Global Market Forecast
The tea segment total revenue was $214,761.67 million in 2019 and is expected to reach $230,328.9 million in 2020. The tea market is also expected to grow by 6.7% (CAGR from 2020-2023) annually. The revenue growth is expected to be decreasing slightly from year 2020 to 2023. The average revenue per capita was $29.14 in 2019 and will increase to $30.94 in 2020.
Globally, the tea industry is decreasing in revenue growth from 2019-2023. The average total revenue growth is between 6.6% to 7.4% from 2019 through 2023. The country with the highest tea revenue globally is generated in China. China’s tea revenue is expected to reach $92,951 million dollars in 2020. China’s tea industry would be best to partner with because they have the highest surplus.
According to World’s Top Exports, China, Kenya, and Sri Lanka were the largest tea exporters in 2018. China’s export was the largest with 23% of total tea exports, Kenya with 17.7% and Sri Lanka with 12.1%. The exports from China totaled approximately $1.8 billion US Dollars, Kenya with $1.4 billion and Sri Lanka with $942 million. China’s tea market has the highest surplus with the highest cash flow. Therefore, China would be the best pick as an exporter.
The top three tea importers in 2018 are Pakistan, Russia, and the United States. Pakistan imports totaled $571.3 million US Dollars, Russia with $497 million, and the United States with $487.3 million. Overall, Pakistan holds 7.7% of total tea imports, Russia with 6.7% imports, and the United States with 6.6% imports. Each of these countries has different tea exporters that import tea products into the markets. Selecting the best country to export/sell tea to would depend on the country’s largest tea import country.
Tea Trends in the United States between 2018-2019:
Traditional breakfast tea blends and black tea are leading in sales in the US tea industry and green tea is also starting to grow in demand. Over 87% of millennials drink tea and more than half Americans drink tea daily. Some of the trends are:
● Tea is known to have health benefits and it is currently a continuous trend in the United States. It is consumed to relieve stress, digestion problems, inflammation, etc.
● Matcha has been popular and is offered in many coffee and tea shops. It is the leading type of green tea sold in the tea market.
● Iced tea is more commonly consumed in the United States than hot tea. About 80% of Americans drink cold tea more than hot tea.
United States Market Analysis
In 2020, the United States’ tea revenue increased to $13,295.4 million dollars from $12,870.4 million dollars in 2019 and the average revenue per capita increased to $40.17 from $39.11 in 2019.
The United States’ tea revenue continues to grow over time. The revenue growth rate was 3.8% in 2019 and dropped to 3.3% in 2020. However, the revenue growth rate will increase to 4.2% in 2021 and is estimated to drop again to 3.7% in 2022. Overall, the revenue growth rate is fluctuating between 3.3% to 4.2%. The United States’ revenue growth rate will also decrease
Foreign Exchange Rates:
Due to uncertainty in the global markets, the US Dollar is projected maintain its strength as a safe haven in the near term. As a result, exports to the United States should remain strong, especially for products which come from countries with favorable exchange rates.
In 2019, tariffs on Chinese goods were increased to 15% and duties were imposed. This caused Chinese imports to be heavily taxed and the reason for the decrease in tea imports and exports. The United States was looking to import tea from other countries but still need imports of Chinese specialty tea.
In September 2019, duties were imposed on Chinese imports. Consumers were required to pay extra on Chinese imports. The product that was most affected by the tariffs and duties is the black tea packaged in tea bags. Black tea in teabags is a common product that the United States can get imports from other countries. However, China was not too concerned about the decrease in black tea exports because the United States still need imports of specialty tea that are native to China.
On February 14th, 2020, Chinese coffee and tea tariffs were lowered to 7.5%, which is half of the imposed tariff in 2019. This phase 1 agreement was signed on January 15th, 2020. The lowered tariffs are good for imports and exports between both countries; however, consumers are still affected by higher prices. The trade war could present opportunities for Non-Chinese tea exporters, as China is a large source for the US tea supply.
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