China Forum Tea Production & Consumption May 12-13, 2008 Joseph P. Simrany, President Tea Association of the USA Tea Consumption Trends in the USA

2 Introductory Comments Grateful to the China Tea Science Society & the International Tea Culture Institute for inviting me to this meeting Tea Consumption in the USA has long been a little unusual The USA is now one of the fastest growing markets for tea The role of Tea & Health Other Important Consumer Trends

3 A New Spirit of Cooperation Communications between our two countries has not always been open Times have changed and to succeed today we need to talk openly about challenges and opportunities

4 Time for Closer Ties Between China & the USA The USA is learning to appreciate Specialty Tea China is one of the leading producers of Specialty Tea Trade cooperation between China and the USA has never been better Let’s make it happen!

5 The Time for Tea is Now! Tea is China’s gift to the world, a gift for which we are eternally grateful Tea’s appeal is immense The appeal of tea in USA is diverse Tea consumers in the USA are not traditional

6 The Versatility of Tea Tea is one of the most versatile beverages in the world –Tea: Relaxes some Invigorates others Satiates thirst Some like it hot Others cold Most like the taste Others like the health benefits

7 Tea Imports into the USA (Kilos) % Inc/ dec Black Tea 85,875,28888,729, Green Tea 5,424,20716,891, Total Tea 91,299,495105,620,

8 Tea Imports into the USA in 2007 The USA imported over 241 million pounds of tea or 109+ million Kg. 83% of which was Black with most of the remainder Green Tea Total tea imports were up nearly 2.0% over the full year 2006

9 Tea Sales ($) Forecast to Double over Next 5 Years A reputable market research firm (Packaged Facts) has forecast that the Dollar value of tea in the United States will move from nearly $7 Billion in 2007 to nearly $15 billion by the end of 2012! Green Tea is growing at a much higher rate than Black Tea; up over 200% in Kgs. Over the last ten years

10 Size of the Tea Market in U.S $Value by Type Trad. $0.87 RTD 0.20 Fd Srv 0.50 Special 0.27 Total $1.84 Billion –Green $20 Million 2007 $Value by Type Trad. $1.95 RTD 2.80 Fd Srv 1.0 Special 1.1 Total $6.85 Billion –Green $550+ Million

11 Consumer Issues Driving Trends Growing number of scientific studies suggesting tea plays a role in the inhibition of many chronic human diseases Widespread acceptance by the scientific and medical communities that tea is a healthy beverage Widespread awareness by the media that tea is proven to be a healthy beverage Tea enjoys positive imagery regarding its contributions to health versus alternative beverages

12 Tea & Health Strategy Sales results from focusing on the health benefits of tea exceeded our most optimistic expectations Consumers already believe tea is healthy and their perceptions are reinforced by scientific studies Long term trend in the USA is to eat and drink healthier foods & beverages

13 Green Tea Sales Prove Health Strategy is Working Green Tea has moved from 3% of total imports 15 years ago to over 17% of total imports in 2007 This is an increase of over 500% The increase in popularity is almost entirely due to the association with health benefits

14 Black Tea Will Benefit Next As more scientific information emerges regarding the health benefits of Black Tea, it is entirely possible that it too will surge in popularity

15 Future Health Plans The Tea Council of the USA remains committed to the health message A Scientific Symposium was just held on September 18, 2007 in Washington DC The Tea Council of the USA is grateful to its Producing Country members (India, Kenya, Malawi, & Sri Lanka) whose generous contributions make these kinds of events possible

16 Other Consumer Trends Driving the Popularity of Tea in the USA A desire for more convenience Ease of preparation Ready availability

17 Third Major Trend Driving the Increased Popularity of Tea Growing appeal of Specialty Tea China has a tremendous opportunity in this area This is the most profitable segment of the Tea Industry

18 Forth Trend Responsible for the Popularity of Tea in the USA Promise of high profitability is drawing thousands of entrepreneurs to sell various forms of tea The number of tea rooms has grown from 200 to 2200 over the last 10 years in America Thousands of Coffee Houses have added Specialty Tea Affordability to consumers

19 USA Market is Exciting Market is Vibrant & one of the few in the world where tea sales are growing The market forces in place are strong and long term The health message will drive increased consumption for many years to come

20 Tea is Finding its Way into Many Other Products CosmeticsMedicines Blends with Juice Food Preparation Pet Foods Candies & gums Toothpaste Alcoholic Beverages

21 China Has Tremendous Tea Potential It is only a matter of time before China realizes its true tea potential in the USA & the rest of the world China discovered tea and produces some of the best tasting tea in the world.

22 China Has Tremendous Tea Potential The primary thing constraining China’s emergence as a tea leader is the lack of a centralized direction in the areas of process and promotion Perhaps this will soon change as strong entities such as the China Chamber of Commerce for Import and export of foodstuffs emerge onto the scene

23 China has Tremendous Potential More branding needs to be done in important tea growing regions Should capitalize on the rich heritage and romance of tea from China Take advantage of White Tea, Green Tea, and China’s vast number of Specialty Teas The role of tea in Chinese medicine

24 Strategies for Success Adopt A Universal Code of Conduct Support the Global Initiative on Pesticides Join cooperative consuming country promotional efforts Attend International Trade Shows Share your Knowledge through Seminars and Tea Classes Contribute to Scientific Symposia

25 Strategies for Success Talk to your customers Understand their needs and modify your business to satisfy those needs Exhibit at International Trade Shows especially the World Tea Expo in the United States Engage in cooperative promotional programs

26 China Has Tremendous Tea Potential The Tea Association of the USA and each of its divisions stand ready to assist China to realize this potential Thank you for the opportunity to spend some time with you.

27 Sincere Gratitude to the Organizers Special thanks to the Conference Organizers for inviting me to speak at this important meeting I am truly honored to be here and look forward to establishing long term friendships with you