Enhancing tea quality standards By Peter Kimanga

PRODUCTION AND CONSUMPTION TRENDS Demand started growing faster than production in 2005 but was most apparent between 2007 and 2009. It remained in balance until 2013. In 2010, FAO-IGG cautioned producers not to overreact to the good prices. The agency was concerned that tea producers could over-react to by planting more crops leading to an oversupply on the market. FAO advised greater effort should be expanding demand, particularly in producing countries where per capita consumption was low compared to traditional import markets. The IGG also encouraged diversification into other segments of the market, such as organic and value-added teas, and greater support to the tea smallholder sub-sector. In 2013 the average price declined by 2.5 percent to 2.79 USD per kg. In 2014 they declined furtherto 2.65 USD per kg.

REASONS FOR DECLINE IN PRICES Overproduction - The effects of increased planting, Husbandry and Rehabilitation Drop in exports to Arabian markets due to the Arab spring. Drop in oil prices. Decline in quality 1) Mushrooming of new factories from 2010 – lack of Expertise 2) Weak enforcement of Tea Regulations – Leaf hawking 3) Sun-Standard Processing Machinery Lack of Consumer driven Research and Development Negative Tax Regime (Kenya) - Levying of VAT on buyer inter-trading. Vat on direct sales by local exporters. Lack of adequate promotional activates

CHANGING CONSUMER DEMANDS From Tradition/Culture to Health & Wellness Premiumization– There is the shift towards premium Tea. Tea consumers are increasingly looking for high value specialty teas. Consumers are more knowledgeable about tea varieties and origin. Young consumers are also increasingly searching for innovations and healthy teas. Supermarkets are developing higher quality teas. Example, Tata Global Beverages brought Teapigs on the British market. It is currently the leading premium tea brand in the United Kingdom and available in large retail chains such as Tesco and Sainsbury’s. Interest food-safety management systems (such as Hazard Analysis and Critical Control Point (HACCP), British Retail Consortium (BRC) or International Featured Standards (IFS)) or sustainability standards (Rainforest Alliance, UTZ Certified, Fairtrade or organic.

SHORT TERM OUTLOOK   Continued standoff between Iran & US likely to hurt prices further.  Pakistan’s Economy slowdown to hurt prices especially of Kenya teas. Sudan’s political situation. Heat wave in Europe