The unprecedented toll on tea consumption following global lockdowns and the resulting closure of the world’s hospitality and foodservice venues is becoming apparent.
India is a bellwether, regularly consuming 90 million kilos of tea monthly at roadside stalls (tapriwalla), rail stations, restaurants, cafés, and tea rooms. India consumes 75% of the tea grown there.
Viren Shah, chairman of the Federation of All India Tea Traders Association (FAITTA), told the Economic Times that out-of-home consumption accounts for 36 million kilos a month. “In April and May, we have lost around 72 million kilos of tea consumption. Overall domestic consumption has fallen 25 -30%,” he said.
According to the Tea Board of India estimates, tea consumption at home increased by more than 10%. Indians drink 17 cups of tea at home to every cup of coffee and three cups of tea for every cup of coffee sold away from home. Tea retail is valued at $2.4 billion, approximately 2.5 times greater than coffee. A coffee sells for INRs65 in tea cafés while coffee sells for INRs100 per cup.
FAITTA predicts an increase in farmgate prices of between INRs60-70 but questions whether prices will remain higher due to the severe economic hardship experienced by consumers. Tea stalls, operated almost exclusively by small independent merchants, remain abandoned in cities like Mumbai, where the contagion is rampant.
In the US, the foodservice segment generates approximately 20% of tea sales. Tea globally generates an estimated $52 billion in sales in 2018, the majority of which is purchased at grocery outlets for home consumption. The global market for packaged coffee is $96 billion, according to Euromonitor International.