By Peter Keen
Forecasts of overall demand for tea in Western Europe over the coming few years are around half those made 2-5 years ago for the same time frame. Then, growth was expected to be in the 5-6% range. Now, estimates are uniformly under 3% and are as low as 1%. This contrasts with those for the Asia-Pacific region, where growth is expected to be 7% p.a. for the coming decade.
Much of this lowering of expectations reflects the uncertainties and disruptions of the still unresolved Brexit chaos. Most recently, concerns about recession are spreading, mainly fueled by US trade war threats and slowing exports. In January 2018, forecasts for Eurozone growth were for a healthy and sustained 3%. In April 2019, the German government halved its estimate for its pace-setting economy from just 1% to 0.5%.
The tea market of Western Europe is one where “on average” and “typically” don’t mean much. First, it’s hard even to define. There’s the CIA classification of it as seven countries that formed the Cold War bastion of anti-Soviet democracies. Some definitions show it as 13 countries – or 17. When Scandinavia and South West Europe (Andorra, Spain, and Portugal) are included, the total leaps to 23.
However defined, it’s a market of contrasts. It includes two of the world’s highest tea consuming nations: Ireland, which ranks at the top along with Turkey, and the UK in fourth place in most surveys. In many regards, it’s marked by a tea or coffee divide. Approximate figures are: UK and Ireland 2 kilograms per capita, Netherlands and Germany 0.8. Switzerland, and France, Spain, Italy, and Scandinavian countries all less than 0.2.
The range is very wide, but the same general pattern emerges across imports and retail sales: a sustained 2-3% drop in volume but an increase of 3-5% in value. That seems to be the single most useful statistic for assessing demand within and across countries and targeting consumers and product innovation. Simply stated, it means that people drink less commodity black tea and more premium teas of all types in close to every market forecast and industry analysis. This trend has been continuous over the past decade.