Tea producers urged to bolster demand at home

By Guy Montague-Jones

- Last updated on GMT

Related tags: Tea, Supply and demand

Tea-producing nations should up their marketing efforts at home to take advantage of domestic market potential, according to a new FAO report.

The Food and Agriculture Organisation (FAO) said leading tea producers like India and China should target the un-tapped potential found on their doorsteps.

“Scope for expansion in consumption in traditional import markets like the United Kingdom and Russia is quite limited but in countries where tea is produced the per capita consumption is much lower and so there is a lot more market potential,”​ said Kaison Chang, secretary of FAO’s Intergovernmental Group on Tea.

In its report on the tea market, the FAO specified that consumers in tea producing countries drink just a tenth of the amount of tea drunk in mature market, leaving plenty of space for growth.

Price volatility

The call for action to bolster tea demand comes after a drought in major tea producing regions in Africa and Asia caused the price of the crop to shoot up in 2009. According to the FAO Composite Price for tea, the indicative world price of black tea went up 12 per cent last year.

But now that weather conditions have returned to normal, the FAO has warned against any increases in the size of tea plantations. The UN agency said moves to increase supply could upset long-term prices, especially when markets in major importing countries are nearly saturated.

Nevertheless, it does see some scope for growth in developed markets, and encouraged producers to further publicise the health benefits of the drink abroad in order to bolster demand.

The FAO said the acceptance of the health benefits of green tea has helped exports over the past few years. Over the next decade, this pattern is expected to continue as the export market for green tea is tipped to outpace that of black tea.

Related topics: Tea and Coffee, Markets, Emerging Markets

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