Tea sector to prosper in recession, say experts

Kochi: What do the people do in times of recession? Well, it seems that they sit more at home and drink tea, and drink more tea by shifting from Cola, Beer and Vodka, say commodity experts. And the penchant for tea in times of uncertainty and recessionary blues helps the tea industry. Perhaps, it may be the only sector and industry smiling and flourishing, while other markets shrink and crawl. Experts estimate it to grow handsomely in the years to come as people turn more health conscious.
In the US market, tea's appeal is immense and vibrant according to Joseph P Simrany of the Tea Association of USA. Import of tea into the US market is seen growing with green tea, in particular, growing by almost 200% in a decade. The total market has grown from $1.84 billion in 1990 to $7.3 billion in 2008. It is estimated to double in the next five years, Simrany said.
By the year 2012, the tea market in the US would be worth over $15 billion, he added. Traditional tea is expected to grow in the range of 2-3%,while the ready-to-drink segment is estimated to grow by 5-10%.
It has been observed that there is a ten-fold increase in specialty tearooms from 200 to 2,400. Even, traditional coffee houses are offering specialty tea, Simrany observed.
Marcus Wolf from Schroeder & Rudolph Hamann oHG of Germany also expects the market to stay in positive territory in the coming days. The demand for tea is seen increasing all over Europe with people lining up to buy or consume their tea. The per capita consumption of tea is estimated at 25 litres by the German Tea association. The large Turkish population aids German tea consumption.
Similar is the case of the UK market says Pradeep Jeyathilak of Unilever UK. "The only thing cheaper than tea is tap water. A cup of tea comes for 1.8 pence, while instant coffee retails for 3.9 pence and carbonated drinks cost 16. 5 pence," he said. During the last recession, 50% of the households claimed to spend less on eating out of home. It is seen that people sit at home and drink more tea, he added. The total UK market for tea has seen 2% growth in 2007 when compared to 2006 and 0.4% growth in 2008, when compared to 2007. Tea sales increased in the UK aided by its retail price relative to other drinks, its high level of home consumption and the emotional benefits, Pradeep Jeyathilak said.
Alexey Shvetsov of Ormi Traders, says that in Russia more consumers are shifting from Cola, beer and Vodka. "What else can people drink? People still dink tea as a healthy and traditional drink. And an obvious choice when you have less money is still tea," he said. The total import into Russia in 2008 is seen at 178.6 million kg. Shvetsov thinks that people may shift from premium varieties of tea to the less costly varieties if the crisis lingers. Consumers may also shift from relatively expensive tea bags to the loose packages, he added.
Other tea drinking nations like Egypt, Iran and Iraq are also reporting a growth in tea consumption.
Developed nations are shifting from traditional tea to the ready-to-drink segment and specialty teas, while the West Asian and Asian nations still prefer tea the traditional way. (Source: Financial Express)