Tea Market

Tea is among the most widely consumed beverages after water owing to its pleasant flavor, mildly stimulating effects, and nutritional properties. The growth of the global tea market is driven by the high demand for functional beverages and availability of several flavor variants in the market. The increasing demand for organic products across the world is expected to offer a lucrative opportunity to market players in the coming years. However, changing climatic conditions and limited natural resources are expected to hamper the growth of the global market during the forecast period.

Growing consumer awareness about health and wellness is driving the demand for functional beverages. Consumers are inclined toward beverages that assist in enhancing certain body functionalities. This growing trend for functional beverages has increased the scope of the global tea market. Thus, tea manufacturers are offering advanced products to address the health concerns of consumers. For instance, market players are infusing vitamins and functional herbs to increase the functional properties of tea. Furthermore, green, black, and herbal tea contain phytonutrients, compounds that improve human health alongside providing color, flavor, and aroma to the beverage. Green and black tea are extremely popular among consumers owing to their antioxidant content. Green tea contains four components called catechins, which are natural antioxidants that help prevent cell damage and offer other health benefits. Catechins further reduce the formation of free radicals in the body, thereby protecting cells and molecules from damage. Additionally, free radicals are responsible for aging and trigger several diseases in the human body.

Market players are also blending other herbs and plants such as chamomile, lavender, peppermint, and ginger with tea to increase the value of the product. Chamomile promotes relaxation due to the presence of the flavonoid apigenin; it is also an anti-inflammatory. Similarly, lavender tea has a calming effect and aromatherapists use lavender to treat headaches, nervous disorders, and exhaustion. Peppermint aids in digestion due to its menthol content which breaks the phlegm and thin mucus to soothe stomachache, cramps, and heartburn. Ginger contains approximately 14 bioactive compounds with antioxidant and anti-inflammatory properties.

In accordance with the high consumption of tea for its functional properties, manufacturers in the global tea market are continuously launching new and innovative products. For instance, in December 2018, Tata Global Beverages Limited launched the Tata Tea Chakra Gold Elaichi to address the special functional needs of consumers in Tamil Nadu and Andhra Pradesh in India. Similarly, Twinings, a brand of Associated British Foods, launched a range of green teas in February 2018 that include a blend of botanicals with natural flavors, thereby strengthening the company’s product portfolio.

Thus, the growing demand for functional beverages would significantly contribute to the growth of the global tea market during the forecast period.

Rising health consciousness has led to the preference for organic food products among consumers. There has been an inclination among consumers toward the consumption of organic tea, which is produced without any synthetic substances such as the majority of pesticides, herbicides, and fertilizers. It has been observed that the demand for organic products has grown tremendously in most of the developed countries in the past few years. According to MRFR analysis, the global organic products market was valued at USD 104.6 billion in 2018, registering a CAGR of approximately 7.5% from 2008 to 2018.

Thus, the preference for organic products creates an opportunity for players in the global tea market. For instance, Lipton launched an organic black tea in 2017. The product is made with tea leaves picked from the Kenyan Highlands and approved and certified by the US Department of Agriculture (USDA) and the Rainforest Alliance, respectively. Furthermore, companies such as Organic India and Teatulia are offering organic tea to cater to the growing demand for organic products. Moreover, the demand for organic tea is on the rise in certain developing countries as well, providing market players the scope to expand their geographic footprint.

Tea being a delicate perennial plant is highly sensitive to temperature change and precipitation. For instance, in China, tea yield reduced 3% due to climate change between 2012 and 2014. In Assam, the primary tea-growing state in India, a 1/5th decline in rainfall was recorded with the lowest temperature rising by a degree to 19.5°C from 2017 to 2018. Similarly, Sri Lanka is expected to experience hotter and more humid climate with intense rainfall in major tea plantation areas by 2025. Climate change is likely to result in drought damage and soil loss followed by an increasing number of pests and diseases affecting tea plants in the years to come. In Kenya, only high-altitude regions are suitable for tea plantation; however, the majority of these areas are environmentally protected, limiting the cultivation of tea. Furthermore, tea is grown is certain countries with high vulnerability to climate change and extreme weather conditions, which, in turn, is impacting tea yield and the cost of tea. Such fluctuations in climatic conditions and the dependence of the tea plant on weather conditions are likely to pose a limitation to the growth of the tea market across the world. challenging

Resource constraint in terms of water, energy, and vital nutrients, including phosphorus, for tea plantation is a major challenge faced by players in the global tea market. According to MRFR analysis, the global demand for energy is expected to increase by 55% from 2019 to 2025. The soaring demand for water is as much as 40% higher than supply and there is an increasingly short supply of phosphorus, a non-renewable resource. These factors are directly influencing the fluctuations in the price of tea across the world.

In the US, there are only approximately 25 years of phosphorus reserve. China reserved 3.3 billion metric tons of phosphate rock in 2018 and imposed an export tariff of 135% on phosphate rock to secure domestic supply.

The scarcity of natural resources around the world is expected to be a potential threat to tea plantations, escalating the competition for resources, and driving the price of tea in the years to come. Furthermore, tea processing is also energy-intensive and the different stages involved in tea production such as withering, drying, grading, and packaging require as much as 4–18 kWh of energy per kg of tea processed. In comparison, approximately 6.3 kWh of energy is required to produce a kilogram of steel. Such heavy consumption of energy in tea processing is further exacerbated by frequent outages and unreliable power supply in a number of tea-producing countries such as India and several African nations.

However, declining costs and the growing adoption of renewable energy are providing opportunities to players in the global tea market. Renewable energy sources are localized and act as a sustainable energy supply for tea estates, thereby balancing the above concerns in the global tea market.