RWANDA
At the end of 2017, Rwanda reported that for the first time for which figures are available, domestic consumption amounted to half of total production.
In itself of little import, this is a reminder of the dynamics of demand at the domestic, rather than international level. The key indicator here is per capita tea consumption. It gives a very different perspective on tea markets than the more traditional aggregate figure of production and exports. For example, Kenya is a giant player at the international production and trade level, but a minnow in terms of consumption: just over half a cup per person a day.
Here are figures for selected countries, with comments on what they imply for market growth and innovation. They are derived from the UN FAO (Food and Agriculture Agency) and other regular publishers of such survey data. Figures are not consistent, especially for African nations. The world average per capita figure is in the range of 0.6 kilos a year. This is equivalent to 0.7 cups a day.
The highest DCPC (daily cups per capita) is Turkey, slightly under four cups. Ireland is in second place, ahead of the UK, at 2½ cups.
Of the top 10 consumers (averaging at least one per day), 4 are Muslim countries, and mainly green tea drinkers: Turkey, Morocco, Egypt, and Saudi Arabia.
Five are traditional black tea cultures: Ireland, UK, Russia, New Zealand, and Poland. Except in Russia, demand for black tea is falling; in the UK, the decline has been consistent and amounts to 20% in under a decade. The search is one in the industry to tap the growing interest in green tea and flavored infusions. Russia drinks little non-black tea. As average family incomes shrink they are buying more commodity imports and fewer premium teas.
These are all mature markets. Growth in any one segment comes at the expense of another – green tea instead of black, herbal eating into caffeinated teas and tea versus coffee.
The areas of most opportunity are likely to be markets that should already be larger. One of the striking figures is the extent to which the top producers rank so low. Japan is in ninth place, and one of the few top ten producers that is a high domestic market.
Here are the DCPC for the top 10 growing nations (kilos per capita):
China 0.7, India 0.4, Kenya 0.5, Sri Lanka 0.5, Indonesia 0.3, Vietnam 0.5, Iran 1.1, Argentina 0.1. All of these are noted for their tea cultures built on long history, ceremony and tradition. This perspective obscures the DCPC issue: they may be deep-rooted but they relate only to a small part of the population. Most of the population has no investment in tea.
They are thus far more open to innovative, non-traditional teas than the high consumer mature markets. India and Taiwan have massive upside potential. Any Asian market with a growing younger population with discretionary spending power is a target for beverage products that explicitly abandon tradition. That seems to be very much the pattern in most of Asia. Bubble tea in Taiwan, cheese tea in China, Japanese foody infused and alcohol teas, India’s new chai out-of-the-home cafe. If the tea industry arbitrarily assumes one DCPC as a reasonable target, societies that have a strong tea awareness but average around half that figure represent immense and incremental growth.
The same is potentially the case in East Africa, where tea drinking is minuscule. Nepal is an eccentric: rapidly growing in its production of superb teas and barely sipping them.
There is one market that when viewed from the traditional measures of volume stands out as healthy and huge. Switch to per capita drinking and it looks, well, weird. This is the US, with large imports, superb online and physical store infrastructures, supermarket variety, blogs, deals. Buzz.
But it consumes less per person than most Scandinavian nations, the bastions of coffee and by far the world’s highest caffeine infusers. Its .25 DCPC is a third that of Germany, not thought of as a tea culture, and little more in than France. This partly reflects how much of US “tea” is cold, not hot, iced and ready to drink teas. The US is a low consumption market with huge potential.
This brief per capita focus on tea is impressionist but seems useful in opening up new ways of thinking about the dynamics of markets, rather than their size.