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Review of Russian tea market in January-November of 2014

Author: Natalia Krylova, Analyst Information-Analytical Company “VVS”

Today tea is one of traditional hot drinks. People drink it in the morning for invigoration and in the evening to relax before sleep. People go to their friends for a cup of tea and conversation.

Russia started its own tea plantations in XIX century where today Azerbaijan and Krasnodar Territory are located. Later tea plantations were also started in Georgia.

Currently Russian tea industry includes mainly tea packing factories working with imported bulk tea. Only Krasnodar still has tea plantations.

During 11 months of 2014 production (packaging) of tea in Russia constituted 100.1 thousand tons in volume*, by 2.8% less than during the same period of 2013. About 60.6% of tea in Russia is packed in Northwestern Federal District where the company “Orimi Trade” LLC is located (Saint Petersburg, TM “Greenfield”, “TESS”, “Zhemchuzhina Nila (The Pearl of Nile)”, “Princess Gita”, “Princess Kandy”, “Princess Noori”, “Princess Java”, “Shah”). Almost 36.1% of tea was packed in Central FD. Southern FD packed 3.2% of tea in Russia and the rest 0.1% of production volume was shared between Privolzhsky FD and Ural FD. With consideration of bulk tea supplied to tea packing factories Russia imported 156.4 thousand tons of tea** during 11 months of 2014. In comparison to the same period of previous year import volume declined by 0.5%. Import is dominated by black tea (90.3% of import volume in January–November 2014); share of green tea constituted respectively 9.7%.

During 11 months of 2014 Russia imported 141.7 thousand tons of black tea, just by 52 tons more than a year before. Geography of places of origin of black tea imported to Russia is diverse: in 2014 Russia purchased tea produced in 55 countries. The leader among supplying countries was Sri Lanka with 32.2% of import volume in the category. In 2013 this country also was the leader but with a slightly larger share (34.3%). Second popular country of origin of black tea was India: 26.3% of import volume in the category against 25.3% in 2013. Kenya was the third popular country of origin (share in import volume increased during the review period from 12.8 to 16%). The leaders were followed by Vietnam (7.3%), Indonesia (5.8%) and UAE (4.4%).

The average import prices for black tea in 2014 were lower than a year before. Exclusion was seen only in January and November 2014 when the average import prices exceeded the level of 2013.

Volume of green tea import during 11 months of 2014 constituted 14.7 thousand tons, by 5.6% less than in January–November 2013; 45 countries supplied green tea to Russia. Green tea from China was the most popular in Russia: in 2014 China controlled 70.7% of import volume in the category. Second popular country of origin was Sri Lanka (11.4%). Vietnam with third large share (3.9%) was followed by Germany, Indonesia, Kenya and UAE with shares of 2.9 to 1.7%.

Dynamics of the average import prices for green tea was fluctuating during 2014 and was either above or below prices of 2013.

During 11 months of 2014 Russia exported 6.1 thousand tons of tea; export saw 23.2 year-to-year decline in volume. 88.6% of export volume was constituted by black tea and 11.4% — by green tea.

Export of black tea from Russia constituted 5.4 thousand tons in 11 months of 2014, by 22.9% less than a year before. Main partner country was Ukraine with 67.3% of black tea export in volume. About 8.5% of black tea was exported to Moldavia, about 4.8% — to Germany. All in all Russia exported black tea to 50 countries.

Export of green tea from Russia in 11 months of 2014 constituted 690 tons; export of this category saw 25.7% year-to-year decline. Russia supplied green tea mainly to Ukraine (39.6% o export volume in the category). About 13.6% of green tea was exported by Russia to Moldavia and about 7% — to Kyrgyzstan. All in all Russia exported green tea to 41 countries.

Retail prices for tea in Russia are growing now like the prices for other food categories. For instance, the average retail price for quality black tea increased from 428.9 rubles/kg in January 2014 to 482.0 rubles/kg in November 2014***. In this context it is quite possible that in short term perspective demand for cheaper tea varieties will be higher than for expensive. As a whole we shouldn’t expect a considerable decrease of consumers’ demand for such a popular drink as tea.

* Data of fira.ru for OKPD code “Green tea (unfermented), black tea (fermented), partially fermented tea in package size maximum 3 kg” (15.86.13).

** According to Customs Service of Russia, foreign trade with Customs Union countries not considered. Analysis of import and export for TN VED code 0902.

*** Source fira.ru.

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