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China Spells It “Opportuni-tea”

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Markets still enamored with coffee would do well to start reading their tea leaves.

Hong Kong International Tea FairWith the opening of the first Hong Kong International Tea Fair on August 13, new opportunities emerged for trade and investment in the multi-billion-dollar international tea industry.

For countries like the Philippines that are not even a blip on the global tea radar, the delicious brew presents a nascent industry that can no longer be ignored.

Just as China accounts for a fifth of the world’s population, so does it account for a fifth of the tea traded worldwide. China’s tea exports hit US$682 million last year.

Gateway Hong Kong, meanwhile, although posting more modest numbers (US$49 million in imports, US$15 million in exports) is undoubtedly Asia’s largest tea consumer, per-capita, with each person consuming a whopping 1.3 kilograms yearly.

At a breakfast meeting with the overseas press, Raymond Yip said, “Our consumption is more than twice the world’s average of 543 grams.” Yip is assistant executive director for fair organizer Hong Kong Trade Development Council (HKTDC).

This inaugural Tea Fair gathered 259 exhibitors from 17 nations and regions. As expected, exhibitors from the Chinese mainland made up the lion’s share with 177 exhibitors. Taiwan and Sri Lanka came in far seconds at eight booths each, with other countries making up the difference.

Kenya, while only being represented by three exhibitors, announced that it had not only topped 200 million kilograms in annual tea production but was also exporting 95% of that total.

Brewing Crisis For traders worldwide, tea represented one of the best investments amid the late-2008 global financial turmoil. The Hong Kong tea trade, for instance, posted a 10% increase in imports last year and a remarkable hike of 31% in exports, according to HKTDC executive director Fred Lam. Compared to its total 2008 export growth of 5.1%, the numbers are impressive.

The true acid test, however, will take place in the coming months. Hong Kong represents a microcosm of the Asian financial environment, posting a drop of 17.2% in exports for the first six months of the year. After a 10.6% growth in 2008 retail sales, a drop of 4.4% was registered as of May.

But judging by the intense atmosphere at the exhibit hall during the three-day fair, the global tea industry may not do too badly this year. For one thing, even the mainland Chinese market still presents a huge “opportunity for growth” as tea giant Kampery’s Simon Wong noted. Wong is also chairman of the Association of Coffee and Tea of Hong Kong, which offered free membership only for the duration of the Tea Fair.

The international market for the versatile brew is wide open. Not only are its variations infinite, tea is also versatile enough to generate followers in every market segment. Speaking at one of the fair’s many fora, Fook Ming Tong’s Thomas Lee noted, “You don’t have to target really expensive teas. You can be a McDonald’s or Coca-Cola [of the tea industry].

For a country like the Philippines, where coffee shops line the streets of the capital to the extent that two same-brand stores are located a stone’s throw from each other (One guess as to which coffee brand), investors would do well to wake up and smell the tea.

Print ed: 09/09

 

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