Let’s take a look at some developments in China black teas:
CHINA DOMESTIC PRODUCTION
China has seen a steady increase in tea production- a 7.32% CAGR from 2008 to 2017. When viewing a breakdown, trends show that most provinces are ramping up their tea production. Fujian and Yunnan provinces lead the pack- 2 areas known for their established histories of black tea production. Another important trend is the rapid growth of tea production in “Other” provinces, suggesting the development of new tea production areas that will likely begin any early development with lower-cost teas before potentially creating new signature tea styles of their own. It is also worth noting that some major tea-producing areas are stagnant or declining in production volume. Anhui and Zhejiang provinces may be shifting their strategy to producing higher value teas over higher quantity.
These trends also reflect the potential impact of spillover effects a tea or tea style can have on a region of neighboring provinces. Keemun (Qimen) black tea was originally a tea developed in a particular county of Anhui province. As the reputation and demand for this tea increased, Keemun black tea production areas expanded across nearby borders into Jiangxi and Hubei provinces. Now, Keemun teas from these other provinces are recognized as acceptable sources of Keemun-style black teas.
Chinese tea imports were overshadowed in the later half of 2019 by the impact of tariffs on Chinese goods. Tariffs were not place on Chinese tea until September 1, 2019, and a view of imports comparing Jan to October imports from 2014 to 2019 revealed a few insights:
- The largest segment of China black imports showed little change in volume and value compared to the previous year
- One of the biggest losers was black tea packed in teabags. Imports brought in under this code dropped from $11.5 million in 2018 to $3.6 million in 2019 (Jan-Oct of both years).
- Organic black tea in bags showed a 15% CAGR within the periods (Jan-Oct) during 2014-2019
A few general trends may be developing here:
- Watch for cheaper, substitute teas from other countries that may be replacing commodity teas from China.
- Unique, harder to substitute teas will likely feel less impact from any continued tariffs- as long as tariffs on tea do not exceed 25%
- If trade disputes extend to other nations (e.g. Argentina steel + tea), Chinese commodity tea trends may fluctuate
- Secure quality teas from China- valued teas more resilient to any potential market instability
On the consumption side, the vast majority (approx 85%) of all tea consumed in US is black. And it is still mostly iced.
However, do not be surprised by any creeping gains green tea will make into this space. The market is already seeing more growth in foodservice and RTD green iced teas. Iced green teas offer a great palette for adding popular flavors while maintaining the healthy benefits associated with green tea. Some market research suggests the supply of green tea offerings may already be behind market demand.
Chinese black tea production is poised for growth with established specialty teas and new fields bringing more commodity tea. Overall, the US is bringing in its average amounts of Chinese black, with an uptick in organic black teabags and a decline in non-organic (conventional) black tea bags. However, watch out for shifting consumer preferences away from black tea and toward more green.