Tea in Turkey is marked by a vibrant culture, limited industry and weak identity. These may all be invigorated by the joint venture announced at the end of September between the Dutch-based Jacobs Douwe Egberts (JDE) and Ofçay, one of Turkey’s leading tea producers. The two will mesh operations under one organizational umbrella.
The partners have strong complementary skills, implicit in their announced goal to “Open up new growth opportunities in the Turkish hot beverages space… through the combination both of JDE’s International dimension and expertise in coffee and Ofçay’s local expertise in tea.” JDE is a major player in coffee. Its products are available in 140 countries, including its own brands, such as Jacobs, which has a strong position in Turkey and ones it produces for a range of labels. Its Pickwick tea dates to the 1930s and is very strong in the firm’s home base of the Netherlands and in Eastern Europe, an obvious target for the joint venture. The company is owned by JAB Holdings which controls about 20 percent of the global coffee market. U.S. brands include Peet’s Coffee & Tea, Mighty Leaf, Caribou Coffee, Panera Bread, Krispy Kreme, Dr Pepper, and Keurig Green Mountain.
Ofçay was formed in 1984, when the tea monopoly in Turkey ended. The dominant player remains state-owned. This is Çaykur, with around 60 percent of the market. The third main brand is Bogus. Almost all the tea produced is black, though in recent years there have been innovations in green and even white tea.
The Turkey tea culture
The word “unique” is too easily thrown around to describe something that doesn’t fall into well-established categories. The Turkish tea culture is described as different, idiosyncratic and even “peculiar.” All in all, it is, well, unique.
Here are a few of its main features:
- Turkey has the highest per capita tea consumption in the world, according to most surveys. Just about every tourist guide will highlight, generally in the first paragraphs that cay (pronounced like “chai”) “is much more than a drink. It is an unmistakable part of the nation’s social life fabric.” It is ubiquitous in homes, cafes, restaurants, business and social gatherings, sporting events, etc., “from sunrise to sunset.”
- Turkey is the fifth largest tea producer, generating around $1 billion in revenues. (Turkey has a population of 80 million.) Its exports are tiny, though growing, just 4 percent of production and $25 million sales. They increased by more than 20 percent in 2017. The total volume was 7 million metric tons, sold to 96 countries with Germany the top market, paying $770,000 so far this year for 128 metric tons. During the first eight months of 2018 the U.S. purchased $576,000 worth of Turkish tea, according to the Eastern Black Sea Exporters Association (DKIB). Historically, Turkey has ranked around 15th globally but that has fallen to 30th.
- The main growing area, Rize, is at a low elevation and located adjacent to the Black Sea and accounts for more
than half the national output. The city was originally part of Georgia and given away to Turkey by the USSR. Of its 350,000 inhabitants, 200,000 are estimated to grow tea. Rize is notoriously rainy – the wettest area in Western Asia. Its wet season is September to June and the dry one April to May, the exact opposite of the monsoon and growing patterns of the major Asia tea growers.
- Rize has a natural pesticide: snow. It is the only major tea growing region in the world with a snowy winter – lots of it – and where tea plants withstand freezing temperatures. Climate change is causing major disruptions, including landslides, soil loss and decreasing yields: Rize is drying out, with less rain and colder winters.
- Turkey produces one of the few true Earl Grey teas, through its being one of the few countries outside Italy to grow the key flavor maker: bergamot. This is a little ironic, since Turley was at war with Britain in the very years he supposedly invented it.
- Tea there is brewed in a two-level double-boiler samovar and served in a tulip-shaped, handle-less glass. The liquid is concentrated and typically drinkers will pour half a glass and add water to dilute it. They use a lot of sugar and no milk.
The tea industry
The JDE-Ofçay joint venture is export-centered. Both firms have a strong experience in supplying retailers, product development and efficiency. For several decades, Turkey’s economic policy makers have targeted growth in exports, with tea at the forefront; the government aimed at creating ten strong export brands by 2023. The early intention and expectation have long been that it would be admitted to the EU, the first majority Muslim, Asian-European member.
These are the positives. Any statement, however carefully phrased, about the future of the Turkish political landscape and economy is sure to miss something about to happen or looming soon. The negatives pile up almost by the month: conflicts in and with Syria, Iraq and the Kurdish enclaves; Erdogan’s authoritarianism with the coup attempt of 2016 being followed by aggressive crackdowns; the U.S. as Turkey’s trade “enemy”; perceived and real anti-Muslim sentiments among EU policy makers; the refugee crises across Europe and MENA; an improvement in unemployment to 11 percent overall and 20 percent for those aged 25 percent or younger. In late September, inflation rose from 18 percent two months ago to 25 percent, the highest in 15 years. The lira has depreciated in 2018 by 40 percent.
Back to the positives and the opportunities that are open to JDE-Ofçay and the tea industry in general:
- Tea is very inexpensive, around 80 cents a cup and a third of that for coffee. Given the growing range of products both firms offer to the hot beverage market, there is every reason to expect domestic growth to expand.
- In both import and export markets, Turkey is expanding its connections and openness. Historically, imports were blocked; even in the early 2000s, tariffs on tea were as high as 145 percent. Within the past few months, initiatives have included Çaykur supporting a new factory in Pakistan and partnering with Chinese firms to produce stevia – “Rize sugar” – in the tea growing region of Turkey. Turkey is Sri Lanka’s third largest market. Lipton has been building its supply base for organic teas through assistance to and education of small Turkish growers.
- The main export markets are countries with a large expatriate population. Germany is the main one, with its “Gastarbeiten” – guest workers. North Cyprus is another receptive target. Increasing tourism from the Middle East has expanded buyers of its teas for their “idiosyncratic tastes.”
Turkey’s Tea Identity
Turkish tea lacks a global identity. This is most obvious in the U.S. market. Searches for Turkish teas on leading sites like Upton and Adagio produce “no results found.” Amazon list 60 hits for Caycur and none for either Ofçay or Bogus. There are few reviews, with mixed evaluations. There is a broad split between special and a weaker tourist tea. The teas are small leaf, lowish in tannin and very inexpensive. Prices are mostly under $15 a pound and teabags 15 cents. There are a few distinctions among the teas, with Filiz grade seen as the most selective. Ads uniformly highlight the better brands being pesticide-free.
While the plans and priorities for the JDE- Ofçay venture are unclear (it is awaiting approval from Turkey’s regulators), it seems likely that identity will be among them, enabled by JDE’s international supply chain and distribution strengths. Brand awareness follows from this. Distinctive teas from anywhere find enthusiasts and tea lovers are looking for new teas to get enthusiastic about. It seems sure that Ofçay has underexploited brand opportunities. It thrives in a culture that may not quite live on tea but loves it. It has “idiosyncratic” features. Will it join such niche entrants as Colombia’s and Vietnam’s wild black teas or neighbor Georgia’s Ghmerti organics?
Source: Daily Sabah