The final accounting states that Starbucks paid $615.8 million in cash. At closing the company repaid $35.2 million in long term debt. Intangible assets such as the Teavana name were valued at $105.5 million. Teavana’s proprietary tea blends were valued at $13 million. An astounding $467.5 million of goodwill represents the intangible assets that do not qualify for separate recognition, such as established global store presence in high traffic malls and high-sales-volume retail venues, Teavana’s global customer base, and Teavana’s “Heaven of tea” retail experience in which store employees engage and educate customers about the ritual and enjoyment of tea.

Pucker Up: Finding Tea’s Tannins

Tea drinkers are familiar with the concept of astringency, that mouth-drying, puckery feeling after drinking a cuppa. That sensation is the result of chemicals in the leaf called tannins. Those tannins help prevent many creatures, including birds and insects, from consuming the plants.

Tannins are very powerful. They are able to denature proteins, protect plants from ultraviolet light, and prevent bacteria, microbes and fungi from having a negative effect on the plants. But the strength of tannins could also be a weakness. Their powerful impact must be minimized inside the plant so they do not destroy it. Scientists have come to understand that tannins must be isolated in the cells by structures called vacuoles. But how do they get there?

Scientists in France and Hungary have finally discovered more about the origin of tannins and their story begins with a previously unknown organelle called the tannosome. In the cells there are chloroplasts, the part of a plant cell where light is captured and photosynthesis occurs. The chloroplasts are lined by membranes called thylakoids. Jean-Marc Brillouet and his research team discovered that tannosomes emerge from this membrane and then group together within a new membrane called shuttles. From there they move on to a protective vacuole, making tannins along the way. These multiple layers of membranes, the tannosome membrane along with membranes in the shuttle and vacuole, offer the protection the cell needs from the tannins.

It is also interesting to note that because tannosomes are formed from chloroplasts, they are green, not brown as some might expect.

Source: Scientific American and Annals of Botany

World Tea Expo

World Tea Expo is an outstanding conference and the leading tradeshow focused exclusively on tea. Registration is now open for this year’s event which moves to California at the Long Beach Convention & Entertainment Center, May 29-31.

The Expo is co-located with the Healthy Beverage Expo. Together these events attract 5,000 businesses and professionals from more than 50 countries to meet face-to-face with 260 exhibiting companies.

The education program is designed to meet the specific needs of retailers, distributors and developers with different levels of experience, according to George Jage, group director of The Beverage Group @ F+W Media, Inc.

Tea Biz has attended for years and finds this year’s program more relevant than ever.

Educational topics include: Current Trends and the Future Outlook for Tea; How to Source & Select Teas; Cultivating the Next Generation of Tea Connoisseurs; Current and Emerging Regulatory Issues in the Tea & Infusion Products Industry; Building Your Own Successful Tea Business Close to a Teavana; The Science Behind Health Claims on Tea Beverages; and Why Ignoring Herbs Could be Costing Your Business, among many others.

“The U.S. tea market is undergoing a transformational change driven by flavor, variety and quality innovation,” says World Tea Expo presenter David Sprinkle, research director for MarketResearch.com and publisher of Packaged Facts.

“At the heart of the change lies specialty tea. Competition by product type and retail channel is fierce, but ultimately the tea industry as a whole is the winner, because specialty tea products translate to more consumer enthusiasm, as well as higher prices at the cash register, than the more commoditized products they are replacing.” Sprinkle will present new research from Package Facts, including data collected specifically for World Tea Expo on specialty tea use by mainstream U.S. consumers.

“World Tea Expo is a vibrant community that’s at the helm of tea’s massive growth in the marketplace,” says Jage.

Register at WorldTeaExpo.com and HealthyBeverageExpo.com.

Gender Imbalance Hampers Kenya’s Tea Industry

MOMBASA, Kenya – Kenya’s ministry of Agriculture has published a thought-provoking report describing the gender imbalance in agriculture and food production and recommending a sensible solution: share decision-making with women.

Globally 70% of the world’s food is grown by women, toiling on five-acre and smaller plots to feed their family and earn a living. In Kenya small gardens produce 60% of the country’s harvest.

“While women provide the majority of the labor in agricultural production, their access and control over productive resources is greatly constrained due to inequalities constructed by patriarchal norms,” according to the report which was drafted with the assistance of Kenya’s Food and Agriculture Organisation.

Researchers found that when their decision-making ability is limited, and women do not have access to resources and household income, they are more likely to accept lower wages.

The report finds that women are over-represented in jobs characterized by high job insecurity and low labor standards. This has become more acute as “youth are not significantly engaged in agricultural activities.”

Young people are seeking white collar jobs and other fast income-generating activities, according to the report.

“The key gender concern is the limited power over and ownership of assets and resources despite producing about 65% of the food consumed in the country,” according to Standard Media.

Kenya’s tea industry is experiencing a pivotal moment. Upheaval in traditional export markets such as Egypt and overproduction following a lackluster year drove auction prices to new lows. Since a majority of growers tend small gardens and sell their tea through the Kenya Tea Development Agency, there was little to be done when KTDA reduced its orders.

In response, middlemen began approaching growers directly, offering 25 cents a kilo, which a significant premium over the 16 cents per kilo is paid by KTDA. Several farmers in Central and Rift Valley regions have entered into contracts with multinational tea processors.

Chege Kirundi, the director in charge of KTDA Zone Three told The Star that, “Tea hawking is dangerous and no one should be allowed to buy the commodity directly from farmers because this will affect KTDA.”

Although prices are down 30% the auction still presents the best avenue for marketing the commodity, Kirundi told the newspaper. Farmers have in the past raised concerns over its inefficiency and costs, forcing them to seek alternative ways to sell their produce.

Because of their diminished position, women are less likely to benefit from technical training and extension programs. Yet, researchers have found that women tend to produce better-quality tea due to their greater diligence, attention to quality controls and willingness to invest in the long-term interests of their families, reports In2 East Africa (www.intoeastafrica.net).

Though small-scale tea farmers produce about 60% of the country’s output, they have few women representatives in their management authority, the Kenya Tea Development Agency, observes In2 East Africa. Only 20 of the 109 tea factories in Kenya are managed by women and there are no women on the KTDA’s board of directors.

The Journal of Management and Sustainability in May 2012 published a study warning that the tea sector is likely to face future challenges if women’s participation is not actively supported.

“At a time when women’s rights are regarded as criteria for trade, their violation might lead to denied entry of Kenyan tea in some export markets,” according to researchers at Africa Nazarene University, whose work was published by the Canadian Center of Science and Education.

If Kenya’s tea sector is to continue being one of the country’s biggest foreign exchange earners, more women will need to be involved in decision-making, according to the publication.

Per Capita Tea Consumption

It used to be that tea was just tea – 2 grams to be precise, neatly packaged in a 100-count box of tea bags on the grocery shelf.

Lipton, Tetley, Red Rose, Twinings, PG Tips, Yorkshire… the brands are too numerous to list but all weighed the same. The 2-gram teabag dictated uniformity. It also made it a lot easier to calculate just how much tea was consumed.

Quartz, a digitally native news outlet that compares global data sets, recently published a flawed but nonetheless helpful visualization of the world’s tea drinkers by country. The stats on per capita consumption were supplied by Euromonitor International and were calculated as tea imports divided by population.

The world leader is Turkey  with Ireland and England trailing. While India (.72 lbs.) and China (1.25 lbs.) each produce more than a billion metric tons of tea, neither has a high per capita count since rural populations outside the tea growing regions find it expensive. Tea in these countries is mainly sold at market stalls, not grocery aisles. Only 2% of India’s domestic tea is sold in supermarkets.

And what happened in Pakistan, which does not appear on the list, asks French Tea Export Barbara Dufrene.

Pakistan is a relatively small tea producer but one of the world’s top consuming nations. Estimates place per capita consumption at more than a kilo, double the United States and greater than neighboring India. But it is a hard number to calculate because the price of tea is so high in Pakistan that much of the tea consumed is smuggled into the country to avoid taxes. Pakistan officially imported about 170,000 metric tons in 2010, making it the fourth largest tea importer in the world. Estimates of the tea smuggled into the country that year range as high as 100,000 metric tons.

Dividing population into the annual harvest (minus exports) is a good approximation of consumption in China, for example, where tea is consumed as loose leaf with few added ingredients to distort the weight/volume. It is more difficult to count cups but results in a more accurate measure of tea’s popularity.

The Chinese use six grams of tea per cup, as do the Turks. However the Chinese steep their green tea three to five times for a minute or two yielding at least three cups for two grams. Asians drink six to eight cups a day. The Turks in contrast steep their black tea once. Countries like Ireland and UK average two grams per cup (equivalent to a tea bag). Tea drinkers in these countries typically consume four to six cups a day.

In Europe and North America tea is blended with fruits, florals and herbs. A cup of tea in these countries is made with very little tea by weight.

Counting cups also has limitations. In Canada (1.12 lbs. per capita) and in the United States (.503 lbs. per capita) the totals are also distorted due to the large amount of bottled tea. While the majority of tea drinkers in both countries choose traditional tea bags, between a third and one half tea drinkers consume specialty blends including whole leaf tea. Much of this tea is bottled.

The Foreign Agricultural Service keeps tabs on tea imports for the U.S. Department of Agriculture. In the 12-month span from January to November 2013 (December numbers are not yet available but are likely to be the about the same as the 13 million kilos imported in December 2012) the U.S. imported an estimated 217,221,887 kilograms of tea for domestic consumption which is equivalent to 452 tea bags per person.* If this sounds too high, consider that a great deal of the tea that you drink is brewed in large quantities then powdered or concentrated and bottled.

When you exclude bottled tea, it does not seem unreasonable to assume a household with two tea drinkers buys 9 boxes of 100-ct tea bags a year – averaging about a box a month or enough tea bags for 1.2 cups a day.

Statistics Canada provides a very reliable measure of tea leaf consumed. Their count in 2011 was 2.65 lbs. per person or the equivalent of 600 tea bags a year. This compares favorably with the findings of market research firm Nielsen whose survey of 4,205 Canadians discovered 54% drink at least a cup of tea a week. The national average is 8.3 cups weekly with heavy tea drinkers consuming 16.4 cups a week (2.3 cups per day); moderate drinkers average a cup a day and light tea drinkers 1.5 cups a week. The Tea Association of Canada estimates Canadians drink 9.7 billion cups a year, a number that has climbed by 120 cups per year since 2006.

Since the population of Canada is about one tenth that of the U.S. Consumption is about double the per capita. An estimated 18.9 million Canadians drink tea on any given day. In the U.S. annual consumption was 79 billion cups in 2012. On any given day about 158 million Americans are drinking tea, according to the Tea Association of the USA.

The encouraging image portrayed by Quartz is that all the world drinks tea.

*The total excludes herbals and tea that landed in the U.S. but was exported to another country. The 217,000 metric tonnes is the equivalent of 239,446 short tons or 479 million pounds. Divide that by a population of 240,185,952 over 18 years and the per capita consumed is 1.99 pounds (452 tea bags). This falls to 1.53 pounds if you calculate consumption using the entire population of 314 million (2012 US. Census estimate) conforming to method used by Quartz with Euromonitor International data. Sources: Nielsen 2013 Tea Time Survey (Tea Association of Canada). USDA FAS. Statistics Canada. Tea Association of the USA.

Decaffeinated Teas’ Tea

SAN FRANCISCO, Calif. — ITO EN has launched an Unsweetened DECAF tea and slightly Sweetened TEAS’ TEA®, offering new alternatives to their line-up of award-winning ready-to-drink teas.

The unsweetened decaf was developed for caffeine-sensitive consumers. It is authentically brewed from premium loose leaf teas and carefully decaffeinated to preserve the tea’s true taste and available in Green Tea and Black Tea flavors. The teas offer zero calories with naturally occurring “catechin” tea antioxidants in a 16.9 fl. Oz. recyclable PET bottle.

The slightly sweetened tea has a clean finish and clarity with only 120 calories per bottle (16.9 fl. oz.). The top selling Green Tea and Jasmine flavors are sweetened with cane sugar. The newest addition to the TEAS’ TEA® family is an option for the health conscious consumer, who is not yet ready for the pure green tea, but prefers quality tasting tea that is sweetened but low in calories.

“We are pleased to offer new dimensions to meet consumer requests. The new DECAF tea meets our taste standards and affirms our commitment to the purity of the tea leaf.” said Rona Tison, Sr. Vice President of Corporate Relations. With more Americans embracing a healthier lifestyle, TEAS’ TEA® is gaining rapid distribution for its tea innovation and expertise in creating Only The Purest Tea™. Learn more: www.teastea.com

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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.

What tea professionals need to start the week. —

Third party sustainability certifier UTZ finds gardens adhering to its recommended practices generate higher yield and better quality tea… a large-scale study of U.K. women on foods that offer protection against diabetes confirms that tea, chocolate and berries are the perfect afternoon snack… Sri Lanka sets a revenue record for tea exports… changes in temperature and rainfall may reduce the beneficial components of tea… researchers find hydrating with tea is equal to water (we think it’s a smidgen better)… a formidable fence on the border with Bangladesh keeps India tea growers locked out at night.

 

Sustainable Practices Benefit Tea Growers

AMSTERDAM, Netherlands — The UTZ certifying organization published its first Impact Report last week and the findings suggest tea growers will benefit in several ways by adopting the UTZ Code of Conduct.

The report is a compilation of findings from 24 independent research studies to assess the impact of the a regimen of sustainable practices that include training in horticulture, spare use of soil inputs and pesticides and practices to encourage biodiversity, water conservation and soil enhancement.

Highlights from the work on tea gardens in Malawi and Kenya:

• Kenyan tea farmers were able to improve yields by 11% from 1.13 kilos per bush in 2010 to 1.26 kilos in 2012.
• Kenyan tea farmers that received training on the UTZ Code of Conduct increased record keeping by 30%.  In the same study, significantly more farmers that were trained on UTZ stated that they regularly review records on their use of inputs and production to help them adjust their farm management practices.
• Use of Personal Protective Equipment that includes breathing masks, protective foot-gear, gloves, eye protection and protective clothing rose from 3% to 37% in Kenya and from 10% to 17% in Malawi following training. The UTZ certified farmers were significantly more likely to prevent vulnerable groups, such as pregnant women and untrained workers, from applying agro chemicals.
• Tea farmers in Kenya increased income by 14% (adjusted for inflation). This was due to lower input costs, higher prices and the effect of the UTZ premium. Lower input costs included labor and fertilizer costs, with UTZ certified farmers using 22% less fertilizer per bush in 2012 than they did in 2010. In Malawi, similar results were observed. In that country 53% of tea farmers that received training reported their net income had increased compared with two years ago.
• Satisfaction levels went up in relation to quality of family welfare, relationships with neighbors and quality of farms, including access to water and electricity. Scores on satisfaction level regarding livelihood increased by an average of 25% from 2009 to 2011 among UTZ certified tea farmers in Malawi. 

“It is of fundamental importance to measure the impact of our program,” said Han de Groot, executive director of UTZ Certified. “We are proud of the outcome of this report. It shows that UTZ is making a difference for more than half a million farmers and their families worldwide,” he said.

Click here to download UTZ Impact Report. Learn more: www.utzcertified.org

WebMD: Tea Lowers Diabetes Risk

The WebMD site is a treasure trove of trustworthy reporting on the health benefits of tea. Last week it cited a report in the Journal of Nutrition (Jan. 19) of the first large-scale human studies to look at how substances found in tea, chocolate and berries can protect people against diabetes. The disease has reached frightening levels in the developed countries of the world.

“Our research looked at the benefits of eating certain sub-groups of flavanoids. We focused on flavones, which are found in herbs and vegetables such as parsley, thyme and celery, and anthocyanins, found in berries, red grapes, wine and other red or blue-colored fruits and vegetables,” study leader Aedin Cassidy, of the University of East Anglia in England, said in a university news release.

The study included nearly 2,000 healthy women in the U.K. who completed food questionnaire and were tested for levels of blood sugar, insulin resistance and inflammation, according to a report on the WebMD website.

Earlier research that took place in laboratories suggested that these types of foods might affect blood sugar, which plays a role in type 2 diabetes risk, she noted. However, it was unknown how regular consumption of these ingredients might affect a person’s blood glucose and inflammation levels and insulin resistance, Cassidy said in the news release.

In the release co-author Tim Spector, of King’s College London, said the study suggests “that some components of foods that we consider unhealthy like chocolate or wine may contain some beneficial substances. If we can start to identify and separate these substances we can potentially improve healthy eating.” 

Sri Lanka Leads World in Value Added Tea Exports

COLOMBO, Sri Lanka — Tea exports reached an all-time high in 2013 generating revenue of $1.5 billion for this island nation of tea growers. Production was up 7% compared to 2012 reaching 340 million kilos of tea.

The country excels in tea processing, blending and adding value to the leaves it grows. Last year 41% of its export total was value-added tea. Sri Lanka’s combination of tea blending, tea bagging factories, carton making and printing and shipping prowess makes it common to load entire containers of cello wrapped tea for market.

Plantations Industries Minister Mahinda Samarasinghe told the Daily News 2014 would be even better.

Sri Lanka has again managed to sustain the highest price of all the world’s auction centers, averaging $3.44 per kilo, he said. The tea auction center in Mombasa, in contrast, averaged $2.40 per kilo in 2013, well below the past two years. In 2012 Kenyan tea sold for an average $2.88 per kilo. Kenya is the world’s largest black tea exporter but adds value to only 8% of its exports while India, the region’s other tea powerhouse adds value to only 11% of its tea exports.

Samarasinghe said that to spur further growth the government is providing assistance to farmers to re-plant. Subsidies for small holders were increased to $2,679 per hectare (about $1,300 per acre) from $725 per acre in 2012. The funds are used to purchase fertilizer with an additional $1900 per hectare incentive to plant new tea.

Russia and the neighboring CIS countries remain the primary destination for Ceylon tea at 16% followed by Iran which received 12% of last year’s exports. Turkey, Iraq, Syria, UAE, Kuwait, Japan, Jordan and Chile round out the top 10 destinations.

Impact of Climate Change on World’s Favorite Drink

YUNNAN, China — A study funded by the National Science Foundation will investigate changes in temperature and rainfall patterns that are believed to alter not only the taste and aroma but also the potential health benefits of tea.

Science Daily reports on a research project by Tufts University biologist Colin Orians to “examine how climate change effects the concentration of chemical compounds that are responsible for tea’s stimulant, sensory and healthful properties.”

The study is based on preliminary research conducted in southwestern China’s Yunnan Province by co-principal investigator and tea expert Selena Ahmed while she was a graduate student and later Training in Education and Critical Research Skills Program (TEACRS) postdoctoral fellow at Tufts.

“Since the quality of tea is determined by a range of secondary chemicals that depend on climatic conditions, climate change can have significant consequences for tea markets,” says Orians, a professor in the Department of Biology in the School of Arts and Sciences at Tufts. “People buy and drink tea for certain qualities. If those qualities are not there, then they may not buy the tea.” Similar research is ongoing in Assam, India where R.M. Bhagat, deputy director of the Tea Research Association, based in Tocklai told Al Jezeera that “the degree of impact varies regionally, depending on distance from equator and other local conditions.”

The Tocklai tea experimental station has been recording daily weather and tea production data for more than 100 years. “We have found that the minimum temperature has risen by 1.5 degree centigrade, and the annual rainfall has reduced by 200 millimeters,” said Bhagat.

Bhagat says tea trees in Assam previously would be high yielding until 40-45 years of age, but now decline at 30-35. The resulting tea is less pungent and full-bodied. Assam was historically viewed as sub-tropical with an ambient temperature under 95º Fahrenheit (35º Celsius). The range is now 100º to 104º (38-40º C) in shaded areas, and upwards of 122º F. (50º C) in non-shaded spots. Photosynthesis slows at 95º F. and food production in the plant stops above 102º F. Tea leaves can no longer breathe and die above 104º F.

“Only time will say whether the tea trees will adapt or not, but the industry has to gear up,” he says. He recommends increasing shaded areas, alternative water systems, and using organic manure. The association is also testing clones that are resistant to climate change, he adds.

Sources: Science Daily, Al Jazeera

Staying Hydrated with Tea

It would be hard to avoid the message that everyone should be drinking more water – eight 8-ounce glasses each day. Right? Not necessarily. The concept of “8 by 8” became ingrained in society, as did the belief that only water would do. Common wisdom was that tea would make a person more dehydrated, in need of additional water intake. Unfortunately, even though this idea has been proven to be untrue, many people have not gotten the message.

According to the Institute of Medicine, drinking any beverage containing water will help keep the body hydrated. Happily, this list includes tea. “We should be telling people that beverages like tea and coffee contribute to a person’s fluid needs and despite their caffeine content, do not lead to dehydration,” wrote Spero Tsindos from La Trobe University’s Department of Dietetics & Human Nutrition in the June 2012 Australian and New Zealand Journal of Public Health.

A study sponsored by the UK Tea Advisory Panel corroborated these statements. Researchers assembled 21 volunteers who would consume four cups of tea on one day of the study and four cups of hot water on the other day of the study. (Some participants began with tea and the rest began with the water. Each person switched for the second day.) Hydration levels were measured using blood and urine samples. Researchers found no differences in hydration levels in the participants whether they consumed water or tea. Read more in The Telegraph.

Cross-border Theft Hampers Tea Growers

JALPAIGURI, West Bengal – Along Assam’s southern border with Bangladesh, tea growers report cross-border tensions are at a high. The border fence runs through tea gardens maintained by growers in the Jalpaiguri district of West Bengal. At the time the territorial boundary was established the precise location of the “zero line” was not known. During the past few years India has constructed a 4,000 kilometer, nine-foot-high fence of multi-layered barbed wire to discourage illegal immigration and smuggling. Approximately 3,200 kilometers faces Bangladesh with 1,066 kilometers bordering the State of Bengal, according to a report in the Hindu Business Line.

The fence was erected 150 yards from the zero line creating a zone ruled by India but easily accessed by Bangladesh. Tea production in this area totals 50 million kilos, valued at US$10.5 million. “Over 1000 small tea plantations, recognized by Tea Board of India, are situated in the land along the Indo Bangla border. Many have special permission of Border Security Force (BSF) guarding the international border, to plant tea,” explains Bijoy Gopal Chakroborty, President, Confederation of Indian Small Tea Growers Associations (CISTA).

Chakroborty told the Economic Times pilferage has been growing for the past several months with thieves now absconding with pumps, irrigation pipes, sprayers and farm implements. Indian growers are permitted to cross through gates into the buffer zone but must return at night.

This has escalated to large-scale green leaf theft which has “hit hard the economy of these STGs (Small Tea Growers),” he said. Growers can only complain to the security forces after the fact, since they are not allowed access their land at night. “We accept that BSF is always active everywhere. But it is impossible for them too to keep everyone out of our lands in opposite side of the fence,” tea planter P. Saha told the newspaper.

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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.

What tea professionals need to start the week. —

Himalaya tea brand created to challenge Darjeeling… green tea interferes with a blood pressure drug… garden workers in Assam are pressing for a wage hike… there is a battle in Cornwall to see who will get creamed… Rishi Tea introduces a special knit mesh bag and a zoo regrets dressing Chimps for tea.

Himalaya brand challenges Darjeeling

DARJEELING, West Bengal, India – The 87 gardens here produce less than 10 million kilos annually while marketers last year sold an estimated 40 million kilos branded with the highly celebrated Darjeeling name.

If you are scratching your head over the math, it is possible because of the work of counterfeiters and due to tea blends that contain at least 51% Darjeeling tea. These blends continue to be legally marketed under the Darjeeling label for now, but all that is changing.

In November 2011 the European Union registered Darjeeling Tea as a Protected Geographical Indication (GPI) as it has done with Champagne made in a specific region of France and the whisky known as Scotch. Geographical indications are a useful intellectual property right for developing countries because of their potential to add value and promote rural socio-economic development. They are also an aid in exposing misuse and counterfeiting.

Notice that even if every kilo of Darjeeling’s annual yield was blended, only 19.8 million kilos could be genuine, leaving more counterfeit Darjeeling in circulation than is grown. Only 3 to 4 million kilos are exported mainly to Europe (60% of the export total) and Japan. The large quantity of suspect tea suggests counterfeiters are at work in both the domestic market and overseas.

Blenders that has sold the teas for the five years prior to the ruling are permitted to continue marketing the 51:49 mix as Darjeeling tea for five years ending in 2016. At that time only packets that contain 100% Darjeeling can legally carry the name.

Anticipating an end to this lucrative practice tea importers are trying to create a new brand called Himalayan Tea, according to reports in the The (Calcutta) Telegraph. The newspaper quoted the Darjeeling Tea Association’s Principal Advisor, Sandeep Mukherjee, as saying the importers “are using the words Himalayan Tea on packets in certain European countries to create a new brand so that they can carry on with the practice of blending various kinds of tea.”

“The use of Himalayan Tea is not rampant as of now but the usage has started,” he added.

Confusion over the purity of Darjeeling is being addressed in several ways. A seal is affixed to exports and counterfeit tea is confiscated. Ultimately the price is going to rise on scarcity and new demand. In November, South Korea, for the first time, imported 1,500 tonnes of Darjeeling tea according to the Economic Times. S.S. Bagaria, chairman of the Darjeeling Tea Association (DTA) said he was pleased at Korea’s interest in first flush and autumnal teas.

Stable prices and rising demand have generated renewed interest in revitalizing the gardens of Darjeeling. The Mamata Banerjee government recently offered to sell three Darjeeling gardens to Bengal, Inc., a group that includes Jay Shree Tea, Ambootia Group, Bagaria Group and state-run Andrew Yule. The decision to privatize is expected to lead to new investment in Rungmook-Cedars, Rangaroon and Pandam gardens.

Last week the Ringtong tea garden reopened after 17 years. The garden, located in the Sonada valley, was abandoned after militant workers burned the factory and ransacked the manager’s bungalow.  A new factory is to be constructed. Ringtong is the last of the 87 gardens to reopen and is expected to be fully operational by 2019.

Tea quality suffered in 2013 due to heavy rains and workers disrupted shipments causing order cancellations early in the season.

Sources: Economic Times and The (Calcutta) Telegraph

Ill Effect of Green Tea on Blood Pressure Meds?

A report accepted this week for publication in the journal Clinical Pharmacology & Therapeutics suggests that consumption of green tea may impact the absorption of nadolol, a blood pressure medication.

Researchers from Europe and Japan developed the study after previous data indicated that rats who consumed green tea extract were less able to absorb this blood pressure medication. Ten volunteers were given either water or green tea each day of the two week study. They were then given a dose of the beta blocker nadolol. After a rest period of two weeks, the study was repeated with the volunteers switching to the opposite beverage.

Blood samples were taken to measure the concentration of the medication in the blood stream. When volunteers drank green tea, there was 76% less nadolol in the blood than when they consumed water. Nadolol was also found in significantly lower amounts in the urine. Researchers believe that this indicates that the medication was absorbed less in green tea drinkers.

Further lab analysis led researchers to believe that the antioxidant EGCG may be affecting the proteins that move the drug into the cells. Although the study was small, the results were concerning enough that they recommended abstaining from green tea consumption while taking this drug until further studies can be done.

Rishi Tea Debuts a Special Knit-Mesh Tea Bag

MILWAUKEE, Wis. – Paper and even fine mesh silky bag materials are too tightly woven and act as a barrier to the tealeaves’ infusion according to Rishi Tea which introduced a new filter mesh bag from plant-based resources.

Rishi Tea’s new tea bags are certified organic and Fair Trade certified and “set a new standard for gourmet quality in the tea bag market,” according to the company.

The filter bag imparts enhanced flavor, aroma and body over standard paper or silky/nylon tea bags, according to Founder and President Joshua Kaiser. “We found a looser weave structure was needed to improve the overall tea bag experience,” says Kaiser. “Our teas, blends and herbals carry with them the taste of origin. They also embody a culinary approach to tea so we were excited to have brought to market a specially designed knit material that actually allows for a full, true infusion of flavor and aroma without any of the sensory hindrances posed by paper or nylon mesh tea bags.”

“The design was inspired by the strainers inside of handheld Japanese tea pots called Kyusu. A kyusu has a fairly wide mesh at the base of the spout with ample room inside the pot for tea leaves to unfurl and yield a balanced, full infusion. Rishi’s tea bags offer that level of quality and honor the artisan methods we and the farmers we collaborate with take,” says Beau Bernstein, Rishi’s Director of Marketing. This new line offers a veritably epicurean approach to organic tea that the Specialty Tea market has been missing.”

Rishi’s new line of tea bags are available in 15 count boxes, and feature ingredients not seen anywhere else in the tea aisle, from South & South East Asian turmeric root to organic Bordeaux varietal grape skins.  The 16 organic tea bag flavors (priced at $8.99) will be available at select retailers and specialty gourmet markets nationwide beginning in February.

Organic green teas: Jade Cloud, Jasmine Green, Tropical Green, Sencha, Green Tea Mint, Matcha Super Green. Black Teas: English Breakfast, Earl Grey, Masala Chai. Pu-erh teas: Pu-erh Bordeaux, Chocolate Cinnamon. Herbal Teas: Blueberry Hibiscus, Pacific Peppermint, Chamomile Medley, Turmeric Ginger. White Tea: Peach Nectar

Marketers Focus on Adding Value

Tea marketers are exploring added value products in the relatively static world tea market that will undergo significant retail and foodservices changes, according to a report by Research and Markets.

Tea marketers including Unilever (T2) and Starbucks (Teavana) have both acquired premium tea specialist retail outlets, and growth in premium tea consumption is seemingly around the corner, according to researchers.

“Nestlé’s bold move in creating Tpresso using a Special. T. brewer, now available in Japan, “is being closely observed by its rivals,” according to the report. The capsule system launched in retail outlets in September.

“Japan is an important tea market with a lot of potential,” said Pascal Lebailly, Nestlé’s Head of Special.T. “Per capita consumption is up to five times higher than in any western European country, apart from the United Kingdom. “Although Japan has a strong green tea drinking culture, other varieties such as black, blue, white, flavored, or organic herbal are less well known,” he continued.

“There is certainly a business opportunity for another single beverage tea system in the market,” according to researchers.

The report suggests the market in retail and food service is set to change. The global briefing offers an insight into the size and shape of the hot drinks market, highlights buzz topics, emerging geographies, categories and trends as well as pressing industry issues and white spaces. It also identifies the leading companies and brands and offers strategic analysis of key factors influencing the market including new product developments, packaging innovations, economic/lifestyle influences, distribution and pricing issues.

Learn more: Tea Global Corporate Strategy: Adding the Value and Creating the Demand (Jan. 2 2014)

Clotted Cream Wars

CORNWALL, England – What is the true goal of a Protected Designations of Origin (PDO)? Is it to maintain and protect the long heritage and tradition of a product or can it also be a growing and evolving definition, one that reflects changes to a product over time? These are some of the questions emerging from a corporate battle over Cornish clotted cream.

Cornish clotted cream is a thick cow’s milk-based cream produced in Cornwall, England with a warm yellow color and a golden crust on top that is well-known by afternoon tea aficionados. Cornwall’s grass is rich in carotene and has a long growing season, allowing the cows that graze on it to produce milk that is extremely high in butterfat and has a distinctive color. In 1998, the PDO was granted for clotted cream produced in Cornwall, using Cornish milk, with a fat content of at least 55%, and created using a specifically designated process. Last month a filing was made by Trewithen Dairy suggesting that the definitions are outdated and that clotted cream sold in bulk to manufacture other products should be allowed a more flexible definition.

Trewithen wishes to continue to produce a Cornish clotted cream for bulk sales in which the crust is actually mixed into the product rather than on the top. Their biggest rival, Rodda’s, argues that this change would go against the very spirit of a PDO designation. Rodda’s managing director, Nicholas Rodda, was quoted in The Independent saying, “The role of PDO is to protect the traditional foods. Changing it undermines the whole reason for its existence.”

Comments will be collected by the Department for Environment, Food and Rural Affairs (DEFRA) about the proposed changes until March 2014 with a ruling to follow.

India Tea Laborers Seeking Wage Increase

WEST BENGAL, India – Garden workers are again pressing for a wage hike in India which often leads to showdowns that disrupt supplies. Currently workers earn INRs 95 ($1.57 a day) for plucking 42 kilos of tea. They are asking for INRs 322 ($5.18) under a three-year agreement that expires April 1. India requires garden owners to provide workers with shelter, subsidized grains for their table, medical care and education for their children in addition to a daily wage.

Several unions asked to meet with representatives of garden owners. Unions include the Darjeeling Terai Dooars Plantation Labour Union, which is affiliated to the Gorkha Janmukti Morcha, and the Progressive Tea Workers Union of the Akhil Bharatiya Adivasi Vikas Parishad. These and several smaller unions announced they had formed a coalition Dec. 27 and met with West Bengal Labour Minister Purnendu Bose in Calcutta on Jan. 7, according to reports in the The (Calcutta) Telegraph. The coalition is called the United Tea Workers Front (UTWF). Since the last negotiations the Supreme Court of India has issued wage guidelines and the 15^th Indian Labour Conference (ILC) recommended a base of INRs 322 per day.

The UTWF asked Purnendu to initiate talks prior to the expiration of the existing work agreement. The union is seeking wages sufficient “for living a healthy life.”

Gardens in the Terai are situated south of the outer foothills of the Himalaya and north of the Brahmaputra Valley and its tributaries. Terai is the Hindi word for foothills. It is home to 10.3 million people. The tea growing region is crossed by the Ganges and Yamuna and Karnali and hundreds of smaller rivers. The Dooars, which means “door” in Assamese are the floodplains of the eastern Himalayas. The Dooars span 3,400 square miles.

A representative of the Terai Indian Planters’ Association, whose members have gardens in the Terai, told the newspaper that growers are also eager to begin talks but are waiting for state officials to set a date and location. Growers point out that wages have increased 34% since 2011.

Coalition spokesman Anuradha Talwar told the newspaper “we want the state government to immediately initiate talks on the revision of pay for the next three years. Only if the talks are launched soon, the laborers can start receiving wages at higher rates from April 1 and it can be ensured that there are no arrears. There were instances of workers being deprived of new wages from the date of the (earlier) revision because of delay in reaching an agreement.”

Workers want talks held in Darjeeling for unions representing gardens in that region with additional talks in Siliguri for workers in the Terai and Dooars instead of Calcutta.

Other unions in the coalition include Terai Dooars Progressive Plantation Workers Union, West Bengal Tea Labour Union (which is affiliated to the CPI-ML), Paschimbanga Khet Mazdoor Samiti and New Trade Union Initiative. The Citu and Intuc and RSP Union are not part of the group, nor are the two Trinamul tea unions, but these represent relatively few of the region’s several hundred thousand tea workers.

Source: The (Calcutta) Telegraph and The Business Standard.

Zoo Regrets Tea Service

LONDON, England – Twycross Zoo has apologized for allowing PG Tips to feature a pair of talking chimps in its tea commercials for 50 years.

The zoo in Leicestershire, now known as the World Primate Center, said there will be no more chimps used in advertisements and has since remodeled its habitat to more closely resemble the wild.

In the ads the chimpanzees were dressed in clothes and hats and lip-synced with the voices of actors such as Peter Sellers and Bob Monkhouse. Their antics were on display at the zoo as well. Animal rights groups protested and the ads were halted in 1970, reappeared 18 months later and were finally abandoned in 2003.

The zoo told the BBC that performing alienated the animals from their kind. The surviving chimp, known as Choppers played Ada in the commercials. She is now 42 years old and never learned to assimilate with fellow apes.

Her insularity and unwillingness to integrate with other chimps was caused by the close bonds she formed with people, according to Sharon Redrobe, Twycross Zoo’s chief executive. “She’s mixed up,” Redrobe told the BBC.

“It’s not a good start in life to be treated like a human because they don’t learn ape behavior and are not very good at being with other chimps,” she said, “they want to be with people.”

“You can’t deny the past – it happened,” said Redrobe. ”It absolutely wouldn’t happen again under my leadership.”

Source: BBC

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