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