Tea

Economic Fact Sheet #8

August 1990

Department of Agricultural and Resource Economics

College of Tropical Agriculture and Human Resources
University of Hawaii

By
Trace V. Tipton, Kevin M. Yokoyama,
Kulavit Wanitprapha, and Stuart T. ~akamoto

CROP PROFILE • It takes about 40 man-hours to harvest one acre

of tea in the Assam region of India. Ideally,
SPECIES AND VARIETIES harvesting consists of plucking the youngest
shoots, i.e., the terminal bud and the first two
• Tea is the most popular beverage in the world. leaves, by hand, with hand shears, or mechani­
The drink is prepared from the leaves and buds cally. Hand harvesting results in the highest
of Camellia sinensis. The taxonomy of the dif­ quality, because workers are able to select only
ferent varieties is unclear. Two general types the youngest shoots.
are commonly recognized, however: China (C.
sinensis var. sinensis) and Assam (C. sinensis • The number of times per year that a plantation
var. assamica Mast.). is harvested varies according to factors such as
the variety of tea and climatic conditions. In
• Tea plants are highly heterogeneous, and there Japan there are usually four distinct harvests
have been many cross-pollinations between the each year, while in tropical areas there may be
China and Assam types. The term "jat" is used 30 or more rounds of harvesting.
by many tea growers to refer to the different
groups or types of tea. • The moisture content offresh tea leaves varies
from 74 percent to 82 percent. Therefore, 100 lb
• China varieties are slow-growing, dwarf trees ofnewly plucked tea leaves will yield 18-261b of
that are hardy and that grow in high altitudes. finished tea.
Assam varieties are less hardy than the China
teas but are faster growing, have larger leaves, • In 1988, the average yields of finished tea for
and provide higher yields. major tea producers Kenya, India, Indonesia,
Sri Lanka, and China were 1740 lblac, 1520 lb/
PRODUCTIVITY ac, 1420 lblac, 910 lb/ac, and 380 lb/ac, respec­
tively. Through selection and propagation work,
• Tea is grown in open fields or on terraced hill­ yields of more than 4000 lblac have been re­
sides; it requires at least 60 in. of rainfall per corded in Sri Lanka.
year, with no extended periods of dry weather.
The pla~t prefers a deep, well drained soil with USES AND PRODUCTS
a pH slightly on the acidic side (4.5 to 6.0).
Young plants are pruned to produce a spreading • Several tea products are derived from Camellia
shrub that will grow to a convenient harvesting sinensis; they differ by processingmethod. Black
height. tea is allowed to ferment, oolong is partially
fermented, and green tea is unfermented. Black
• Tea leaves can be first harvested three to four and oolong teas are withered and rolled to initi­
years after planting. The plant reaches matur­ ate fermentation, while green tea is first steamed
ity in nine to 10 years. Some China varieties of or pan-fried to destroy the enzymes responsible
tea have been known to have an economic life of for fermentation.
more than 100 years.
 -.-
. . -__~_~IU: __-'1 •
has potential as a substitute for olive oil in the
pharmaceutical and cosmetic industries.

The amount of caffeine in tea varies widely and

depends on the type of leaves brewed and the
I length oftime the tea is steeped. One 6-oz cup of
Withering Steaming and heating
I I black tea averages about 60 mg ofcaffeine, about
Rolling Rolling
1
half the amount in coffee.
I I
Fermenting Semi-fermenting

..
I I

.. Drying or firing Drying or firing

OOLONG TEA

Processing of tea
Drying or firing

•
WORLD SUPPLV AND DEMAND

SUPPLY
World tea production increased from 4.0 billion
lb in 1978 to a record high of5.5 billion lb in 1988.
• Black tea is dark in color and strong in taste, India (1.5 billion lb), China (1.2 billion lb), and
while green tea is light in color with a taste Sri Lanka (495 million lb) were the major tea
closer to that of fresh tea leaves. Oolong tea is producers, accounting for 58 percent of the total
intermediate in flavor between black and green production in 1988. Other major producers were
tea. Kenya (361 million lb), Indonesia (317 million
lb), Turkey (308 million lb), and Japan (211
• The two general grades oftea are leafgrades and million lb).
broken grades. Grade is determined by sifting
the leaves through various sized screens. Leaf • Tea prices have been highly volatile. The aver­
grades are larger than broken grades, and within age annual London auction price for tea in 1988
each are several subgrades. was 81.3 centsllb, considerably lower than in
1977 and 1984, when the average prices were
• The color and flavor of leaf grades tend to be $1.221lb and $1.57Ilb, respectively. Factors con­
drawn out more slowly than those of the broken tributing to high prices were expected demand
grades, which are used to produce a stronger and changes for tea, leading to speculative stockpil­
darker tea. Broken grades are also used in tea ing in 1977, an export ban by India in late 1983,
bag manufacturing. To obtain a distinctive tea and low levels of tea stocks in producing and
product, companies often blend 20 or more teas. consuming nations in various years.
Instant tea mixes are manufactured by extract­
ing soluble tea compounds from a tea brew and • Specialty tea includes flavored, blended, and tea
concentrating these into powdered form. grown in specific regions of the world known for
high quality. Prices for specialty tea can be
• Tea quality is determined by professional tast­ exceptionally high. For example, tea from an
ers. Among the many factors that influence the estate in Darjeeling, India, established a world
flavor and aroma are the particular variety of record price for tea at $95 per pound in 1987.
tea; soil and climatic conditions; speed ofgrowth
of the plant (slower growth is normally associ­
ated with high elevation and better quality); 6000

fineness of plucking (youngest leaves produce 5000

en
highest quality); and handling and manufactur­ -0
5o 4000
ing practices. Q..

'0 3000
en
• Byproducts such as caffeine, food colors, antioxi­ c:
~ 2000
dants, plant growth regulators, organic fertil­ ~
1000
izer, and animal feed can be made from tea
waste left from tea plantations and tea factories.
An oil can also be extracted from tea seeds that n 78 79 80 81 82 83 84 85 86 87 88
Year

World tea production

• There is no international agreement on export tea was the primary tea product imported (169.5
quantity or quality standards for tea. However, million lb at a Cost, Insurance, and Freight
a producers alliance (Inter-Governmental Group (CIF) value of$130.3 million) followed by green
on Tea) meets to review the world tea economy tea (18.5 million lb at a elF value of $13.3
and to discuss various issues pertaining to tea, million). Oolong tea is included with black tea,
such as future implementation of tea export but is only a small part of the total (less than 1
quality standards. percent in 1988).

DEMAND • The major suppliers of black tea to the United

States in 1989 were Argentina (22 percent ofthe
• The major producing countries of tea are also total), China (20 percent), Indonesia (16 per­
the major consumers. In 1988, India produced cent), Kenya (7 percent), and Sri Lanka (7 per­
nearly 1.5 billion Ib, two-thirds of which was cent). Green tea is supplied primarily by China
consumed domestically. China also consumes (55 percent), Argentina (7 percent), the Federal
most of the tea it produces. Republic of Germany (7 percent), Japan (7 per­
cent), and the Netherlands (6 percent).
• World tea imports increased from 1.9 billion Ib
in 1976 to 2.4 billion Ib in 1987. In 1987, the Average U.S. import prices for black and green tea of major
United Kingdom, the Soviet Union, Pakistan, suppliers, 1989.
and the United States accounted for 45 percent ..........................................

·-:·::-::::·BI.ickt.:·
of the total world tea imports. ............
. : :.:.>.:.:.:.:.:.:.:.:........ .. ... ,
.
:.:.:.::::::::::>:::::::::::::::::::::::::::::::::::::::::::- .
.

..::.. ••••:.. :.. •..•. '.' .'>CIFPrlce :.,....:....::.:-:.-..::::.. :CIF>Prlce

• In the past 50 years, total tea supplies have
"'::)¢9HIl~ry:" '. «:($(I~);'\ .::: :::;<)\P()~:~#y;<:: .. .>;($/11;»)::
nearly tripled. Among factors that have helped ::Arg,l'ltiriji/ ·:::<:()~44::-:::· :>\4rgf!litll'l~>":: ;::::'0.46
to avert a serious oversupply problem are large : .:.· • eljj6';·•. ·:· • • ·•·.· ·.·• . :.•.·• ;()~58; • • :.: :·. ·::.;;·;;;;\:.;91'116••••;••••••••••;:::::.:.:::::: .:::.·;.;.;·:.::.·Q.48
increases in consumption in the major produc­ .:::·lrl~961!$ta· . ... .:;:()~~$.' :::-:·;··.. :-:F=:a.g~ ..I'Il~I'1·y:· .··:::::;::::Q.67 ..
ing countries and substantial increases in im­
ports to such countries as the Soviet Union,
..~;;"l:IlQ .··.·/t~:«~:~~~dal1ds~:~g>
Pakistan, Egypt, Iran, and Iraq.
• Importers in the United States buy tea in the
500
11 1978 til 1982 [ ] 1987 producing country or in London or Amsterdam
450
400 through auctions or direct negotiation. Uker's
350 International Tea & Coffee Buyers Guide Direc­
300
250
tory lists tea importers, packers, and associa­
200 tions in the United States. Among the large
150
100
packers are Thomas J. Lipton, Inc.; Tetley Inc.;
50 The Nestle Co. ;The Great Atlantic & Pacific Tea
0..-................... Company; Jewel Companies, Inc.; The Kroger
U.K. U.S.S.R. Pakistan U.S.A. Egypt Iran Iraq
Country
Co.; Salada Foods, Inc.; and Wm. B. Reily & Co.
Major importers of tea
• Annual per capita consumption of tea in the
United States was estimated at 7.3 gal during
SELECTED MARKETS 1988. This is considerably lower than soft drinks
(46.0 gal), coffee (25.0 gal) and beer (23.7 gal),
THE UNITED STATES but slightly higher than bottled water (6.4 gal)
and juices (6.8 gal).
• Commercial production of tea is limited in the
United States. However, the Charleston Tea • About 80 percent of tea consumed in the United
Plantation in South Carolina produced and me­ States is in the form of iced tea, while in other
chanically harvested 30 acres oftea in 1988. The countries tea is consumed primarily as a hot
tea is marketed on the U.S. East Coast as a beverage. Therefore, in the United States, other
novelty product under the name "American cold beverages are the primary competition.
Classic."
• The two major sales outlets for tea are the
• In 1989, the United States imported $127 mil­ supermarket and food service sectors. In 1989,
lion worth ofblack, oolong, and green tea. Black the combined sales of tea through these outlets
 was estimated at 177 million lb. Supermarkets • Consumers in the United Kingdom have changed
accounted for 132 million lb, or 75 percent ofthe their preference from loose tea to tea bags. In
total sales. 1976, loose tea composed about 58 percent of
total tea sales, while tea bags accounted for
• For 1988, estimates on sales ofvarious tea prod­ about 41 percent. By 1986, tea bags accounted
ucts through supermarkets are $300.1 million for 73 percent oftea sales, while sales ofloose tea
for tea bags, followed by $295.8 million for in­ declined to 26 percent.
stant and liquid tea, $30.2 million for decaf­
feinated tea, $25.2 million for loose and bulk tea, • Among the major manufacturers of tea in the
and $11.0 million for specialty tea. Sales of United Kingdom are Unilever Croydon, Lyons
decaffeinated tea and specialty tea were up from Tetley Ltd., Premier Brands Ltd., Co-operative
the previous year by 13.5 percent and 4.5 per­ Wholesale Society Inc., and Own Label.
cent, respectively.

• The Tea Council of the USA, Inc., New York, TEA IN HAWAII
consists of members from major tea-producing • Camellia sinensis was first introduced into Ha­
countries and leading tea-packing firms in the waii in 1887. In 1892, the Hawaiian Coffee and
United States. This organization promotes the Tea Co. had about five acres of tea in the Kona
sale and consumption oftea in the United States. district. The effort was eventually abandoned,
and the reasons remain unclear. High costs of
THE UNITED KINGDOM production in Hawaii compared with costs in
other tea-producing regions appears to have
• The United Kingdom is the leading importer of been a major concern.
tea in the world. In 1932, the United Kingdom
accounted for nearly 60 percent of total world • Recently, some firms in Hawaii have shown
imports. The import share had decreased to interest in tea production. For example, McBryde
about 17 percent by 1988, but remains highest Sugar Co. (a subsidiary of Alexander and Bald­
among all countries. win). has planted tea in test plots. Mechanical
harvesting may be possible to avoid the rela­
• In 1988, the United Kingdom imported 422 tively high cost of manually harvesting tea.
million lb oftea. The major suppliers were Kenya
(47.3 percent), India (16.0 percent), Malawi (10.0 • In 1989, Hawaii imported 22,110 lb ofgreen tea
percent), Sri Lanka (6.8 percent), China (4.2 from Japan, at a CIF value of about $129,420.
percent), and Zimbabwe (3.8 percent). During the same year, 25,970 Ib of black and
oolong tea were also imported, at a CIF value of
• Tea accounts for about 45 percent of all bever­ about $43,130. Taiwan accounted for 52 percent
ages consumed daily in the country. Per capita of the volume imported.
consumption of tea in the United Kingdom was
estimated at 3.7 cups per day in 1986, considera­ • Ito-en Ltd., a large tea company in Japan, has
bly more than soft drinks (1.9 cups), coffee (1.7 formed a Honolulu firm to process canned oolong
cups), alcoholic beverages (1.3 cups), and milk tea in Hawaii. The teas used for this product are
(0.2 cup). organically grown in the Fujian province of
China.
• The value ofthe tea retail market has more than
doubled, from $349 million in 1976 to $811 • A Hawaii-produced tea would have difficulty
million in 1986. In the same period, the volume competing at commodity grade prices. Tea may
oftea sales declined more than 20 percent, from have more potential in Hawaii if marketed as a
388 million lb to 306 million lb. higher valued specialty product.

Reference to a company or product name does not imply approval or recommendation of the product by the College of Tropical Agriculture and
Human Resources, University of Hawaii.

Hawaii Agricultural Experiment Station, HITAHR, College ofTropical Agriculture and Human Resources, University ofHawaii at Manoa.
Noel P. Kefford, Director and Dean.

A list of reference sources for this fact sheet is available from the authors upon request.