Thursday Nov 14, 2024
Thursday Nov 14, 2024
Thursday, 22 August 2013 00:18 - - {{hitsCtrl.values.hits}}
When the dominant RTD (ready to drink hot) consumption globally is analysed, the current scenario which emerges is that tea, with 290 billion litres sold in retail and food service, remains the most consumed beverage ahead of bottled water, carbonates, beer and coffee.
These findings by Euromonitor suggest that global consumption of tea in this form alone amounts to 1,160 billion cups and when translated into tea by weight (working at say 1.5 grams per cup on average) would amount to a staggering 1,740 million kilograms of tea. About half the world’s annual production and more than five times the tea produced in Sri Lanka!
In terms of retail value however, the findings are that tea (US$ 40.7 billion) trails behind carbonates (US$ 183 billion) and coffee (US$ 75.7 billion) and it would be here that that the real challenges for tea lie.
There is therefore a critical need to transform the way we present our tea to the world, differentiating it from the rest, if this is at all possible and mindful of the need to add value, while taking note of the changes so evident from researched information published by internationally acknowledged experts and monitors tracking the mega trends taking place in the world of consumers.
Our tea production is about 10% of the world’s annual production but our export earnings have been hovering for too long in the range of only US$ 1.5 billion per annum. Even if we take what should be our due share (US$ 4 billion), assuming that what we do is the same as what others are doing generated by half the worlds off take in this category of retail and food service (US$ 40.7 billion) we fall short in value terms by US$ 2.5 billion!
Obviously, we haven’t got it right and we have to quickly examine where we should be. In any event the urgent need to go up the value stream cannot be denied. This is so critical to sustain this industry and an economic necessity for our country. The challenge therefore is twofold, firstly to deliver greater value to those who consume our tea in the form that they want it through premiumisation and by tracking consumer behaviour and changing habits and secondly to generate for our country and those who produce and market our tea, a greater return for their inputs and enterprise.
The evolving market
These shifts in consumer behaviour present great opportunities for those who are sensitive to the changes taking place. Retail RTD volumes are 
estimated to grow by 38 billion litres in the next five years and the value growth projected in the same period is US$ 8.1 million, making it one of the fastest-growing beverage categories in the world. Fortunes will favour the brave and only those who do not fail to take notice of the changing trends in consumption patterns and strive to take an extra slice of the US$ 8 billion up for grabs in the next five years.
Where are the markets
When we consider the next five years and the projected data by Euromonitor International, it is clear that the emerging markets of Asia, namely China, India and Pakistan, where even presently, tea is recording the highest levels of consumption which will contribute to two-thirds of the projected value growth from 2012-2017.
A clear shift is identified from unpackaged tea in loose form sold in rural areas and through informal markets to branded and packaged teas sold through modern trade channels. This switch is a global phenomenon but more pronounced in the emerging markets of Asia. Asia Pacific and Latin America will lead the growth tables with Africa and the Middle East following.
Consumer preference
Tastes of consumers and preferences in tea are so wide, varied and different across the globe that one would easily err if the changing trends in each key market are not carefully studied and acted upon separately. One tea type or category does not suit everyone. So a single strategy will not fit for all markets and territories. One type of tea will not find popularity across the world. Fortuitously for Sri Lanka, reliable forecasters have plotted a clear shift and strong growth in black tea globally which will be more pronounced in India, Pakistan and Iran in the next five years.
Not surprisingly, judging by the enormity of scale in China, the growth in sales forecasted will come from a diverse range of tea products and categories. Special attention is being paid to instant tea and specialty products, for example, gunpowder. A leaning towards convenience is also clearly evident in emerging Chinese consumption behaviour and tea ‘in an instant’ is perhaps poised for its ‘Starbucks Moment’ in China?
Growth trends
While China, with the remarkable growth rates consistently recorded, presents the greatest opportunity in terms of the size of market and 
provides the perfect platform for the creation of value added cultures in serving tea, Euromonitor International in the report under reference in this article, suggests that outside of China demand will be forthcoming from two distinct sectors.
In predominantly black tea drinking and emerging markets, the tea bag business is expected to experience sustained growth, which means that a switch from traditional brewing to convenience in these markets is forecast. In markets where coffee rather than tea has been the predominantly consumed beverage up to now, it is expected that consumers wishing to avoid coffee and caffeine will be looking for fruit and herbal infusions.
What should we do?
Steve Jobs in the US was the ultimate icon of inventiveness, imagination and sustained innovation at a time when that country was seeking ways to sustain its innovative edge. Jobs believed that the best way to create value was to connect creativity with technology. He and his colleagues were able to think differently and backed up their ingenuity with engineering skills. Steve was inspired by nature and the things he saw and observed around him.
I believe the answer to breaking through in the way we should present our tea to the world of the 21st century would also be through creativity, fresh thinking and the use of technology. Great opportunities are afforded for tea in the foodservice sector. Already, the ‘shift’ is being marked. In the last 12 years, the annual value of the global specialist Coffee Shop market grew from US$ 12 million in 2000 to US$ 40 million in 2012!
The potential for a similar explosion for tea in food service exists. Already, the leaders in foodservice like McDonalds, Yum Brands, Starbucks and Dunkins are paving the way and are focusing on this ‘opening’ by introducing innovative tea menus backed up by aggressive marketing and promotion.
The versatility of tea unlike coffee in that it is capable of being mixed with wide array of flavours and infusions presenting a wide spectrum of benefits to the consumer and this could be the feature to leverage the marketing of tea with unique selling propositions. Tea appeals both in brewed and bottled form unlike any other hot/cold beverage and deriving value from this opportunity in a fast moving world is bound to generate positive results.
We have been waiting far too long for answers and solutions to come from the industry and the trade and they in turn have been waiting for the policy makers to decide and act. We cannot tarry any longer we have missed several opportunities already.
Outside the box
Perhaps, the answers may lie with those outside the inner circle? Probably there is a strong case to link our universities with the trade and industry and also the research organisations both in scientific and marketing institutes. What is conspicuously lacking is a continuous debate aimed at arriving at a settled strategy for our tea.
The discussion so far has been in fits and starts. A regular tea forum where anybody interested could attend and contribute may be a starting point. I am amazed at the cross section of views expressed on the tea blogs on the internet.
I do not have the ultimate solutions to the issues at hand but being neither a planter, agriculturist, scientist, tea maker, taster nor an engineer, I am still led to pose a few questions which I hope will stimulate creative thought and discussion taking us closer to the ultimate course of action we should take and to find a solution to the stalemate situation we are presently in.
(The writer is presently a consultant to the Heritage Tea Group of Companies and a past chairman of the Exporters Association of Sri Lanka. He can be contacted on [email protected].)
