Written by 6:50 pm Europe Economy

europe: Rising prices, rupee gain hurt tea exports to Europe, Japan

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

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

“Buyers from the EU and Japan are not keen to pay higher prices. So, the offtake is less. Moreover, the British pound and Japanese yen have weakened against the rupee, which too is impacting Indian tea exports to the UK and Japan,” Anshuman Kanoria, chairman of the Indian Tea Exporters Association, 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 10.33% and to the UK 2.46%.

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

However, buyers in newer markets like Iran have shown interest in Indian orthodox tea – loose-leaf tea, which is produced using traditional methods that involve plucking, withering, rolling, oxidation or fermentation and drying.

“Orthodox tea market is at an all-time high. The market is booming in Iran for Indian orthodox teas. Orthodox tea production too should be at an all-time high. Iran and the UAE together will exceed 54 million kg of tea exports from India,” said Mohit Agarwal, director, Asian Tea & Exports. “The Assam government is giving full support and it has increased orthodox subsidies to ₹10 per kg.”

India produces 100-120 million kg of orthodox tea annually.

Exporters are hopeful that shipments will increase to 225 million kg in 2022, as against 195 million kg in 2021.

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