Highly Concentrated Tea Industry Is Destroying Communities

There’s only a dozen giant tea companies in the world that control the tea supply chain, driving down wages and destroying communities.

These dominant companies have delivered great results to their shareholders, but their success is damaging the tea economy. In today’s market, it’s the winners that take it all and leave a mess for the rest to clean up.

Without mentioning the brands, these firms have fantastic brands, great packaging and excellent service. Though it sounds great to consumers, there’s a downside. They’ve large bargaining power that allows them to drive down wages and increasing inequality.

But that’s not it. These companies enjoy economies of scale and lobby with governments for subsidies, regulatory favours and tax breaks. And this highly prevents entrepreneurship. To reduce competition further, they acquire potential rivals to continue control the distribution channels.

With a few companies in the game, these companies together act more like a cartel instead of competitors.

So what’s the problem? For hundreds of years economists and policy makers ignored the increase in concentration in the tea industry. As long as consumers weren’t harmed, they kind of ignored it.

But even that’s not true. Consumers today have less choice. Teas we buy are a blend of raw material from different countries. Large companies don’t value diversity, they value consistency. So the consumer has less choice. Moreover, farmers won’t work hard to improve the taste, but focus on driving down cost. There tea will end up as a small part of a blend anyways.

In conclusion, the winner takes all tea industry is making losers out of tea growers and communities. We need more competition, and find a way to allow individual growers to shine!

If you’re a grower what can you do about it?

Luckily technological developments have allowed growers to avoid the large corporations and sell directory to consumers or local distributors like tea shops and small businesses. As a tea grower, here’s what you can do:

  • Unionise and bargain together for a better deal
  • Diversify your distribution channels by sell online through a webshop or online platforms
  • Create a brand that consumers will love
  • Innovate through packaging
  • Be transparent about your teas (where is it from, which season, why is it unique?
  • Focus on producing high quality and unique teas
  • Starbucks Tries It Again, Starts Selling Milk Tea in China

    One time I walked into a Starbucks in China and found that they’re selling authentic Chinese tea such as Biluochun green tea and Jasmine tea in tins. I found it strange, since Starbucks wouldn’t be my place to buy real tea. I don’t think most Chinese would either.

    Recently, Marketing Interactive reports that Starbucks tries again to enter the tea market. Now with bottled milk teas sold in supermarkets and online. Is it gonna work? I’ve my doubts.

    In 2016, Starbucks also introduced Teavana teas in China as reported by Bloomberg. This line of teas doesn’t really compete with the authentic Chinese teas, but rather competes with the bubble tea chains that that have been extremely successful.

    Yet, I don’t think it worked out well. I don’t know any friends who go to Starbucks for an iced tea. I think it’s a mistake for a coffee person to believe that having a coffee background means that they can sell tea. Especially not in China. Taiwanese bubble tea shops probably understand Asian customers better when it comes to commercial tea drinks.

    So in my opinion, the success of Starbucks still strongly relies on a strong global brand that represents the coffee culture. And they should stick to it. I’ve yet to see a really creative coffee tailored to the Chinese market, and I hope they do it before it’s too late. Remember, KFC had many years of success due to it’s Western image. The whole menu was completely new to Chinese, and thus entertaining to try. But today, that’s not enough anymore. They’ve to reinvent themselves and perhaps localise more.

    Genome in Tea Responsible For Tea Taste

    A recent article published on cell.com reveals that a certain genome in tea is responsible for its taste and health benefits.

    The scientists present a genome sequence for cultivated tea plants. This sequence provides a foundation for uncovering the genetic basis of important traits that affect the appearance, medicinal value, nutritional properties and taste of tea.

    The article itself is written in highly scientific language, but here it is:

    http://www.cell.com/molecular-plant/pdf/S1674-2052(17)30103-X.pdf

    On 5th of June, India also announced it’s own genome mapping project. The project is not supposed to copy the Chinese study. The study aims to develop a climate smart plantation that is more resistant to extreme weather, which has become a bigger business risk in the past few years.

    This Massive Pu Erh Tea Needs a Sawing Machine To Slice

    In the past transporting tea from Yunnan to neighbouring regions was a difficult task. Pu erh tea used to be compressed tightly in massive sizes for easy transportation. We discovered this cylinder shaped pu erh during a tea expo, and the merchant was selling them while demonstrating how he gets a slice of it with a sawing machine!

    Canadian Tea Demand Gets Boost From Millennials

    A recent report published by the Tea Association of Canada shows that there’s a brewing demand from millennials in Canada.

    Who are they?

    The fanatic brewing millennials are mostly based in Ontario and Western Canada. Surprisingly there’s only a slight majority of female tea drinkers (53%), while traditionally tea is more popular among women. What’s also interesting is that 44% of the millennial tea drinkers are parents and are part of a 3-4 person households. This suggest that parents tend to be more health conscious then non-parent millennials.

    What Millennials Like

    In the past there was still a preference for coffee over tea, but a mayor conclusion of the report is that they like tea and coffee equally. Millennials are curious and like to try new flavours. There’s a trending demand for loose leaf tea and tea infusers to brew them conveniently.

    Reasons of Purchase

    Tea is associated with many health perks including relaxation, improving sleep, reducing anxiety etc. While there’s a growing interest for artisan tea enjoyed for the flavour and aroma, buying tea for health benefits is still the major reason of purchase.

    What Are They Drinking?

    2 out of 3 millennials drink at least 1 cup of tea a week. This group accounts for 36% of all Canadian tea drinkers. However, they consume consume fewer cups per week (4.6 versus 6.1). This suggest that even though more millennials drink tea, they drink it less frequently.

    Where Do They Buy Tea?

    15% of the tea is purchased at specialty stores and this proportion is growing. However, still the majority of the tea is bought through grocery and mass merchandise stores (48%).

    One major reason to visit specialty stores is because consumers want to explore new teas. Those millennials have a wide interest in variety, quality and expert advice. They also like the fact that they can sample small quantities and taste teas before buying. The best way to introduce teas to millennials is by introducing unique flavour and blends. It’s interesting to know that the brand of the tea is relatively unimportant when purchasing in specialty stores.

    Brew Tea In This Online Bitcoin Casino Game: Dragon’s Tale

    Recently there has been some noise in the Bitcoin world about Dragon’s Tale, which is a online Bitcoin based casino. The platform now introduces a mini game with a Chinese tea ceremony theme!

    While most of the games in Dragon’s Tale are based on luck, it’s said that the Chinese tea ceremony mini game is based on skill too. Here’s an explanation of how the game works from the Dragon’s Tale’s wiki page:

    • In Tea Ceremony mini game you have to get the highest value set of teas compared to other players, at the end of the round. The game has different coloured teas which have different values.
    • At first you can see only the values in your own table of teas, but as play progresses you may be able to see others.
    • On your turn, you may lock a table of teas, preventing it from being stolen, but also revealing it to other players. Do this with tables you want to keep.
    • Or you may switch one of your own tables with one of another player, in an attempt to improve your own tea set. Note: this may backfire. You may also raise during your turn.
    • If you win the round, you win all the money in the Teapot.

    As you can see, this more a gambling game with a tea theme rather than a serious tea brewing simulation that I was hoping for. Stealing teas from other also really isn’t the way of tea! Neither is gambling. Let’s stick to our real life tea tables.

    Image source: newsbtc.com

    Flying Teapot Becomes ‘Vomiting’ Teapot

    Warning, if you’re about to brew yourself a nice cuppa tea, then don’t read further. If you aren’t then this story is definitely entertaining.

    An article this week by People.cn reports that a teapot sculpture outside of a tea factory in Chongqing turned green due to algae grow. Pictures of this ‘flying teapot’ that turned into a ‘vomiting teapot’ went viral in China. See below:

    According to the owner of the factory the flying teapot sculpture is supposed to enhance the corporate image of the company. At first the sculpture was made of plastic, but because due to whether it often needed to be repaired. A layer of cement was used to strengthen it. However, what the makers didn’t know that it’s easy for algae to grow on cement.

    The Chongqing tea factory has yet to communicate how this problem will be solved.

    Tea Politics: Premier Li Treats Merkel Cup of Anhui Local Tea

    Premier Li Ke Qiang shows his charms when showing German Chancellor Angela Merkel around in Hefei, in his home province Anhui. This is a special occasion as it’s the first time, the premier has invited a foreigner political leader to visit his province. And of course, they had a cultural tea session together, including a tea ceremony.

    Anhui tea offered to angela merkel by li
    Angela Merkel opens Anhui tea gift box.
    Tea ceremony girls ready to perform tea ritual
    Tea ceremony girls ready to perform tea ritual
    Ready to sip! Merkel can't wait.
    Ready to sip! Merkel can’t wait.
    Demonstrating tea customs to Angela Merkel
    Demonstrating tea customs to Angela Merkel

    Brewing Success: Global Tea Sales Increasing in 2015

    While countries such as China, India, the United Kingdom, Turkey, and Ireland have traditionally been large tea consuming countries, the global demand in other countries show an increasing trend.

    U.S. Tea Market

    Recently, CCTV reported that the demand for tea in the US is growing. Even though, the average American still drinks far less tea, more are learning to get a taste for it. One important fact is that the U.S. tea market has grown from 2 billion USD to about 10 billion USD in 2013, based on data from the U.S. Tea Association.

    Thailand Tea Market

    The Nation reports that a recent research among 300 respondents aged 15-49 in Bangkok shows that green tea is currently the ruling beverage in the market. The main reasons for choosing green tea is that respondents believe that its refreshing, energizing, good for the skin, and improving digestion.

    China Tea Market

    The Center for Agricultural and Rural Research recently published the Chinese tea ranking list of 2015 based on brand value, showing an increase of more than 10%, compared to 2014.

    In the mean time coffee consumption is growing 7 times faster than the global average.