India’s ongoing campaign to increase tea exports to China paid off this month with an order for $1 million in black tea to supply COFCO (China Tea Co.) the largest of China’s tea companies.
Jay Shree Tea & Industries will ship several hundred thousand kilos of Assam cut, tear, and curl (CTC) tea, in the latest and largest of several transactions between the world’s major tea producing countries. Year-on-year growth in tea sales was 29 percent in 2017 with China paying $25 million for approximately 9 million kilograms of Indian tea. Prices were not disclosed but Shree is likely to have negotiated a higher average rate per kilo based on quality. COFCO benefits from the higher price Chinese are willing to pay for tea.
Jay Shree Industries is part of the B.K. Birla Group, a conglomerate with substantial holdings in chemical production, fertilizer, sugar production, and real estate. The tea division’s 27 gardens account for 3 percent of India’s total output and 11 percent of the Darjeeling harvest. It is the only tea company in India with large estates in every major tea growing region. Jay Shree also has substantial holdings in East Africa.
Under the supervision of managing director D. P. Maheshwari the company has invested in modern packaging equipment located at the factories to preserve freshness and reduce outlays to middle men.
“Technological upgradation and modernization is a continuous process,” writes Maheshwari.
China outreach The deal was signed during China’s first global import expo in Shanghai, an event that resulted in $57.83 billion in trade deals across many sectors.
The week-long China International Import Expo (CIIE) attracted 400,000 buyers and 3,600 exhibitors from 172 countries, according to a report by the China Internet Information Center.
Tea exports are not a significant contributor to China’s overall economy ― the country produces far more tea than India — but the decision to purchase $1 million in black tea signals that China believes in two-way trade.
Chinese are discerning tea drinkers, but only 35 percent of the population drinks tea regularly and many are unfamiliar with black tea. This has led to increased demand for what consumers call An Hua Hei Cha (Chinese black tea leaves). In Anhui province China produces an exquisite Keemun black tea dating to the 19th Century. In Yunnan the Baoshan Changninghong Tea estate and factory supplies much of the tea for blends used by Twinings and Unilever as well as Orimi, a large Russian import company. The Yunnan Black tea estate is Rainforest Alliance certified and a member of the Ethical Tea Partnership.
“Global demand for black tea will continue to rise, driven in particular by its increasing popularity in China,” according to The Economist Intelligence Unit’s (EIU) monthly forecast of consumption growth. EIU predicts “a relatively high” 4.6 percent average in 2019-20 that is “in line with the long-term historical average.”
“Tea consumption will continue to be dominated by Asian consumers, particularly China and India, which together accounted for an estimated 59% of global demand in 2018, up from 48 percent in 2010,” according to EIU.
Most of this growth is due to the rising demand of Assam CTC black tea, known for its strong colour and flavour, which goes well with milk-based tea drinks.