Kenyan tea exporters sold 523 million kilos in 2023, earning a record Sh 180 billion ($1.23 billion). However, oversupply due to favorable weather, subsidized fertilizer, and aggressive plucking threaten to undermine black tea prices globally.
Tea exports are in decline, and bulk tea prices are falling. The World Bank forecasts tea prices will decline 2% in 2024. The Economist Intelligence Unit (EIU) expects “prices to weaken to an average of $2.75 per kilo in 2025.”
Greenleaf production rose 15% among Kenya Tea Development Agency (KTDA) smallholders from June 2023 through January. Unit prices are up 13% to Sh 345 per kilo, rewarding growers with a record bonus.
But the windfall is more closely tied to currency fluctuations than demand. Slowing economies, sanctions, and war globally contribute to auction warehouses bulging with staling tea.
According to the East Africa Tea Traders Association (EATTA), 40.7% of the tea on offer remained unsold in 2023. Traders normally buy 75% of Kenya’s annual harvest at auction, but demand is unusually low, forcing the country to consider abandoning a $2.43 per kilo minimum price established in 2021.
Kenya stands out as the only country among the top five producers worldwide to see gains in volume and value. Kenya's domestic tea market is relatively small, making Kenya the world’s top black tea exporter, even though India produces much more significant quantities. East African tea-producing countries export more than 90% of the teas grown there. Kenya exports 95% of its tea, of which only 10% is blended and packed.
Earnings surged by almost a third (31%) on volume that grew by 72.5 million kilos from the 450 million kilos sold in 2022. The big surge in value did not significantly increase unit prices. Auction price averages fell in 2023 compared to 2022.