China has returned to dominance in tea exports, a status enjoyed for centuries. In December the China Tea Marketing Association estimated that China will export 330,000 metric tons of the 2.8 million tons of tea it produced in 2018.
Chinese tea exports, mainly green, were valued at more than $1.5 billion in 2018, rising 10.41 percent year-on-year, according to the association. This is the second year in a row China has topped the list of tea exporting nations in value and is likely to be the year China also shipped the world’s greatest volume of tea.
Export value was estimated at $1.6 billion through December.
In 2017, China accounted for 20.6 percent of global export value. Sri Lanka followed at 19.3 percent share, according to The World Factbook. India, in contrast, exported a comparable 260,000 metric tons of tea in 2018 but at a much lower value (estimated at $650 million—about 7.5 percent of total tea value in 2017).
In terms of volume China produces approximately 35 percent of the world’s tea, followed by India (21 percent), Kenya (8 percent), Sri Lanka (7 percent), and Turkey (5 percent).
Export data compiled over the past five years, beginning in 2013, shows a market value of $8 billion globally. Asian countries accounted for 60.3 percent of the global value of tea.
China and Japan are the two fastest growing tea exporters with China up 29.3 percent in value during that period, indicating sustained demand for higher quality tea.
Green tea accounted for 83 percent of Chinese exports through September, with black tea the fastest growing of six tea categories, but from a much smaller base.
Globally tea is expected to grow 5 percent per year through 2023, according to market research firm Technavio. Consumption increased between 30 and 36 billion liters from 2013 to 2018. The United Nations Food and Agriculture Organization (FAO) reports tea production grew at a compounded average rate of 4.4 percent per year between 2007 and 2016. Consumption in 2019 is estimated to grow at 4.8 percent year-over-year, according to Technavio.
A Return to Historical Dominance?
Every society that has encountered tea has developed a taste for this stimulating brew. Prized for its medicinal properties for at least 6,000 years, tea is a household commodity in daily use. Since ancient times China listed the essentials of life as fuel, rice, salt, soy, vinegar, oil, rice and tea. Tea also appears alongside the zither, chess, painting, poetry, and verse on a list of refined arts celebrated by China’s cultured elite, according to Australian academic Gary Sigley, author of Tea and China’s rise: tea, nationalism and culture in the 21st century.
“Thus as both an essential commodity and as a part of more cultured pursuits, tea stands out as an item cutting across broad socio-economic boundaries,” writes Sigley. His peer-reviewed article was published in the Academy for International Communication of Chinese Culture.
Tea is consumed domestically by more than 500 million Chinese. According to the China Tea Marketing Association, most of the new converts are young people choosing the health benefits and convenience of tea sachets and ready-to-drink bottles over traditional kung fu. Sales of ready-to-drink tea in China were estimated at $11.7 billion in 2015. The category is growing at double digits and it is not just green tea, sales of iced black tea doubled between 2006 and 2011. China’s RTD tea segment alone generates 10-times more revenue than loose leaf exports.
China is the world’s largest manufacturer and exporter, and while the economy may be slowing to a pace not seen since 1990 the country’s gross domestic product is estimated at $15 trillion in 2018 making $1.5 billion in tea exports trivial. In 2006 the government abandoned a system of licensing restriction and quotas that depressed exports. At the time only 40 government-owned companies were permitted to ship overseas. During the 10 years that followed, Chinese exporters grabbed 21 percent share of global exports. The U.S., Vietnam, and Morocco became important trading partners. To meet this demand, production increased 81 percent from 700,000 metric tons to 1.27 million metric tons between 2000 and 2008.
While the of tea exports is minuscule, during the past five years China has invested significant effort in promoting tea as part of its One Belt, One Road initiative.
In 2015 Chinese president Xi Jinping, citing development of the ancient silk road economic belt and the maritime tea trading routes, called tea “China’s greatest ambassador.” The trillion-dollar OBOR investment is part of “a great rejuvenation” of the Chinese economy.
Implicit in his words is the “notion of ‘restoration’ (fuxing) in terms of ‘returning something to its original condition.’ Many foreigners tend to see China’s rise as a ‘new kid on the block’ and do not detect the strong sense of ‘restoration’,” writes Sigley. In contrast, many in China hold the view of a great timeline of ‘rise, fall, and rise again’ that describes Chinese civilization. According to Xi’s timeline, the renewal of the Chinese nation will not be completed until 2049, the anniversary of the founding of the People’s Republic.
Tea is clearly ascending. Consumption is rising and there is greater diversity in supply for export. Imports of tea to China were up by 33.9 percent in 2017 to a total value of $1.49 billion, according to a report released in November by the China Chamber of Commerce of Import and Export of Foodstuffs, as part of the China International Import Expo in Shanghai.
Tea drinkers worldwide are demonstrating a willingness to spend a little more money for much better tasting tea.
China is willing to oblige.
Consider that Wuyi rock tea, a costly and difficult-to-produce oolong with a distinctive mineral taste, is now exported to 10 countries including the U.S. and Korea. China’s biggest rock tea customer? Malaysia.
Chunlun, a Fujian-based producer of jasmine tea dating to 1853 sold $725,000 worth of jasmine tea powder to its overseas customers last year.
“Jasmine green tea is not a newcomer to the Maritime Silk Road; it was the tea that the Chinese explorer Zheng brought with him on his expeditions 600 years, ago,” said Chunlun’s Fu Tianfu, describing China’s willingness to deliver ancient tea in modern times.
A Taste for Something Different
The residents of Turkey, a terminus along the ancient silk road since the 1500s, consume 1,300 cups of tea per year on average. Serdar Ersahin, who heads the Istanbul-based coffeehouse association, describes his countrymen as drinking three to five cups daily, a number that rises to 10 cups in winter.
Turkey is the world’s sixth larger producer of tea. Turks almost exclusively drank Çaykur, an inexpensive, good quality brand made since 1971 by a state-owned tea company that operates 45 factories. There was little incentive to import.
Yet today India accounts for a quarter of Turkey’s tea and coffee imports. China is shipping both green and black teas in quantity. Ofçay, one of Turkey’s leading tea producers, recently entered into a joint venture with Dutch-based Jacobs Douwe Egberts (JDE) to distribute Turkish tea globally. Ofçay was formed in 1984 when the tea monopoly in Turkey ended.
Pakistan is another country of tea-lovers eager to sample the world’s great variety of tea. Per capita tea consumption in Pakistan rose 35.8 percent between 2007 and 2016. The country spent $549.6 million on tea imports in 2017, accounting for 7.5 percent global share. Morocco, another major buyer of Chinese tea, imported $219.8 million in 2017. Imports were up 72.6 percent in Pakistan and 15.8 percent in Morocco in 2017, according to Worlds Top Exports.
India is perhaps the best example of tea’s expanding appeal. The country maintained putatively high tariffs (100 percent) and import quotas designed to protect the local tea industry. These barriers make it very expensive for retailers to offer teas from China, Japan, and Korea. Tariffs were lowered by half recently to comply with terms of the ASEAN (AFTA) free trade agreement. Green tea imports are up as a result, according to the Commerce Ministry.
“China offers great opportunity for India,” Indian Tea Association (ITA) secretary Sujit Patra told The Economic Times. During the first eight months of 2018, India exported 6 million kilograms to China, which is 19 percent higher than the corresponding period during the previous year. Indian tea accounts for 30 percent of total Chinese tea imports.
Now that China is back on top, it seems unlikely to be unseated.
Global output of green tea is foreseen to increase at 7.5 percent annually to reach 3.6 million metric tons in 2027, largely driven by China.
During the next decade, production of green tea in China is expected to more than double from 1.5 million metric tons in 2015-17 to 3.3 million metric tons in 2027, according to FAO.