The Ukrainian tea market is steadily developing despite the ongoing war with Russia, which has led to catastrophic challenges for Ukraine and its economy.
According to analysts of the Ukrainian Pro-Consulting research agency, the tea market in Ukraine was relatively stable prior to Feb. 24, 2022, when the war began, with annual sales growth of five to 10 percent.
Over four years, retail turnover in the segments grew by more than 50 percent from UAH$2.7 to UAH$4.2 billion (in the Ukrainian hryvnia currency - UAH).
After Feb. 24, 2022, some of the major players significantly limited their operations in the market due to limited logistics capabilities, the need to ensure a safe production process, and difficulties faced by local partners.
The main financial losses were associated with a decrease in demand, as some regions of Ukraine are under occupation or under constant shelling, and people have moved to safer cities. Household consumption also decreased as some citizens left Ukraine. That decline, however, was partially offset by purchases from volunteers for the needs of the army and territorial defenses. Most distributors, however, have been selling tea to volunteers at a discounted price with minimal profit.
In regards to consumption, in contrast to coffee, tea is more often consumed at home, so the decrease in demand was less noticeable.
Since the beginning of the war, tea consumption has decreased by 25 to 30 percent.
Prices rose by about 20 percent, but the rise in prices was a logical consequence of inflation and devaluation, which is observed in Ukraine.
The tea market in Ukraine has suffered significantly, but it continues to move forward as tea is classified as an everyday product, and local analysts expect the demand to stabilize in the coming months.
The market in Ukraine is still dominated by Russian brands, though. The list of major players includes Orimi Trade and MAYSKY, whose ultimate beneficiaries are Russian business people. These companies own the most popular brands among Ukrainian customers, including Greenfield, TESS, Princess Nouri, Jockey, Jardin, Richard, Curtis, MAISKY and Lisma. Their market share is estimated at about 40 percent. As of now, most of them continue to operate on the market, but the risk of this changing is high.
The war, however, led to the fact that some foreign players have been forced to suspend their deliveries to the Ukranian market. For example, Fiona Reavley of Tata Consumer Products, which as the Tetley brand, confirmed that the brand is not currently sold in Ukraine. According to some Ukrainian media reports, the same situation is observed with other global tea brands, many of which continue monitoring the current situation in Ukraine, in light of the ongoing military actions.
Also, the tea market in Ukraine is completely import-dependent, due to unsuitable climatic conditions for growing tea in country. Ukrainian manufacturers only pack products under their own brands. In Ukraine, ingredients for herbal teas are grown (mainly in the Carpathian region). Ukrainian companies pack various tea types and varieties – black, green, hibiscus, herbal, pure, or with various additives and flavors, leaf (by weight and packaged).
In 2022, due to the war, disruption of supply chains and reduced demand, production decreased by 31.5 percent compared to 2021, which was at a level of about 15,000 tonnes.
Overall, Ukrainians prefer black tea, but more consumers are becoming interested in new and potentially unfamiliar teas, especially fruit/herbal teas. This opens up opportunities for all players in this category.
Tea imports to Ukraine are also declining annually. This is due to the fact that the production (packaging) of tea under its own brand is more profitable for market operators in Ukraine. In 2022 imports decreased by almost 40 percent compared to 2021, which is associated with a significant increase in raw material prices and the economic crisis in the country.
The structure of imports was dominated by tea packed in filter bags, since such packaging is more familiar to the Ukrainian consumer. The geography of tea imports was relatively stable between 2017 and 2021, and among the major suppliers were the United Arab Emirates, Sri Lanka, Azerbaijan, Poland and China. In 2022 Poland and China became new leaders in tea exports to Ukraine, although Sri Lanka still occupies first position.
World Tea News contributing writer Eugene Gerden is an international freelance journalist, specializing in the global tea and coffee industries.
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