Analysts are predicting an increase in tea prices due to a decrease in the collection of tea leaves, the main reason for which is the coronavirus. At the same time, a strong increase in consumer demand for tea is expected.
In the recent past, at the end of 2019, tea costs on the world market have decreased. In addition, the price was the lowest since 2016. The World Bank calculated this price based on offers from three auctions - in Colombo (Sri Lanka), in Mombasa (Kenya) and in Kolkata (India). The average price was $ 2.37 per kilogram, with Ceylon tea priced at $ 3.35 per kilogram, African tea at $ 2.11 per kilogram, and the lowest price for Indian tea at $ 1.64 per kilogram.
Such a sharp decline in tea prices is associated with the overproduction of tea products in 2018: the volume of global tea production and its consumption were 5.85 million tons and 5.61 million tons, respectively. The estimated surplus of tea products on the market was 240,000 tons or about 2%.
A classic market situation has arisen when supply exceeds demand and prices are low. However, market forecasts for the current year cannot be called classic. Indeed, analysts are proposing a continuation of the global oversupply of supply demand and a simultaneous rise in prices for tea products! "The market grimaced at the coronavirus"?
The risk of quarantine due to the coronavirus can lead to a lack of the most popular drink. Large tea producers are concerned about contracts with customers this year.
In the traditional Indian tea regions of Assam and Darjeeling, agricultural work was stopped before the harvest. A special feature of the noble Darjeeling tea drink is the collection of the first leaflets of premium early varieties that could not be collected. The lost first harvest is not critical for the consumers of the world tea market, since their annual production is around 10,000 tons, compared to almost 6 million tons of world consumption. However, a large number of gourmet tea cultures disappeared and the hard work of the tea plantation workers disappeared.
Another example of the negative impact of quarantine due to a pandemic is a disruption in logistics. Many manufacturers and exporters cannot transport tea products. Connection not only between countries, but also in the regions. There is often a situation in which manufacturers of tea raw materials cannot deliver tea leaves that have already been collected to the processing plant.
In addition, it seems an astonishing prognosis that quarantine restrictions help keep demand for tea stable. Since then, homemade tea has made more than 80% of shoppers and during quarantine and more. Since the modern tea trend is closely linked to the consumption of natural and environmentally friendly products, the demand for tea will only increase.
A non-standardized situation is therefore forecast on the tea market, namely: the supply will remain practically at the same level, the demand will increase and the price of tea will increase.