Tea Sourcing Will Never Be the Same

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Photo courtesy KDHP Tea Estate

Tea Sourcing Will Never Be the Same

Retired Thailand-based specialty tea buyer Frank Miller samples a flight of India tea.

Covid-19 has forever changed the tea-buying landscape all over the world.

By Dan Bolton

STiR coffee and tea spoke with commodity and specialty tea buyers, brand owners, wholesalers, retailers, growers, and traders to better understand the coronavirus’s immediate impact amid and economic crisis that has already thrust 85% of the world’s countries into recession. Dramatic changes in sourcing were already underway with the emergence of rival trading blocs and nationalization bent on unraveling global trade, resulting in unprecedented uncertainties and a prediction that sourcing tea will never be the same.

Trust and respect

“Time-honored trust and respect with the growers got me the best leaf of a very good early season before the lock down,” explains professional tea buyer Kevin Gascoyne, a principal at specialty tea retailer Camellia Sinensis, has who traveled to origin annually since 1989. A former tea journalist, Gascoyne is an expert in judging black tea, co-author of the book “Tea, History, Terroirs, Varieties” and a buyer respected for his ability to select the very finest tea.

Quebec was hard hit this spring with 55,390 confirmed cases of Covid-19 and 5,485 deaths. Camellia Sinensis was forced to close most of its street locations, temporarily lay off almost 80% staff, and suspend travel while adjusting to surging sales online. Sourcing more than 100 teas took on new urgency.  By July, the company had re-opened all its locations and managed to get almost the entire staff back to work.

But, he says, “With Asia heavily infected and second wave possibilities, insisting on getting to source in these times and passing through multiple airports is not worth the trouble or risk of both infection and time-consuming quarantine that none of us can afford,” adding, “and this is coming from me, from the hardened [travel-to-source] end of the spectrum.”

Teas are cupping well

“India is still the worst-hit region from the production side. Due to both Covid-related impacts and poor weather, Darjeeling and Assam production numbers remain very low,” writes Mo Sardella, director of marketing at G.S. Haly Company, a US tea importer since 1889. “While global demand remains strong, we will see significant pricing increases across the board: commodity up to super-premium specialty. At the cupping table, the highest-quality teas will suffer the greatest this year, as many producers are shifting their priorities to meet the volume requirements from the commodity sectors. Further, most reports from the Darjeeling and Assam gardens is that weather has not been favorable, so top-quality teas will be even more rare this year.”

As to cupping quality, “Japan, China, and Ceylon teas are showing rather well, and all reports confirm that the weather has been favorable for fine quality tea production so far in these regions. We are excited to see how the rest of the production season will shape up as the season progresses,” said Sardella.

Has the US-imposed 7.5% tariff on Chinese tea discouraged imports?

“I can’t speak for other importers, but the tariffs on China tea imports has not been as discouraging as it has been frustrating,” writes Sardella. “Many of our existing clients have been very understanding and cooperative with us through this process. The additional cost of business to buffer the tariffs [and related cost] created a general sense of frustration regarding the arbitrary and superficial nature of the tariffs themselves. The sustained tolerance of the 7.5% tariffs will likely depend on the duration of time it will take to rebuild our economy, and the ability for tea sales to maintain their current sales trajectory.”

Late calls every night

“Seven Cups survived the Great Recession, but this crisis is something else entirely,” writes Austin Hodge, founder of Seven Cups Fine Chinese Tea. His venture, founded in 2002, is the first American tea company to be granted a Chinese trading license for tea. The company operates a tea house and an e-commerce site that serves customers in more than 90 countries, as well as a brokerage service that supplies small businesses globally.

“On Chinese new year (January 25) the entire country was locking down from the largest cities to the village level. Large boulders in the road blocked delivery of the early coffee crop in Yunnan and nationwide China’s tea harvest was in doubt. The topic of greatest concern to a WeChat group of tea makers and government officials was getting the work done without criticizing the government,” recalls Hodge. As the disease spread around the world, shutdowns expanded. Seven Cups stopped serving tea at its Tucson, [Ariz.] tearoom in March.

“Zhuping Hodge was on the phone to China every night,” he said. “We remained confident  our business values would come through, enabling us to deliver the goods. We buy from 35 to 50 tea producers across China every year and maintain close relationships with them, as well as logistics professionals.” The agents were able to move tea from producers across China to our warehouse in Sichuan while China was still shut down," he explained. "We had the first teas on a plane to Tucson with products for sale online by the middle of April," said Hodge.

“We deemed direct trade and transparency as essential from the start. Supplying quality information not only was of benefit to our customers, it was deeply appreciated by the tea makers who were committed to the art of tea making,” he said.

In addition to paying the 7.5% tariff on sales to American customers, the company faced a three-fold increase in airfreight, compliance costs and higher prices at origin. Seven Cups waived shipping fees to US customers. The company is the exception among importers for finding a path to bring in spring tea by mid-April — most did not arrive until May or June.

“Relationships are time consuming and expensive to maintain and don’t demonstrate their value until something goes wrong,” said Hodge. “We all know a lot went very wrong this year. Yet all our 2020 teas arrived on time. It is comforting to know that we didn’t have to be there, but when flights continue, and we can do so safely, we’ll be back. Our sourcing practices will not change,” he said.

Short-term solution

Keith Hutjens was director of tea procurement for TAZO and later Starbuck’s-owned Teavana for 13 years. He assured supply chain integrity for $1.3 billion of tea sales and supported R&D on all tea products, including input on new recipes, flavor profile descriptions, and quality specifications. His global experience sourcing tea and botanicals for 22,000 locations in 65 countries provides a valuable perspective across multiple origins and markets.

A consultant to many of the world’s best-known tea brands, Hutjens agrees with Hodge and Gascoyne. “After all the years of traveling to the premier tea growing regions, it pains me to say that this is the year where it is prudent to hold off on most trips to origin,” he said. “In the past, my annual trips to Kolkata were important to help establish the current tea season market pricing, understand general tea estate quality, and supply, and renew relationships,” he said. “During these trips, after meeting in the offices of a few tea companies, you quickly started to get a feel of the current harvest season and pricing,”

Since risk increases with exposure, and flying is considered a risk level of 5 out of 10, Hutjens suggests “focusing more on the invoice tasting and approval in your own office. Zoom conference calls can easily be done instead of origin office and estate visits. Type samples can be sent to the tea company for a conference call tasting with the origin tea company at the same time.”

“This is more of a short-term solution to get us through until we have a vaccine, hopefully in the near future,” said Hutjens.

Everyone eventually adapts

Indi (Gurrinder) Khanna is a respected planter, consultant, and founder of The Studio, a specialty tea factory in the Nilgiri Mountains in South India.

“My rather divergent view since the start of this mess has consistently been that the virus is here to stay and is not going away. Regardless of how much we safeguard ourselves, over time we’re all going to get infected — and of those that do get stricken by Covid-19, not everyone is going to kick the bucket,” said Khanna. 

“Bottom line: we’re going to have to live with this as a recurring infection much the same as the other hundreds of infections and diseases the human race is faced with.  As is its wont, the human body will adapt and will start producing anti-bodies to fight this one too,” he said.

Khanna, who had to shelve his plans to visit China in February, said that “Muskan [Khanna’s daughter who manages The Studio] and I were all ready with flights/trains/hotels/meetings all locked in.  I had to backtrack and, in some cases, bear the cost. That travel restrictions are going to upset many plans is a given. After all, no one in his right mind would want to end up in a quarantine situation,” he said.

“We’re having to learn new ways to keep businesses going,” he adds. “I personally am totally disinterested in any Zoom or similar methods of contact.  For me, it’s got to be a hand-shake and eye-to-eye contact, drinking tea and breaking bread together, and building up the relationship, always hopeful that the same would stand the test of time and translate into business,” writes Khanna.

India hard hit

Anupa Mueller is the founder of Eco-Prima Tea and the daughter of a famous planter. She grew up on the Makaibari Tea Estate in Darjeeling.  Her tea is certified organic, and she is a member of the Fair Trade & Women’s Business Enterprise (WBENC): “Travel to India right now is not recommended. Estates and managers are barely coping with the minimal amount of relaxation [of strict stay-at-home orders] currently allowed, she said.  “Unless you are very adventurous and have a lot of time on your hands, a trip to India to visit estates right now is fraught with risk.  And cases are still rising in India.”

“There is less crisis intervention available there and massive restrictions, a patchwork of rules and quarantines everywhere.  For now, buying is being conducted via samples, and even those are taking more time than usual. I don’t know anyone who is actually doing this or contemplating a visit any time soon,” she said.

China recovered quickly, meeting April shipping dates for all but Hubei. Tea suppliers in Japan, and Taiwan, Vietnam, and Thailand experienced outbreaks and lockdown, but even South Korea, which made headlines due to the fast-spreading virus, recovered. Sri Lanka, with a population of about 21.5 million people, reported only 2,037 confirmed cases of the novel coronavirus with 11 deaths. Kenya, with 6,190 cases in a population of 51 million and 144 deaths fared worse, but the contagion mainly impacted urban areas, only now are rural areas experiencing a spike.

India’s nationwide lockdown with short notice on March 24 halted the spring harvest at a critical time. Plucking resumed after a month, but by then, bushes needed tending, causing further delay. India has steadily increased tea production to record levels the past few years. Still, it anticipates a decline of at least 140 million kilos in 2020, assuming minimal impairment to the second flush now underway. May and June’s yields are critical to exports, and while factories are processing with half the normal staff, a steep decline in demand threatens the industry.

Tea exports dipped 5.6% in the financial year ending March 31, known as AY 2019-20. The new AY 2020-21 began April 1. Volume fell to 240.0 million kilos from the 245.5 million kilos exported in AY 2018-19. Russia and the surrounding CIS (Confederation of Independent States) remain the most significant tea trading partners, importing 47 million kilos in 2019-20. Iran emerged as second due to a sharp decline in tea exported to Pakistan due to hostilities between the two countries. Exports declined from 15 million kilos to 3 million kilos in the past year.

India reported 2.5 million confirmed cases of Covid-19 with at least 50,000 dead in July, and total infections estimated at 40 million, making it the world’s third worst-hit country after the US and Brazil.

Reinventing the tea trading model

Tea is remarkably resilient. There are 250-, 500- and even 1,000-year-old trees producing quality leaves from which skilled tea makers will continue to profit after centuries of cultivation. Relationships with buyers around the world are far more fragile and challenging to establish.

During the coming year, growers will re-focus on domestic supply, selling to local agents for direct-to-consumer brands. Online orders will become the norm as consumers increasingly take tea at home. Retailers anticipate a stop-start pattern globally, tied to periodic virus outbreaks. Sourcing specialty tea, even in remote and relatively virus-free New Zealand, will be more difficult as marketing premium tea is tied so closely to retail sampling and authentic storytelling that originates in the gardens.

Tea suppliers will certainly take the call and join in virtual tasting. Any type of interaction makes it more likely to close the sale, but Zoom calls will not replace the long-term advantages of establishing face-to-face relationships.

As to commodity tea, expect further consolidation of exports from China and re-export to facilities like the DMCC Tea Center in the United Arab Emirates where 48,000 metric tons of tea are stored, blended, and packaged annually. The center is the largest tea re-export hub in the world, with a market share of 60% that is valued at $184 million annually. The center can store 5,000 metric tons in “dry atmosphere” warehouses that maintain tea quality, and its tea quality laboratory has a library of 4,000 recipes for blending tea orders from the world’s top 13 producing countries.

“This is the year to work out of our own offices and hope that next year, we will be able to re-establish our buying routines and travels,” writes Hutjens. “Tea estate visits always added to the portfolio of stories to bring authenticity to our tea blends, along with looking at tea factory conditions, plucking standards, etc.  However, the time in Calcutta was always the most valuable to me, and exhausting,” he said.

Asked if in-country “bubbles” consisting of an extended stay, business-friendly residences for visiting buyers to quarantine in places like Calcutta or Coimbatore are an option, Khanna is quick to note that producer/suppliers bend over backward to ensure that buyer visits are kept under wraps.

“When one goes out to meet producers at origin or, in my case buyers in their dens, it simply has to be one on one,” writes Khanna. 

“To my mind, the only factor which will enable us to sail through is relationships.  Most established tea companies at both ends of the divide survive on relationships and nothing else. In which case, canceling an annual trip is not likely to erode long-standing and mutually beneficial arrangements,” said Khanna.

“Threads would have to be picked up in ‘21 by which time, hopefully, the world would get back to an even keel,” he writes.

Traveling to buy tea: What was it like?

Tea buyers arrive year after year in Kandy, Colombo, Kolkata, Coonoor, Darjeeling, Hubei, Fujian, Kyoto, Shizuoka, and Uji, drawn to the unique terrain of fabled tea lands as diverse as Nkhata Bay in Malawi and Kenya’s Rift Valley to Cameron Highlands of Malaysia and the ancient Dragon Well of Zhejiang. They arrive to a bit of pomp, greeted by costumed workers dancing indigenous steps amid handshakes and hugs, graciously accepting a hand-woven wool or silk scarf.

Buyers sign the latest volume (perhaps No. 10) in a log that contains the names and arrival dates of rivals and associates first visiting in 1972 or 1982 or 1992.

In Volume No. 1 (1892), the ornate script reveals the identities of British, German, Swiss, or French tea buyers, and, more recently, the names of Japanese, Canadians, Russians, Chinese, and Americans.

Arrival day entails hours of conversation in the manager’s bungalow, an after-dinner story, or two. A frank discussion of business concerns over Scotch may last well into the night.

Rising at dawn to a tray of hot tea with toast or biscuits at the bedside, a planter’s breakfast, and a tour of the garden in a crowded Range Rover follow, stopping at times to admire the view, pluck the leaves and assess the condition of aging trees. Then, to the factory to taste 20 freshly made teas, meticulously arranged and precisely steeped all-the-while sharing rinse water between slurps and spitting into the same spittoon.

Purchasing tea at origin has evolved over time to become a personal, congenial, and richly informative ritual.

In little more than a month, the coronavirus pandemic abruptly halted annual trips to every major tea producing origin upending tradition and changing business practices that span 150 years.

— Dan Bolton