In 2020, the world tea market will see major changes! In January this year, the World Bank predicted that after a 5% drop in the beverage price index in 2019, it is expected to rise by 2% in 2020. Before March this year, due to the overcapacity of world tea production, the wholesale price of tea fell to the lowest level in 10 years.
However, with the global pandemic of the epidemic. After March, the global wholesale tea price has not risen by 2%, but by 50%. Recently, the average tea price has climbed to 3.16 US dollars/kg, the highest since November 2017 (3.29 US dollars).
The rise in tea prices is nothing more than changes in production and sales and the relationship between supply and demand. Except for the steady growth of tea production in China, most other major tea-producing countries have reduced their production this year.
China is the world’s largest tea producer. In 2019, China’s tea production was 2,793,400 tons; India ranked second with 1.39 million tons; Kenya produced 459,000 tons of tea, although it was 34,000 tons less than 2018, it ranked third. ; Sri Lanka ranks fourth with an output of 300,000 tons. Japan ranked ninth with 82,000 tons (2018).
But this year, the world's tea-producing countries will face many challenges.
India, tea production plummeted
India's tea production is the second in the world, and it occupies a pivotal position in the world tea market. Only this year, India's tea production has dropped significantly.
Indian tea is concentrated in the northeast of Assam (about 50%) and Sibanga Province (about 23%). The most famous Darjeeling black tea, the second tea from May to June has the best quality , Known as the champagne of black tea.
However, this year, the production of champagne in black tea is not optimistic.
On July 13, according to news from the Indian Tea Association, Bata Chaji, the secretary-general of the Indian Tea Association, said: The pandemic and flooding have put "the Indian tea industry in trouble."
In the face of heavy rainfall from Assam and West Bengal, it will be difficult to achieve "restoration" in the next few months. The heavy rain led to an increase in the number of workers and a decline in tea production. Most of the tea plantations in northern Assam were flooded.
In the first half of the year, affected by floods and epidemics, India’s tea output was only 348.26 million kg, or about 348,300 tons, a year-on-year decrease of 26.4%. The output of 348,300 tons in the first half of the year was only a small fraction of India's 1.39 million tons in 2019.
Japan’s largest tea-producing county, a 55-year low
Among the major tea-producing countries in the world, in addition to China and India accounting for half of the world's tea, Japan must also say that after all, the unit price of Japanese tea exports is high.
The export unit price of most tea-producing countries is around US$3, but the export price of Japanese tea is frighteningly high.
In 2017, the unit price of Japanese tea exports was US$27.37/kg, the highest in the world. At that time, the Chinese export price was US$4.53/kg, which was higher than the world average. Kenya, which has the largest export volume, is only $1.73/kg.
There are 13,000 acres of tea gardens in Shizuoka Prefecture, Japan, accounting for almost half of the country. This year, the output of Shizuoka tea fell below 10,000 tons for the first time in 55 years, to only 9,240 tons, a decrease of about 14% from last year. It is estimated that the production of summer tea will be reduced by 20%.
Except for China, the situation in major tea-producing countries is not so good. Global tea wholesale prices have soared by 50%. It is not difficult to understand! Moreover, with the global pandemic of the epidemic, most countries will not improve immediately next year, and it will be difficult for a while to return to the level before the epidemic.
This year, with the exception of China, the world economy has experienced overall negative growth, and the tea export market has become more sluggish than in previous years. The tea exporting countries are basically the world's major tea producing countries, China, Kenya, Sri Lanka, and India.
Kenya has the largest export volume and the lowest unit price
Among the four countries, Kenya has the largest export volume, reaching 475,000 tons in 2018, but the export unit price is the lowest. In 2017, the average export price of this country was US$1.73/kg, which was the lowest among the major exporting countries.
India, production fell sharply
In the first half of the year, India’s domestic tea production dropped sharply by 26.4%, which directly led to a rise in domestic tea prices.
At the same time, India’s tea exports have dropped significantly. Statistics show that in the first five months of this year, Indian tea exports fell by 26.6% year-on-year.
Sri Lanka, tea exports hit a record low
According to the "Daily Finance" report, Sri Lanka's tea exports hit the lowest shipment ever in March, and their value dropped sharply.
Sri Lanka’s tea export volume in March was only 13,800 tons, the lowest export volume in history, a year-on-year decrease of 47.7% (12.6 million kilograms), and exports were only 11.5 billion rupees, a 48% decrease year-on-year (that is 10.9 billion rupees).
From January to March, the export volume of Sri Lankan tea was only 59.5 million kilograms, 14.1 million kilograms less than the same period last year. The export value in the first quarter of 2020 was 492 billion rupees, a decrease of 13.2 billion rupees year-on-year.
In recent months, Sri Lanka’s tea exports have not experienced a major reversal.
China, good overall
From January to August, except for Pu'er tea, Chinese tea exports all declined. Black tea fell the most, with exports of 19,200 tons, a decrease of 3328 tons, a decrease of 14.8%. The export volume of Pu'er tea was 2,132 tons, an increase of 305 tons, an increase of 16.7%.
Compared with the same period last year, from January to August, China's tea export volume only decreased by 4.68% to 234,000 tons, which is already commendable in the current international tea market. Although the export volume decreased by 4.68%, the export value increased by 5.05% year-on-year, reaching US$1.38 billion.
Existing problem: negative growth for two consecutive months.
In July, China exported 29,700 tons of tea, a year-on-year decrease of 4.04%. The export value was 210 million US dollars, an increase of 9.09% year-on-year. The average export price for the month was US$7.07/kg, an increase of 13.67% over the same period last year and the highest in 2020.
In August, China exported 28,400 tons of tea, a year-on-year decrease of 20.44%. The export value was US$176 million, a year-on-year decrease of 11.29%. The average export price was US$6.19, an increase of 11.51% over the same period last year.
Chinese tea and the world tea supply chain
At the beginning of the year, China suffered an epidemic, and we paid a heavy economic price. At present, compared with the general negative growth abroad, the National Bureau of Statistics has just released new data in the third quarter. GDP increased by 4.9% year-on-year and 0.7% in the first three quarters, leading the world.
This year, my country's spring tea has been affected by the epidemic, and the entire tea market has not been active, especially high-end tea. Currently, Fangcun Tea Market has only recovered 60%. But looking at the world, China's tea market is better than other tea-producing countries. We should see clearly:
The supply of tea in the world exceeds demand, and the contradiction between production and sales is still prominent. For ten years, the world's tea exports as a percentage of total output have been declining, while the output of major tea-producing countries China and India has been increasing. However, the growth of the domestic market cannot keep up with the growth of tea production. China has an annual tea inventory of 100,000 to 200,000 tons. India’s tea inventory is very small. In 2018, India’s tea production was 1.339 million tons, domestic sales were 1.084 million tons, and exports were 251,000 tons. There was only 0.4 tons of remaining tea. Tata Beverage's companies will do further processing, and India basically has no inventory. The country has no tea inventory, just as there is no surplus food at home, it is not safe! In the face of this year's floods and epidemics, India may have to go back to the old way of importing tea before 2003.
India, the second largest tea producing country in the world, encountered floods during the golden tea season from May to June. Today, the Indian epidemic has immediately become the global epicenter, and tea will naturally worsen the situation. Japanese tea export prices are high, and Shizuoka Prefecture's tea production has been reduced by 14%.
Chinese tea has the largest tea plantation in the world, and it is impossible for tea production to decrease. The supply chain of Chinese tea is becoming more and more important to the world. This is an opportunity for Chinese tea.