Dan Bolton is reporting this week for World Tea News from the Global Dubai Tea Forum a biennial gathering of tea professionals from around the globe.
DUBAI, UAE – Tea is the most popular prepared beverage in the world. Iconic brands like Lipton Yellow Label are second only to Coca-Cola in global beverage sales. Lipton holds top market share in 20 countries and its Brisk brand is the latest to surpass $1 billion in sales.
Yet tea is greatly undervalued. Lipton parent Unilever estimates that while tea accounts for 29% of beverage volume globally it earns only 13% of sales.
This is because most tea is sold in markets as loose leaf without uniform packaging. The gap represents an opportunity for adding value.
“That is the point that makes us at Unilever so excited, because there is a real opportunity to uptrade this category. Tea is the hottest beverage in the beverage landscape,” said Winfried Hopf, Unilever Executive Vice President of Beverages – Chairman T2. Hopf, speaking at the Global Beverages Congress in Warsaw, Poland, told delegates tea is a “category with power, because it serves half of our population and it’s a category with scale, with one trillion cups of tea served every year.”
Uptrade is no more apparent than in Dubai where trade volume surged 29% last year to 129,000
metric tons. Value grew by 34% to $463 million, according to Sanjeev Dutta, newly appointed director of the Tea Centre at the Dubai Multi Commodities Centre (DMCC). The Centre specializes in the blending, filling and packaging of traditional teas popular with 65% of Americans. One Lipton facility there produces 6 billion tea bags a year, enough to make a cup of tea for every person on earth.
Dubai is now the world’s largest re-exporter of tea with more than 60% market share. Since the country grows no tea there is no domestic market to protect, no tariffs and favorable financial terms. Companies operate in a free zone status with 50-year guaranteed leases and 100% business ownership, full ownership of business premises, 0% corporate and personal income tax and a secure regulated environment. It is an ideal location to re-export tea after blending and packaging. The Centre also permits 100% capital repatriation with no currency restrictions.
“Dubai has quickly emerged as one of the leading global hubs for the tea trade where 2013 saw our DMCC Tea Centre alone double the volumes of tea handled in comparison to 2012,” said DMCC Executive Chairman Ahmed Bin Sulayem. The Centre was founded in 2005.
“It is a prosperous time for tea with exciting opportunities for those who seek them. The Global Dubai Tea Forum provides a unique platform for those keen to access news markets by strengthening international relations and industry trading ties. We look forward to welcoming industry participants from all across the globe to Dubai and the Global Dubai Tea Forum 2014,” he said.
Delegates from 30 tea producing and tea consuming countries are meeting for the biennial GDTF which convenes from Tuesday through Thursday this week.
Dubai is uniquely positioned at the crossroads of tea production. Teas from southern India and Assam are a short steaming distance. Sri Lanka is 2,300 nautical miles away, only 9 days by ship and Kenya’s vast tea farms are 2,700 nautical miles from Mina Rashid (Port Dubai), requiring only 11 days at sea. It takes a month for green teas from Vietnam and Shanghai, China to arrive.
China, India, Sri Lanka, Kenya and Indonesia account for 77% of the world’s production and 80% global exports. Shipments arrive daily from 13 tea lands including Kenya, Vietnam, India, Sri Lanka, Rwanda, Tanzania and Indonesia. Processing is in the Jebel Ali Free Zone (JAFZA) a deep water port located 22 miles southwest of Dubai.
“The DMCC Tea Centre aims to enhance the value of goods as it moves though the supply chain from the growers’ plants to the consumers’ cups, and to support our members throughout the process,” said Dutta.
“This year we are focused on diversifying our product lines to include specialty teas of varied flavours available and further improving our facilities and services available to our customers, ensuring more flexibility and reinforcing our position as a true partner,” he said.
The Centre processed 13 million kilos of tea last year, a new record. Dutta projects a five- to seven-fold increase in tonnage this year by assisting industry leaders in centralizing their procurement and distribution operations out of Dubai.
The DMCC is the largest and fastest growing Free Zone in the UAE, adding an average 200 companies per month from 125 countries and maintaining a 94% retention rate. There 6,830 companies generating trade estimated at $90 billion in 2103 and employing 80,000 workers in 66 mixed-use commercial and residential towers within JAFZA making it the world’s largest Free Zone.
The Centre supports 25 tea companies including Unilever and McLeod Russell, James Findlay and Taylors of Harrogate (which produces Yorkshire Tea).