The value of Chinese tea exports fell by 16.3% to $1.74 billion year over year (y/y) in 2023 compared to $2.1 billion in sales recorded in 2022, according to China Customs. The decline is the second consecutive annual drop in exports by value. Export volume also declined by 2% to 367.5 million kilos.
Export value in 2022 fell by 9.6% y/y compared to 2021. Green tea experienced the biggest drop in value, declining from $1.4 billion in 2022 to $1.2 billion in 2023. In 2022, China exported 26.5% of the global total by value, according to UN Comtrade.
Sri Lanka, the number two producer by value, saw export value increase to $1.31 billion on a lower volume of tea than in 2022, according to the Sri Lanka Tea Board (SLTB). Exports earned $1.26 billion in 2022, reversing declines in 2020 and 2021. Sri Lanka tea shipments accounted for 15.7% of global exports by value in 2022.
Tea production, overall, increased by 1.7% to 256 million kilos. Sri Lanka maintained an average export price of $5.41 per kilo, up from $5.03 in 2022. Export volume declined by 8.2 million kilos to 242 million kilos in 2023, according to SLTB.
Kenya tea exports from January through November were valued at $1.05 billion and are likely to surpass the 2022 total of $1.4 billion, according to the Kenya National Bureau of Statistics. The 11-month volume was 511 million kilos. In 2022, Kenya reported $860 million in sales for the first 11 months on volume of 410 million kilos. The harvest is 50 million kilos ahead of 2022 for the same period.
India ranked fourth in global tea exports in 2022 but has not reported full-year statistics. Indian tea exports from January through October were down 1.7% to 182 million kilos. Export value for April through October was also down by 3.6% to $590 million (INRs 4,904 crore) compared to $612 million (INRs 5,086 cr) during the same period in 2022. Export volume for the full year is likely to be around 200 million kilos, according to the Indian Tea Exporters Association.
During FY23, India’s tea exports stood at $818 million. Calendar year exports were $751 million in 2022 (about 9.5% of global tea exports by value).
Live Mint reported that rating agency Crisil expects the Indian tea industry to witness an 8% decline in revenue this fiscal year.
“Domestic demand, which accounts for 82% of sales volume, should remain steady at 1,100 million kg this fiscal. However, exports, which comprise 18% by volume and about 30% by value, may slide about 12% on-year to about 200 million kg. Last fiscal, the export volume had increased 14% due to lower production in Sri Lanka, a major tea exporting country,” Crisil wrote in a September report on the Indian tea industry.
Joydeep Phukan, who manages India’s Tea Research Association (TRA), writes that in 2023, the Indian tea market “has debunked the traditional theory of supply and demand. North Indian Tea production is down by 39.40 million Kgs (5.10 %) from April to September, and average tea prices are also down by INRs 18 per Kg (10%).
“With an 8% wage increase for tea workers from mid-2023, it will be extremely difficult for the organized sector to manage and sustain a million-plus workers,” he writes, adding, “Is it because of the low demand for tea for other beverages? I hope the tea producers get a sustainable price to keep themselves sustainable in the near future.”
Varied reasons for declines
Extreme weather was a factor, as were inflation, geopolitics, and world economics, and inflation eroded buying power. According to the Economist Intelligence Unit in its February Tea Forecast, tea consumption growth “will pick up gradually from 2.8% in 2023 to about 3% in 2024-25.” India and China accounted for 64% of global demand in 2023.
A substantial glut of tea remains in Africa, where Kenya and surrounding East African tea-producing countries continue to expand production despite an oversupply of as much as 175,000 metric tons.
Kenya harvested more than 500 million kilos through November, up from 450 million during the same period in 2022. Tea production in Bangladesh through September was up 8.2%, an increase of 5.3 million kilos. Production will increase modestly to 6,582 metric tons but “only a fraction of the additional output will be exported,” according to EIU.
The war in Ukraine continues to disrupt trade as Russia turns to Asian suppliers of black tea, principally Vietnam. European tea suppliers no longer ship to Russia. Prompt payments for tea purchased from India and Sri Lanka are hampered by Western sanctions imposed on Russia and Iran following the February 2022 invasion of Ukraine. The conflict between Israel and Hamas in Gaza further destabilized tea markets in Jordan, Syria, Egypt, Turkey, and Iraq.
In November, the government of Iran suddenly ceased importing Indian tea following a spike in sales. Iran’s Inspection Organization investigation revealed a $3.7 billion embezzlement involving Debsh Tea, the country’s largest tea importer. The company imported millions of kilos of cheap tea from Kenya and falsified customs and food safety records to indicate the tea was from India. At the time, Iran was India’s largest tea trading partner.
Anshuman Kanoria, chairman of the Indian Tea Exporters Association, writes, “The Iran market has opened a bit. Though verification of contracts has begun, allocation of foreign exchange in the country needs to improve.”