CHINA
China’s tea production and markets earn labels of “strongest”, “largest”, and “growing” in every area but one. It does not have any world-class brand. This recent statement was made by Tang Ke, a director in the Ministry of Agriculture at the 2nd China International Tea Expo. It’s well supported by expert and industry opinion and data. Almost any published discussion of China tea brands centers on the dominant player: Lipton, that takes cheap China leaf and packages it in tea bags, commanding a higher price in world markets than comparable China mass-market teas. Reports from the tea expo state that the profit margins of 10,000 Chinese tea enterprises are uniformly lower than Lipton’s.
China has been the world’s largest tea producer for well over a decade. In 2017, it overtook Kenya as the largest exporter. (This mainly reflected the widespread Kenya drought.) Exports were 355,000 metric tons, out of a total output of 2.6 million tons. The lack of brand power reduces profitability in export markets, where China’s specialty teas stand out but are elite names – Mao Feng, Wuyi oolong, Dragonwell, etc. – that rarely translate to brands. In the domestic market, this impedes the growth of customer relationships and market positioning. A study of 10,000 consumers in 10 Chinese cities found that only 11% bought tea from the same company.
There are many factors that help explain the branding gap: the fragmentation, localization, and specialization among 70,000 tea producers stand out. A 2016 report on Lipton’s success aptly summarizes the market as “jumbled” and “confusing.” Neither helps in building customer communication and trust.
There are many lists of top 10 tea brands, with little systematic base or objective measures. They are consistent, however in grouping the following brands as leaders: Twining, Celestial Seasonings, Tazo, Harney and Sons, Dilmah, Lipton, Bigelow, Yorkshire, and Tetley. What’s most intriguing is that in many of the reviews, the brand image shows a China green tea. By contrast, in answer to a query “What are some good tea brands from China”, Quora, a well-established community, and expert forum, provides just four “try this one” names and adds “the other brands are just not famous enough even for a common Chinese person to know.”
The lack of brands is an opportunity. It seems most likely that the leaders will build on China’s rapidly growing e-commerce platforms to establish identity.