Europe: Higher prices and rupee gain hurt tea exports to Europe and Japan

India’s tea exports to the traditional markets of Europe and Japan have declined following an increase in tea prices and the appreciation of the Indian currency. The looming fear of a recession amid growing inflationary pressure is also making European buyers cautious about buying tea at higher prices.

But even though prices for good quality Indian tea have soared 40-50% over the past year, exporters are witnessing more demand from newer markets such as Turkey, Saudi Arabia and Iraq.

“Buyers from the EU and Japan are not willing to pay higher prices. Thus, the levy is less. Additionally, the British Pound and Japanese Yen have weakened against the Rupee, which is also impacting Indian tea exports to the UK and Japan,” Anshuman Kanoria, Chairman of the Indian Association tea exporters, told ET.

According to the Tea Board, exports to Japan fell 10.71% year-on-year in the first five months of 2022, to Germany by 10.33% and to the UK by 2.46%.

The picture for the coming months will be clearer once export figures for the June-August period are known, Kanoria said.

However, buyers from newer markets like Iran have shown interest in Indian Orthodox tea – loose leaf tea, which is produced using traditional methods that involve picking, withering, rolling, oxidizing or fermentation and drying.

“The Orthodox tea market is at an all-time high. The market is booming in Iran for Indian Orthodox teas. Orthodox tea production is also expected to hit an all-time high. Iran and the United Arab Emirates will together exceed 54 million kg of tea exports from India,” said Mohit Agarwal, Director, Asian Tea & Exports. “The government of Assam is giving full support and they have increased the Orthodox subsidies to ₹10 per kg.”

India produces 100 to 120 million kg of Orthodox tea per year.

Exporters expect shipments to increase to 225 million kg in 2022 from 195 million kg in 2021.