• Q|A Ian Gibbs

    Tea Biz travels to the UK offices of the International Tea Committee where Chairman Ian Gibbs describes the immediate and potentially long-term impacts on the global tea trade stemming from the ongoing crisis in Ukraine. According to Gibbs, the combination of sanctions and the collective refusal of the world’s largest container shipping companies to deliver or receive goods will interrupt tea shipments to Russia, but no one knows for how long.

    • Caption: Ian Gibbs, Chairman since 2016 of the International Tea Committee

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    Ian Gibbs, Chairman of the International Tea Committee

    Payment Concerns Further Disrupt Global Tea Supply Chain

    On top of the upheaval in the tea trade caused by the pandemic, new worries include guaranteeing payment for containers of tea without violating sanctions while booking scarce carriers for shipments to the Russian Federation and Ukraine. Stocks of tea in Russia are adequate for several months, but the interruption of scheduled replenishment that averages 120 containers a week will invariably lead to shortages.

    As the ruble’s value collapses, Russian tea buyers accustomed to favorable credit terms now find it difficult to secure the financing needed to pay upfront, according to Ian Gibbs, chairman since 2016 of the International Tea Committee (ITC). In 2020 Russia imported 142,000 metric tons of tea, valued at $412 million — a total likely to decline in 2022. Gibbs predicts a dip – but not a big drop in the volume of tea shipped to the world’s third most valuable tea market. 

    Dan Bolton: Ian, will you put into perspective the impact of the invasion of Ukraine? How will a prolonged crisis impact the global tea trade?

    Ian Gibbs: Initially, it will be a very worrying time for many producers. It’s going to affect some more than others. Reduced demand in one market will have knock-on effects elsewhere.

    If we look at the main countries from which Russia sources its tea (See chart below, all ITC figures are from 2020), India is likely to be hit the hardest just over 39,000 metric tons or 19% of their exports went to Russia in 2020. Sri Lanka sent 30,000 metric tons to Russia, representing 11% of their total exports.

    On the other hand, Kenya exported 25,000 metric tons to Russia a significant figure for Russia but a total that represents less than 5% of Kenya’s annual exports.

    Vietnam exported 13,000 metric tons to Russia (10% of their total exports). Indonesia exported 8,500 metric tons, a smaller quantity than the other countries I’ve mentioned, but a quantity that represents nearly 19% of Indonesia’s tea exports. So that suggests that Indonesia could be hit quite hard. 

    Tea is regarded as an essential product and along with other foodstuffs should, I understand, be exempt from the sanctions. But producers will still have considerable issues to contend with, such as finance, which currency to use, the ruble’s depreciation, insurance, and shipping. Regardless of what’s being shipped, many shipping lines have stopped shipping to Russia.

    Unlike other occasions when sanctions have been applied, I think that the feeling of the majority of people worldwide at the government level, commercial companies, and as individuals is they want to see these sanctions effective as a result of what they are seeing on the television and the internet. So, it’s going to be quite a challenging task, I think, for exporters.

    Dan Bolton: Will black tea producers concerned over price and settlement of payments* cut production, or will tea previously destined for Russia find its way to other markets?

    Ian:  I don’t think producers will cut production. Tea is exempt from sanctions; probably quite a large quantity will be imported by Russia. 

    However, there will be a hiccough in the short term as the players in the market work out how to deal with the various issues I listed earlier.  There is no doubt these issues are substantial, so the market is likely to be adversely affected for a while. 

    New markets don’t suddenly appear, but I hope that producers (and by this, I mean producing companies backed by their countries’ governments) will use this opportunity to explore new markets, which could be a long-term benefit to everyone. 

    “I think that the trade-in foodstuffs, including tea, should be restored to normal fairly quickly once hostilities end. I don’t believe that in the long term, there will be a major disruption to trade.”

    “I think that the trade in foodstuffs including tea, should be restored to normal fairly quickly once hostilities end. I don’t believe that in the long term, there will be a major disruption to trade.”

    Ian Gibbs

    Dan Bolton: Will this crisis soon pass? Or do you foresee years of sanctions that permanently disrupt the current alignment of the tea supply chain?

    Ian: Everyone wants the whole problem solved very, very quickly. The amount of damage already done in Ukraine means that the effects of this invasion will be felt for a long time.

    It will take time to rebuild Ukraine and for trust to be restored between Ukraine and Russia and all the other parties involved.

    It will be a while before we get back to normal. However, I think that the trade in foodstuffs, including tea, should be restored to normal fairly quickly once hostilities end. I don’t believe that there will be a major disruption to trade in the long term.

    Tea is not alone; other commodities are contending with the same problems.  It’s worth noting all this is happening against a hike in the price of coffee over the last year, which has happened for several reasons, and so there is potential for tea to benefit as people can be expected to switch from coffee to tea. 

    In my view, demand will be there, and I believe the government of Russia will be keen to make sure that people get their tea. It is going to take time to settle down. As far as the tea industry is concerned, I personally believe that it’s a blip it’s going to take time to sort things out, but new opportunities are invariably out there waiting to be explored and we have to find them

    Tea Exported to Russia (2020)

    Total Production (mt)Total ExportsExports to Russia%age1
    China2,986,016      348,81515,3004.39
    Indonesia 126,00045,265 8,50018.78
    Sri Lanka278,493 262,726 30,40011.57
    Source: International Tea Committee courtesy Ian Gibbs
    1 Percentage of tea producing country’s total exports to Russian Federation

    Ian Gibbs was elected Chairman of the International Tea Committee in May 2016.  On leaving school, Ian served 14 years with the British Army.  He joined the tea trade in London in 1990, working with tea brokers Wilson Smithett in the City of London until 2005 when he set up his own company. Ian joined the management board of the ITC in 2009, representing Malawi, and became Vice-Chairman in 2010. Ian graduated in 2017 with a BA (Hons) at the Open University in the UK, majoring in French and International Relations. 

    *SWIFT is a secure protocol used by 11,000 financial institutions to transfer about 70% of interbank funds. Founded in 1973, SWIFT is managed by the Society for Worldwide Interbank Financial Telecommunication. The EU, UK, Canada, UK, and the US barred seven Russian banks as of March 1 and are expected to add more to the list, according to Reuters. SWIFT announced the disconnect is effective March 12. It is only the second time that the world’s central banks agreed to sanction a country’s banking system, writes Forbes.

    Established in 1933, the International Tea Committee (ITC) has provided the tea industry with valuable statistical information for more than 80 years. The ITC is an unbiased, non-profit supported and recognized by many major tea-producing and tea-consuming nations as the official source of timely, accurate, impartial data suited to all statistical requirements. To learn more, visit intea.com

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  • Sri Lanka Responds to Tea Market Turmoil

    This week Tea Biz traveled to Colombo, Sri Lanka to assess the impact of the war in Ukraine on one of the Russian Federation’s most important tea trading partners. Correspondent Dananjaya Silva spoke with veteran exporter Anil Cooke, managing director and CEO of Asia Siyaka Commodities, whose insights offer clarity amid a fast-changing crisis that is disturbing global harmony in tea.

    • Caption: Anil Cooke, managing director and CEO of Asia Siyaka Commodities in Colombo, Sri Lanka

    Hear the interview

    Anil Cooke Explains Sri Lanka’s Response to Tea Market Turmoil

    Sanctions Trigger Halt in Tea Shipments to Russia

    By Dananjaya Silva | PMD Tea

    The Russian Federation faces an unprecedented combination of payment and logistics barriers that are interrupting supply. The combined resolve of governments condemning the unprovoked invasion of Ukraine has created uncertainty over prompt clearance of payments. Sanctions that exclude several Russian banks from the SWIFT global payment system and threaten the liquidity of Russia’s Central Bank led to a severe devaluation of the ruble (currently trading for less than 1 cent USD) making tea imports far more costly. That action led MasterCard, American Express, and VISA to suspend transactions at physical locations in Russia or online. Apple Pay and Google Pay systems did the same. Separately the US, EU, Canada, and UK closed their airspace to Russian owned and operated aircraft.

    The collective refusal of the world’s largest container shipping companies to deliver or receive goods poses additional barriers to the movement of tea. Russia annually imports 150,000 metric tons of tea — a total likely to plummet in 2022.

    Correspondent Dananjaya Silva, managing director of PMD Tea in London was in Colombo this week where he spoke with Anil Cooke.

    Dananjaya Silva: Will you discuss the current situation in Ukraine?

    Anil Cooke: It’s critical for Sri Lanka. Last year, Russia imported 27 million kilograms and 29 million kilograms the year before. And Ukraine has been steady at around 4 million kilos each year over the last three years. So that’s approximately 10% of all the tea shipped by Sri Lanka.

    The impact of these two markets is varied in the sense that they buy a whole cross-section of grades from small-leaf, high-growns, to a mix of black leaf orthodox teas. And that could be a definite issue with the depth of demand at the digital auctions, given the uncertainty over trade with these countries. At the moment there’s tea that has already been shipped. Often, the importers operate on a degree of credit, sometimes 30 to 60 days. We are not certain how long these proceeds will take to reach Sri Lanka.

    The other concern is that it looks like shipping and movement of cargo to these markets will be restricted in the immediate short term. We find there are fewer [shipping] lines operating at the moment. So, we’ll have to wait and see.

    Dananjaya: Will you provide some insight on the current price realization? Are you concerned about clearing payments with Russia, given the magnitude of sanctions prevent tea transactions? Do you anticipate workarounds and bartering of commodities?

    Anil: Auction prices are beginning to reflect slackening demand from Russian and Ukrainian buyers.

    The positive aspect is that it’s gradual. Right now, Colombo, Sri Lanka is in the midst of its western quality season. And it’s been pretty dry with production low. So, I don’t see this being felt until a few weeks further downstream, because there is ample demand to take up the available quantities on offer.

    The impact of sanctions on the banking system is also unclear. We are aware that there are yet some banks that have not been prevented from doing business. The impact of SWIFT will be visible later.

    [Editor’s Note: SWIFT is a secure protocol used by 11,000 financial institutions to transfer about 70% of interbank funds. Founded in 1973, SWIFT is managed by the Society for Worldwide Interbank Financial Telecommunication. The EU, UK, Canada, UK, and the US barred seven Russian banks as of March 1 and are expected to add more to the list, according to Reuters. SWIFT announced the disconnect is effective March 12. This is only the second time that the world’s central banks agreed to sanction a country’s banking system, writes Forbes.]

    On the face of it, these sanctions could bite and stop the movement of goods, even though in most cases sanctions are not supposed to block the movement of food.

    Dananjaya: Do you see Sri Lanka adopting a bank settlement system in currencies other than US dollars, like that developed with Iran to circumvent sanctions, happening with Russia?

    Anil: The system with Iran was unique. It was in relation to historic debt on previous oil shipments, which is not the case here.

    [Editor’s Note: Air, land, and sea carriers that refused booking to and from Russia confirmed they will deliver tea, coffee, and humanitarian products. In aggregate these carriers represent more than half the volume of goods shipped in containers.]

    Dananjaya: Assuming hostilities and sanctions continue, how will logistics impact sales given the difficulties of delivering cargo? It appears that it will be simpler to ship tea elsewhere. Is there sufficient demand in the rest of the world? Or should the Orthodox producers throttle back?

    Anil: The biggest challenge is movement of tea to Russia. The impact on most black tea markets is significant, particularly the Orthodox producers.

    Sri Lanka, South India, and Vietnam would feel it to a great extent and Kenya to a lesser extent, but from Sri Lanka’s point of view, we can cope without this demand, because I anticipate a drop in production this year.

    Sri Lanka has already been struggling with shortages of fertilizer and even if the rains are on schedule, I believe that the crop loss would balance the reduced demand from Russia and Ukraine. The way things are going, even the movement of cargo to Belarus is likely to be restricted.

    So, this is a transitional phase. I think we will overcome lower demand from Russia because there’s plenty of interest from North Africa and the Middle East.

    We also believe that some of the Russian tea drinkers who moved to coffee may come back to tea due to less discretionary income with the depreciation of the ruble. That’s a hopeful interpretation of how the customer would behave in what is a complex situation.

    I think it’s going to be tough on the world for tea, particularly the most vulnerable people in the value chain, the farmers and the workers and the tea producers. We don’t need this kind of disruption to a situation that is already complex, and as you know, people suffering and not making ends meet at the producer level.

    So, this is a totally unnecessary problem. If one considers the absolute destruction in Ukraine, we don’t know when these people will be able to return to some sort of normalcy. Cessation of violence will not enable them to simply restart their previous lives.

    There will also be a price that the Russian public will have to pay for this because the sanctions will bite deep and remain in place for a long time.

    Invariably it’s the most innocent who are the victims of all of this.

    London-based Dananjaya Silva is the managing director of PMD Tea and a fourth-generation tea man whose family business, P.M. David Silva & Sons date to 1945 during the Plantation Raj in Ceylon’s Dimbula Valley. The company was founded on Brunswick Estate in the fertile Maskeliya Valley as a small independent Tea shop for tea plantation workers to gather, relax and enjoy a quality cup of tea.

    Asia Siyaka Commodities is one of Sri Lanka’s leading market intermediaries in the tea industry. The 16-year-old licensed tea brokerage has built a reputation for innovation and dynamism and has played a pertinent role in transforming Sri Lanka’s tea auction logistics, which is now among the most sophisticated and structured systems in the world. The company trades an average of 40 million kilos of tea annually and ranks consistently among the top four tea brokers both in terms of traded volumes, with a 14% market share, and prices obtained. Services include warehousing and tea factory development. To learn more, visit www.asiasiyaka.com

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  • A Taste of Modern Tea

    Mike Bunston, OBE (Officer of the Most Excellent Order of the British Empire) is chairman of the London Tea History Association, honorary chairman of the International Tea Committee and serves as Sri Lanka’s Tea Ambassador. He began his career in tea at the Wilson Smithett & Co. brokerage in 1959. Bunston recently visited the Tea History Collection in Banbury, Oxfordshire, to videotape a tasting of modern teas, including milk tea, a Jasmine-Mango fruit tea, and his first taste of bubble tea. Charlie Shortt, co-founder of the Tea History Collection organized the tasting and narrates this exchange.

    • Caption: Mike Bunston, OBE, concludes his first tastings of bubble tea, fruit tea and milk tea with a chuckle.

    Hear the tasting soundtrack

    Charlie Shortt offers tea taster extraordinaire Mike Bunston samples of several modern teas.

    See the video

    Hear the interview

    Bernadine Tay discusses recent innovations in tea with Mike Bunston

    A Taste of Modern Tea

    I’m Bernadine Tay, founder of Quinteassential teas and one of the founding directors of the European Speciality Tea Association. Join me as Mike Bunston shares his insights into modern innovations in tea after his very first tasting of bubble tea.

    Bernadine Tay: When you were first asked to taste bubble tea, did you have any expectations of what this could be? Having tasted millions of cups of tea as a tea taster, what do you think of the texture of the chewy tapioca balls? Or the fruit chunks in this colorful, customizable, Frappuccino-style beverage?

    Mike Bunston: I naively thought bubble tea meant it literally had bubbles in it. Because I had tasted a tea champagne, which was made purely out of tea, and I thought it must be something like that. But it was nothing like that at all. It’s totally different.

    When I took my first suck, I first got liquid and then got the meal as it were, oh my goodness me. This is an extraordinary sensation. And then of course, they put the three in front of me — very different ones. And the irony was that they [the organizers] had made secret packs as to which I would like best and worst. The first two were sweet. One was just like a smoothie. The second one was more like a sweet orange type drink, a bit too sweet for my taste. But I enjoyed it nevertheless.

    As the third one was set in front of me they said “now this one is very different”. It had something like sweet potatoes in it. I believe it was Taro, which made the drink purple. The color was slightly off putting, but I soon learnt it tastes good. It was an attractive drink. And this certainly appeals to the younger generation. I’ve got grandchildren ranging between 20 and 36 and I haven’t had the chance to ask them if they have tried bubble tea.

    In regard to the bubbles, my initial view is we could have probably done without the tapioca balls. Then as I got chewing I thought, “this is quite interesting”.

    I can see why this attracts people of this generation. A real get up and go by it. You can walk through the street and drink it, if you’re in a rush. A total contrast to the traditional ways of drinking tea, with a teapot and cup. It is fascinating, and clearly they’ve got a great thing here, especially with the colorful and customizable options. The Taiwanese have always been great innovators, for everything.

    Bernadine: Innovation is about creating something new that solves a problem. Do you see that with bubble tea?

    Mike: If you’re a young person working in London, or any major city in the world, you’ve got a short time to have lunch, you’re out and about and want to meet a friend. You pick up one of those and suck it and chew it as you go along. In a way it’s almost as good as a meal, isn’t it? So, I think it’s trendy and practical, but it gives you all the goodness that you want from tea and everything else with this little added thing with the tapioca bubbles. So I think it’s clever.

    Bernadine: The mark of good innovation is its staying power. So do you think bubble tea is here to stay?

    You’re right. It begins with an idea that gets improved upon over time. It might take a while for it to gain a foothold, but if it works then there’s no reason why it shouldn’t be there forever. I think, in the case of bubble tea, I could have said without knowing much about it that I expect it’s just another fad. Having heard much more and tasting it, I think it’s got staying power for sure.

    In summary, I love tea. When I talk about tea, I talk about camellia sinensis. So, anything that has got tea in it, I’m happy with. What I’m not happy with are all the things that say they are tea on the supermarket shelf, like mint tea, or fruit tea with the fruit and no tea. That really upsets me. But if it’s got tea that’s just a great thing.

    They’re using tea as a base to make bubble tea and bringing it up, as you say, to the 21st century.

    I think what people can do nowadays, with modern technology and all the bright ideas people have, all things are possible.

    “I love tea. When I talk about tea, I talk about camellia sinensis. So, anything that has got tea in it, I’m happy. ”

    – Mike Bunston

    The Tea History Collection commemorates the history of tea, and preserves important items associated with the industry. Viewings and reservations for meetings are by appointment at the privately owned museum and audio visual center in Banbury. To learn more, visit www.TeaHistory.co.uk

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  • First Tea Culture Week in Brazil

    Tea Culture Week, scheduled for August 1-7, 2022, will feature online and in-person activities across Brazil. Retailers, marketers, tea educators, and volunteer enthusiasts have been planning the event for months, according to Elizeth R.S. van der Vorst, founder of Amigos do Chá. Events include special tastings, formal afternoon teas, gift offers, and discounts to encourage sampling as well as public presentations, workshops, and gatherings in parks and tea houses.

    Organizers include Yuri Hayashi, founder of Escola de Chá Embahu in Sao Paulo, Claudia Sant’Anna, Daniela Folquitto, Daniela Pirozzi, Ligia Gabbi, Luciana Maira, and Eli Vorst,

    • Caption: Elizeth R.S. van der Vorst, Consultora de Negócios do Chá, Certified TAC Tea Sommelier

    Hear the interview

    Eli Vorst founder Amigos do Chá

    1a Semana da Cultura do Chá no Brazil

    1st Tea Culture Week in Brazil

    By Dan Bolton

    Brazil will for the first time this year celebrate one of South America’s less well-known tea cultures which dates to the early 1800s.

    The more than 212 million people living in Brazil, a country hard-hit during the pandemic, are traversing a familiar path as health-conscious consumers seek plant-based foods and beverages. Brazilians traditionally consume great quantities of coffee and herbal infusions. Yerba mate remains popular in the south of Brazil.

    Brazilians drink an average of 10 cups of Camellia sinensis annually – a quantity that has increased from a meager 18 grams per person consumed in 2016 – but remains well below Chile’s 730 grams per head and much less than Ireland’s 2.2 kilo-per-person average.

    In the past five years specialty tea cafes and franchised tea emporiums have flourished, says Eli Vorst. During the period 2013 to 2020 tea consumption increased 25%, “almost double the world average of 13%” according to market research firm Euromonitor.

    The popularity of iced and ready-to-drink tea average less than one liter per person is also growing as Brazil develops a thirst for loose leaf Camellia sinensis.

    The number of specialty tea emporiums and cafes in Brazil is growing
    The number of specialty tea emporiums and cafes is growing according to this chart which shows the number of Franquias de lojas de chas e cafes (Tea and coffee shop franchise) locations has doubled in the past decade. Shops specializing in tea and coffee (Lojas especializadas em chas e cafes) have also increased.

    Dan Bolton: Eli, Will you describe for listeners the tea market in Brazil?

    Eli Vorst: When we started our activities in Brazil in the 1980s, importing teas from the Netherlands and later from Germany, the tea market did not exist yet. We did not have the marketing tools to spread the tea culture.

    We had to work in this way: direct sales business-to-business and face-to-face convincing consumers. It was slow going, but we knew that one day this could change.

    We can say that the tea market in Brazil started five years ago when there was a “boom” of new tea shops, specialized stores, new tea specialists, sommeliers, enthusiasts, and tea courses. In addition to tea courses, in 2013, we had the first official institution of tea teaching called “Escola de Chá Embahu,” founded by Yuri Hayashi and her husband, Claudio Brisighello.

    In parallel with this leap in the market, we saw the growth of a tea community on social networks, which motivated a more significant number of consumers and tea lovers.

    In 2020, with the pandemic, we felt a greater demand for a healthy lifestyle,  generating a significant increase in the healthy food and beverage sector, including, of course, teas/blends and tisanes.

    We feel that the market is growing. Due to our versatility with the Camellia Sinensis and new tendencies within mixology and culinary, we are gaining strength to dispel the myths that tea is just a hot drink to have in the winter season.

    Today, our market has a growing number of tea importers, and it is worth mentioning that Brazil also has a small tea producer’s community aiming for quality specialty tea.

    See: Obaatian The Brazilian Mestizo Tea

    By the way, do you know that Brazil was the first country to produce tea in the Occident? The introduction of tea cultivation in 1812, with seeding, seeds, and the first Chinese tea workers to arrive in Brazil.

    Yuri Hayashi Semana da Cultura do Cha no Brazil

    Dan: Will you describe the goal you have in mind?

    Eli: Our focus is to expand the market and bring in a minimal of knowledge to Brazilian on the stop key. We want also to keep tea culture alive. We will be a little contribution for our tea market.

    “The Tea movement is just beginning, a tip of  the great iceberg. Tea culture in Brazil is still in its infancy, it may take some time, but we have to start.”

    – Eli Vorst

    Dan: How do you see the future of tea in Brazil?

    Eli: Well, this is the question that I am excited to answer because I am very positive in the tea market, always I have been positive. I have worked 27 years in the tea market here in Brazil and I am still here. I can say that with the help of such engaged and serious people who have knowledge and such a clear vision of our tea market, all this energy can only give us a lot of hopefulness for our future. I believe that in order to obtain a well structured market, it’s necessary to create awareness and consistency with our Brazilian consumer. The consumer is the key. Teaching them is necessary in order to spread this ancient culture.

    Education needs to be assertive to obtain concrete results in the future. In time the Brazilian tea market can be visible to the rest of the world. Of course, there is a need for help from various government agencies, with benefits and assistance to tea producers, farmers, and greater openness to importers, who suffer from various impediments.

    The Tea movement is just beginning, a tip of the great iceberg, which is to spread the tea culture Brazil. I can categorically say that it has not been easy. We could do it all over again, if necessary, because it is worth fighting for something you believe in: Camellia sinensis is worth it. Tea is worth having as a business and as a lifestyle. But the most touching and important thing is that the tea brings us together in a passionate way, stirring our senses. This is what we like to show and teach, for those who have not yet experienced this delightful beverage, and to those who already know, we asked them to help us to spread this culture around our country.

    About Amigos do Chá

    Tea is a delight for the senses and has always been celebrated as a cultural treasure and an art, so our goal and contribution is to bring this comfort, relaxation, pleasure and contemplation to our customers.

    About Escola de Chá Embahu

    Since 2013, Yuri Hayashi has dedicated her life to teaching others about specialty tea. This pioneering work constitutes the pillars of the Embahú tea school, which has the support of her husband, Cláudio Brisighello and other tea professionals in Sao Paulo.

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