2010: The Teabag Comes Of Age

By Andrew Gadsden

February 1st, 2010
Posted in Intl Tea Trade, Tea History

Tea is reaching the end of a 50-year cycle of decline and the new decade will mark the moment when everything changed.

Let me explain.

The rise of convenience which brought the teabag to total domination of the tea market was excellent news for everyone. The consumer was able to buy tea of good quality in the local shop, and to make a cup of tea with no mess and no bother. Tea sales were buoyant and the trade was happy.

Once upon a time tea was a luxury product that few could afford. Tea caddies were fitted with locks to prevent the tea being stolen. Quality was high and consumers were connoisseurs.

But when the teabag became overwhelmingly the preferred tea product, the supermarkets began to put pressure on prices. Tea was a staple along with bread and milk, and a leading candidate for loss leader promotions.

The downward price pressure fed through the supply chain, and then back up to the supermarkets again. In order to compete and supply the big customers, tea packers had to lower the quality of their blends, and tea factories and plantations had to produce more low quality tea. A vicious circle had emerged such that prices and quality were constantly being forced downwards.

Everyone was a loser here. The tea gardens and factories made very little money – even today there are many gardens that have simply been mothballed awaiting some brave or foolish company to take them over. Tea processors and packers shaved their margins again and again – and many still went out of business. Last but not least, the consumer ended up drinking tea of lower and lower quality, without even realising because it was happening gradually and was universal.

I believe that this regrettable process is about to go into reverse. The reason is that, in my opinion, a step change occurred in global tea prices during Summer 2009.

We all know that tea prices rose significantly last year, and many of you will be familiar with the reasons – poor harvests, droughts, floods, war, civil unrest, strikes, etc together with inexorably rising demand particularly from the Middle East and Russia.

Phill Hogan has written here about tea prices settling in recent weeks. Certain countries, such as Tanzania, are forecasting increased production in 2010. This is welcome news. But I regard this as a temporary fluctuation around a newly-established mean and not the reversing of the trend to higher prices. My view is that high tea prices are here to stay and that a fundamental change has occurred in the market.

We should see this as Good News. Tea prices have been too low for too long. It has not been possible for plantations to make a profit, and the tight margins at every stage of the value chain has meant poor quality for the consumer. Higher prices will mean better quality. Premium brands will shine, and, importantly, standard brands will have the flexibility to make quality a point of difference rather than being forced to compete on price alone. Speciality Tea, served in smart new teabars as well as in better local cafes, will flourish whilst coffee chains will continue to lose their lustre.

The price rise is a game-changing event. Let’s make 2010 the year that normal everyday tea took its first steps towards a return to the sort of quality that was commonplace 50 years ago, and celebrate the fact that the UK’s national drink can start having some flavour and character again.

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Contact Andrew Gadsden at andrew@allabouttea.co.uk

Read other articles by Andrew Gadsden