My obsession with tea has been transcending from drinking just because it's a custom, to Kung Fu tea, to tea art, to history, until tonight, Chinese tea influence by market share.
I spent a few hours searching for tea related articles in the Chinese sites, which I usually hate because of all the flash, popping icons, annoying music and more colors than a rainbow designs. I found one article that's quite inspiring. China is #1 in tea growing land space, #2 in tea production, #3 in tea exporting, #4 in foreign money earning by tea trade. China is at an embarrassing situation where it's the largest tea country yet not the strongest in market share. The unknown author pointed out 5 mistakes China tea industry make in promoting/marketing tea globally.
1. Branding. European successfully brand and market a product that not a leave is grown on its soil, however China operations are still "mom and pop" operated. Corporate management is still at its youth in China. There isn't a financially strong enough corporation to brand its name globally. The Chinese government should play a major role in establishing a foundation for the country's sake, rather than numbers of small players trying to make a dot in the global market. Sort of like the Farmer's association here in America, uniting individual farms to organize/control production, implement central marketing strategy, gathering and transporting. "Got milk?", "Pork is the other white meat!"! Something to learn from eh.
2. Positioning. Since the 80's, Chinese tea faced strong competition of coffee, juice, and bottle water, all relatively young drinks comparing to thousands years old tradition. For over 4 thousand years, tea is an irreplaceable item in China, its position is determined by consumer, tradition and culture. We can achieve that globally, not as a fashionable trendy thing, but a necessity household item as well.
3. Art over business. Instead of promoting tea on a pedestal, it should be an everyday practical necessity, ie "English breakfast". Something that everyone enjoys on a daily basis without digging a whole in a wallet. Many middle class American can bare an inflated tea price, however $30/lb tea would deter a buyer away compare to a box of tea bags for a mere $1.99 at supermarkets. Successful marketing is conquer market share. I have never seen a Jasmine tea bag at even the finest non-Asian cuisine restaurants in the states where it's free and mandatory at neighborhood Chinese restaurants. Chinese promote tea as an art, a way of living, yet it's just an other consumer product in eyes of the westerners. India the #1 tea exporter exports Darjeeling to the top 10 tea merchants in the world, 99% low grade tea. It's not a refined "art" they are trading.
4. Sales over specialty/quality. Many producers produce according to market trend, something sells well in the market, within 6 months, 5000 more producers are making the same tea. For example, pu-erh is reviving in the last 10 years, you see all kinds fake products surfacing on the market. The mind set of Chinese business men are focusing on how much money one can make at this moment, rather than developing a consistent line of products and create an identity for itself.
5. Market planning/investing. China tea export business is still at shipment by shipment opportunistic mentality. What it takes is a marketing plan to promote tea as a necessity, not follow market trend, nor a trend either. More than 3 hundred years ago, Chinese tea became known to the western world, however Indian tea is the household item today. That's the power of marketing of laying a foundation for a product. It requires a tremendous amount of time and financing to conquer market share.
Living in America and having limited available tea to this side of the globe, I felt it's a noble thing to do to promote the fine "art" of tea, putting my efforts to spread the Chinese tea culture no matter how alone I will be at this task. After reading this article, it's more than just satisfy one's indulgence, chasing that untouchable supremacy. In order to reach that cultural supremacy, one must not forget the baby steps, start from the basic, build a foundation first before reaching the top of the mountain. There is a need to reestablish Chinese tea's global position, we can all contribute with what we can, our knowledge, our passion and our belief. One day I'd be jumping in joy to find even just a bag of Lung Jing or Mao Jian in that nice tea box handed in front of me at any restaurants, be it French, Italian, and even better, a basket full of tea bags at Dennny's!!! It'd be amazing to see that happening during my life time.
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A very nice piece. One comment. Your piece assumes China wishes to export more tea. But she doesn't and will probably to continue on her longterm trend of exporting less and less tea over the coming decades. China re-entered the world trade market in 1971 under our President Nixon by using her trade weapon of half the world market priced teas. China naturally won - it takes no talent to give away product and she grabbed share away like it was going out of style from the origins that need to export like Ceylon. That was 35 years ago and now is now. She's essentially withdrawn her teas from the world export market as she has done throughout her centuries of tea production in order to support the domestic market demand. Others like Vietnam and Turkey have begun to replace her export tonnage. That spoken, China has begun to initiate some of the reforms you suggest but geared toward the internal market instead. She will probably begin holding her own weekly tea auctions within five years in order to acheieve some degree of price transparency and attractive branding in leaf, teabag and RTD has begun to occur already to serve the domestic demand. She is in fact now importing fine teas from top growing origins like Kenya, Ceylon and India in order to meet domestic demand for a quality cuppa. China will always have an export home for her rubbish, however, and that will continue to be the US now as it's been for centuries.
Thanks for sharing!
I am assuming China's wish to export more tea in the future. Base on the increasing volume of tea exported overseas in recent years, also China's aggressive export policy for other goods, it's not a difficult to foresee the increasing trend. You are right about the domestic demands for tea within China, due to increasing number of middle class households, fine tea is reviving in mainland. This trend is also spreading amount Chinese overseas. The increasing export volume is to meet the demands of this group also a group of health conscious westerners which belong to the high income bunch. Again it's not a household everyday item, it’s a “niche” market.
China has a lot of land potential for producing, currently supply is larger than demand both domestically and internationally even at it's #2 producing capacity. Because it's not in every supermarket like Ceylon and Darjeeling. Unlike centuries ago, buyers flopped to China for tea because it's the only place to get it. Increasing competition allows buyers the accessibility where China is still waiting for buyers to come to them. Distinguishing itself from the "rubbish" market has hurt China's competitiveness. While most American's are not tea drinkers, they must be educated to begin with rubbish tea in order to tweak their interest for higher grade tea. Skipping a step will slow down the effort to promote tea in art form or not.
imen, I agree completely with all of your points about the Chinese "art" of tea, the rapid growth of an internal middle class and the ever larger expatriate population overseas demanding a wider range of top quality blackteas (versus their traditional passion strictly for greens). The expansion of land usage to plant out new teas in a world market that shows a downward spiral in composite tea prices is a very politically charged issue in every major tea producing nation. All the major growing origins including a large contingent of the tea experts from China held a meeting in Nairobi last month, under the aegis of the ISO. The goal of the forum was how the industry must halt the production of rubbish teas to the world export markets and concentrate on making quality over quantity. Everyone in the trade agrees this is a desperately needed initiative - the only difference amongst the top producing nations is how exactly to implement this change, based on varying internal economic realities. Everyone agrees that the producers absolutely must start getting a better price for their quality teas and they must get rubbish teas off the world export markets. We already have an ISO quality standard for blackteas that sets the minimum quality level permissable in international trade; next step, we must establish the same for greenteas. Increasing consumer demand for a smaller weight of better teas is essential to the continued health and vibrancy of the trade. This goal means different things in different producing states. For example, the world's largest tea exporter Kenya has already actioned this initiative by establishing structures to increase internal demand and attracting desperately capital to invest in bumping up the proportion of the far most profitable added-value (as opposed to bulk) teas on the export markets in order to match the weights of added-value already being exported by Ceylon (currently about 50% of her crop) and by India (33%). Ceylon for example has long disallowed by law the export of rubbish bulk teas at the same time that she has become the world's largest exporter of added-value teas. Does Ceylon or any other producing nation "throw out" its rubbish bulk teas? Absolutely not. These goods which still have the benefit of high tea solids content post-extraction are used in the production of soluable, decaff and RTD teas for export, the specific market segment that's most rapidly growing globally. It's an expensive high technology proposition to invest in soluable, decaff and RTD production and so far, only Ceylon and India have been able to afford these technologies. So, for the other producing nations, the question is how to attract sufficient capital to invest in such technologies - they will in time. Because the US has traditionally led the world tea market in exposing consumers and creating demand for such new high technology created tea, she has also traditionally been the largest buyer of rubbish teas. Add in the huge demand of one specific buyer - WalMarts - for cheap teas to go into their teabags, and you've got a snapshot of the American tea import picture. Can we get as powerful a global tea retailer as WalMarts to voluntarily raise their tea quality standard? Not likely - everyone in the trade has tried and failed at this effort . But the global consumer can only be fooled so long by WalMarts' deep discount pricing policy - she knows that the food quality of non-branded or off-branded products she buys there tastes terrible - and in fact, she has already begun her own quality revolution at the retail POP. Training the consumer to appreciate and pay the going market rate for quality teas is a tricky wicket and we're getting there slowly but surely. Any tea professional the world over agrees that it takes no talent to sell quality tea because the great teas sell themselves. But when you've got a market intermediary with the global ecopolitical strength of a WalMarts, it becomes a tea industry challenge to show the uneducated consumer what quality tea even tastes like. Meanwhile, at the major origins, you've got continued tea labour agitation to secure a better wage. Their success in turn will decide if the rural economies in these countries will thrive under tea. If the unions fail, the rural tea worker will continue to leave the industry and move to the large cities looking for alternate employment. This scenario itself puts upward pressure on tea prices. As I say and as you are hoping for, the day is coming when we shall see the tea consumer outright reject rubbish bulk tea blends - it's just not happening fast enough to suit anyone's taste.
Some economist say Walmart might hurt US and global economy in a long run. I agree whole heartily.
Slowly but surely, we can do our best to introduce the world of wonderful tea one person at a time. :)
Very nicely written.
China is now officially the top tea producer in the world, not #2.
Branding / positioning: You've hit on some great points. These are things the Indian tea industry is struggling with as well. Sri Lanka seems to be doing the best job at marketing through the efforts of companies like Dilmah tea. In fact, I've seen Dilmah tea concept stores in places as far flung as Krakow and Bangkok.
The main source of future growth in the Indian and Chinese tea industry is going to be in the specialty tea segment, which promises higher margins for their tea. And in order to grow this segment, China and India have to do a better job of understanding the tastes and preferences of their customers, primarily in the west.
Another minor point. A lot of the "Darjeeling" tea sold in markets worldwide is not actually pure Darjeeling. Uncrupulous marketers everywhere have simply labeled their teas "Darjeeling" because the name holds some weight.
A timely post.
Thank you for sharing! I don't want to claim credit for the market analysis. My knowledge is not comprehensive enough to come up with such conclusion. I merely explain and extended a little with my 2 cents.
Until now, my emphasis is limited to Chinese tea, which is already overwhelming for me. Although I have tried tea from other regions, such as Japan, India, Sri Lanka and a little bit of Africa, the type of tea that I had access to without costing my an arm or a leg turn out to be not so good. I guess I am some what bias, Chinese tea has a very large and special spot in my heart. :)
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