SUSTAINABLE COMMODITIES

MARKETPLACE SERIES 2019

Global Market Report: Tea

Vivek Voora, Steffany Bermúdez, Cristina Larrea
Series Editor: Sofia Baliño

Global Demand for Tea Is Growing Despite China, Sri Lanka and Kenya, which account for half
Sustainability Challenges of the world’s tea production, the majority of tea is
produced by smallholder farmers.7,8 Production is
Tea, a dried leaf–infused beverage derived from the
concentred in a few countries, with the top seven
leaves of a small shrub originally from China, has
growing countries accounting for 90 per cent of the
become the world’s second most popular beverage after
global tea supply in 2015.9
water, with 3 billion cups consumed every day across
the world.1,2 In 2017, total tea production accounted The largest tea-exporting countries in 2017 were China
for 5.98 million tonnes, of which approximately 35 per (USD 1.6 billion), Sri Lanka (USD 1.5 billion) and
cent was exported, worth USD 8 billion.3,4,13 That same Kenya (USD 1.4 billion), while the largest importing
year, the sector had a retail value of approximately countries were Pakistan (USD 550 million), Russia
USD 50 billion.5,6 Tea was grown in 48 countries (USD 525 million) and the United States (USD
in 2016, including 12 Low Human Development 487 million).10,11 A significant amount of tea is also
Countries (LHDCs). Tea production employs 13 consumed domestically. For instance, the amount of tea
million people, 9 million of whom are smallholder consumed in China, India and Turkey in 2015 was more
farmers, while the remainder work in tea estates; in than in all other tea-consuming nations combined.9

Standard-Compliant Tea Accounted for At Least 19.4% of Total Tea Production in 2016
Figure 1. Global tea production trend, 2008–2016.44

6,000,000

5,500,000

5,000,000
Metric Tonnes

VSS Compliant

4,500,000 Potentially
VSS Compliant
Conventional
4,000,000

3,500,000

3,000,000
2008 2009 2010 2011 2012 2013 2014 2015 2016

Note:VSS-compliant production volumes refer to tea produced in compliance with one or more VSSs. Conventional production volumes do not comply with any existing
VSS. Production volumes that are defined as potentially VSS-compliant cannot be definitively listed in either category with the data currently available.
How Much Tea is Certified by Each Standard? the market was made up of tea compliant with Voluntary
Sustainability Standards (VSS), versus 2.4 per cent in
Figure 2. Standard-compliant tea production
2008. However, only 6.6 per cent of tea production is
volumes in 2016.44
potentially VSS-compliant, thus leaving 74 per cent of
tea as conventional.

According to the FAO and a number of market research

Rainforest Alliance companies, the tea sector is expected to grow at a
1,084,910 MT compound annual growth rate (CAGR) of about 4 to
5.5 per cent from 2017 to 2024 and is projected to reach
USD 73 billion in retail value by 2024.15–19

Despite this positive projection, the tea industry

faces important challenges that are unique to the
Fairtrade International sector. Access to tea-processing facilities is essential
for tea estates and smallholder tea farms to remain
253,870 MT
viable, as picked leaves need to be processed within
6 hours. Therefore, international tea manufacturers
have established their processing plants close to the
UTZ Certified fields, which has created a vertically integrated value
119,642 MT chain. In fact, the tea supply chain is controlled by
a small number of companies, which has resulted
in a high level of vertical and horizontal integration:
Organic approximately 85 per cent of tea is sold by a few
87,830 MT multinational companies, and 20 per cent of the
global market is controlled by the three largest tea
companies.12,20 Consequently, it is necessary to
Global tea supply growth outpaced demand growth in establish a more equitable wealth distribution across
2016 and 2017 at rates of 4.4 per cent and 4.3 per cent, tea supply chains to improve the sustainability of
respectively, resulting in a surplus of approximately the sector. Furthermore, 70 per cent of global tea
200,000 tonnes for both years.4,12,13 The global supply– production is sold via auctions through anonymous
demand balance of tea closed in 2018 with a small transactions, in which intermediaries can easily switch
surplus and this trend is projected to continue until between suppliers, pushing down prices and reducing
2020.12,13 As tea-producing countries are also the margins for farmers.12 Tea cultivation areas are also
largest consumers of tea, production and consumption geographically limited, as tea is a sensitive crop
are strongly correlated.14 The Food and Agriculture that requires specific growing conditions to thrive.15
Organization of the United Nations (FAO) reports a Climate change is also expected to affect temperature
balanced production and consumption growth of about and rainfall patterns, which can significantly impact
4.4 per cent between 2007 and 2016.14 yields.21 Tea estates are already reporting heavier rains
and longer dry seasons leading to increased soil erosion
The sector is projected to experience continued growth
and further use of fertilizers, pesticides and irrigation
due to increasing demand primarily from Asian and
to maintain productivity.21 Additional challenges
Pacific countries, particularly those experiencing
facing the tea sector include forced and child labour,
increasing incomes; a growing clientele among young
which are still rampant; poor tea plantation working
urban consumers; interest in the health benefits of
conditions; low wages; and pesticide residues in the
drinking tea; and the expansion of new products and
final product.15,22–24
flavourings, such as ready-to-drink tea, premium tea,
and herbal and fruit fusions.15–19 In addition, demand
for green tea is expected to outpace demand for black
tea.4,12,19 The considerable expansion of sustainable tea
products is also worth noting. In 2016, 19.4 per cent of
Demand for More Sustainably Produced Tea Is
Growing and Could Help Address the Sector’s LIVELIHOODS
Challenges Over 13 million people employed in tea production

Voluntary Sustainability StandardsA (VSS) have been 9 million smallholder farmers

used in the tea sector for almost 40 years to address 70% of global production comes from 8 million
smallholder farmers in Asia and Africa
the various challenges facing the sector and to provide
tea consumers with more sustainable options.25 VSS-
compliant tea is produced to meet consumer preferences
MARKET VALUE
while aiming to maintain the sector’s long-term
Over USD 2 Billion VSS-compliant tea
sustainability by requiring agricultural practices that
based on 2016 tea producer prices
enable climate resilience, prevent soil erosion, lower
pesticide use, increase profitability for smallholders, and
improve workers’ conditions, such as providing the right CAGR 2008–2016
to collective bargaining and access to sanitation and
Conventional production is up by 0.71%
clean drinking water.26 while VSS production is up by 35%

Demand for more sustainable tea historically came VSS production in LHDC Tanzania is up by 79%
from outside producing countries, primarily from
Europe and North America. Tea producers with the
resources to become VSS-compliant saw an opportunity TEA PRODUCTION IN LHDCS
to access these potentially lucrative export markets 5% of total tea produced
while being able to fall back on the growing domestic 12% of VSS-compliant tea produced
demand.15,26 Considering their significance in meeting based on 2016 data
global demand for more sustainable tea, VSSs have had
an important role in improving the working conditions
of tea workers and the profitability of smallholders.26
VSSs aim to create a virtuous cycle where demand for VSS-compliant tea comes from Africa (Kenya, Malawi,
more sustainable tea results in better conditions for the Rwanda) and Asia (India, Turkey, Indonesia).
producers and environments that support its production,
On the demand side, several important corporate
which, in turn, should lead to greater investment in a
sustainable sourcing commitments drive the demand
more sustainable and profitable sector for producers.
for VSS-compliant tea. In 2017, the five largest tea-
On the supply side, VSS-compliant tea has grown consuming companies purchased more than 1.2 million
significantly since the first tea plantation was certified tonnes of tea, at least 900,000 tonnes of which were
organic in 1983.25 From 2008 to 2016, VSS-compliant VSS-compliant. Based on the sourcing commitments
tea experienced a CAGR of about 35 per cent, of these five companies and current tea-sourcing
accounting for at least 19 per cent of tea production information, an additional 245,000 tonnes of sustainable
overall. The Rainforest Alliance, Fairtrade, UTZ tea could be consumed by 2020. These leading buyers’
Certified and Organic are the main VSSs in the tea sourcing commitments are driven mainly by final
sector when ranked by production size. In 2016, 1.15 consumer preferences to purchase more sustainable
million tonnes of tea were VSS-compliant, and valued and healthy products.12 European and North American
at USD 2 billion.27,28 This value is derived from average countries are the main destinations of VSS-compliant
producer prices per country, as reported by the FAO, tea,29 and they are expected to continue being the major
which were then applied to the volume of VSS-compliant consumers of sustainable tea in the coming years, and
tea produced by each country.27,28 The majority of will likely develop increased demand as consumers

A
The United Nations Forum on Sustainability Standards (UNFSSs) defines VSSs as “standards specifying requirements that producers, traders, manufacturers,
retailers or service providers may be asked to meet, relating to a wide range of sustainability metrics, including respect for basic human rights, worker health and safety,
the environmental impacts of production, community relations, land use planning and others.” To review the purpose of various VSSs and the set of requirements
producers need to comply with under each scheme, please access State of Sustainability Initiatives Reviews in the following link: https://www.iisd.org/ssi/
Good Progress Toward Sourcing More Sustainable Tea6,31–43, 59-61
Figure 3. Major tea-consuming companies and their estimated sustainable sourcing volumes and
commitments**

In 2017, Tata Global Beverages' estimated

total tea consumption was 244,042 metric
tonnes, of which an estimated 61.51% was
sustainably sourced. They are close to
100% sustainable sourcing by 2022
reaching their goal of 100% by 2020.
James Finlay 65,700
Commitment to 100% sustainable sourcing by 2020

* McLeod Russel 115,000 61.51% Sustainable 38.49% Conventional

Consumption in 2016 Consumption in 2016

100% sustainable sourcing by 2020 244.042 MT

Tata Global Beverages 244,042

100% sustainable sourcing by 2020

Twinings 183,032
Sustainable Consumption
(MT, 2017)

100% sustainable sourcing by 2020 Conventional Consumption

(MT, 2017)
Unilever 610,106
Sustainable Sourcing
Commitment (% and year)
0

250,000

500,000

750,000
* data not found for sustainable
Metric Tonnes sourcing commitments

** consult methodology for estimating sourcing volumes at the end of the document

become more willing to pay more for standard- potential to develop demand for VSS-compliant tea over
compliant and premium tea.29,30 the next decade in the fastest-growing conventional
tea markets, which are projected to be in East Africa:
Despite this positive outlook, growing demand for
Rwanda, Uganda and Kenya have forecasted growth
VSS-compliant tea remains a challenge as the largest
of 9 per cent, 5 per cent and 4.4 per cent, respectively.
tea-producing countries are also the largest consumers,
and they tend toward consuming conventionally grown Consumers in these countries could develop tastes
options over more costly sustainable versions.4,15,20 This for more sustainable options over time, particularly in
situation influences the oversupply of VSS-compliant Kenya where almost all of the country’s tea production
tea, which is another formidable challenge, as it leads to is VSS-compliant, with an increasing interest from
certified tea being sold as conventional.4,26 Nevertheless, the government of this country to promote domestic
recent efforts have been made to develop national VSSs, consumption.45 VSS-compliant tea production needs
such as the Trustea standard in India and the Lestari to translate into equivalent sales if it is to continue
standard in Indonesia, which have grown significantly to expanding over time.26
400,000 tonnes of verified tea supporting livelihoods for
350,000 workers and 40,258 smallholders.42–44 Increasing VSS-Compliant Tea Production
by Focusing on the Top Three Tea-Producing
Demand for VSS-compliant tea is expected to continue
Asian Countries
growing in some of the largest producing countries,
such as China, India, Indonesia and Sri Lanka, with the Going forward, there is an opportunity to increase
growing middle classes developing a taste for specialty VSS-compliant tea production. Demand for more
and more sustainable tea.15,29 Furthermore, there is sustainable tea is expanding, primarily in Europe and
Tea-Growing Regions of the World
Figure 4. Distribution of tea production in the top 15 tea-producing countries in 2016

China
Bangladesh
Turkey

Japan
Iran

Thailand
India

Viet Nam
Kenya

Indonesia
Uganda
Burundi

Myanmar
Sri Lanka

(Burma)
Argentina

Significant Producer HDI Conventional Production 1,000,000

tonnes
Low High Harvest Area Potentially VSS Compliant 500,000
Medium Very High VSS Compliant 0
Prevalent VSS-Compliant Area

Sources: see endnotes 13, 56, 57

Download high resolution version of the map at https://www.iisd.org/sites/default/files/publications/ssi-global-market-map-tea.pdf

North America, which could potentially balance the of Kenya’s tea production (approximately 99 per cent) is
existing oversupply.12,26,28,46 Consumption of organic already VSS-compliant. Other tea-producing countries
tea is also expected to grow in the Asian-Pacific region such as Vietnam, Turkey and Myanmar also offer good
due to a rise in consumer preferences for more natural prospects for increased sustainable tea production.
products.30,47 To realize this potential, the industry must
Another important consideration in assessing
address the above-mentioned challenges, including
opportunities for expanding VSS-compliant tea
more equitable wealth distribution across supply chains,
production is the human development level of tea-
increased profitability for smallholders, better labour
conditions and wages for tea workers, and improved producing countries, as measured by the Human
resilience to climate change impacts on yields. Development Index (HDI). Out of 48 tea-growing
countries in 2016, 12 were LHDCs according to the
As tea cultivation is confined to specific places around HDI, and 6 of them produced VSS-compliant tea
the world that offer suitable growing conditions, the (Burundi, Ethiopia, Malawi, Rwanda, Uganda and
greatest potential for expanding VSS-compliant tea lies Tanzania). These LHDCs accounted for approximately
in existing producing countries, especially considering
5 per cent of the total tea grown in 2016 and were
their total tea output and the current presence of VSSs.
responsible for 12 per cent of the total VSS-compliant
China, India and Sri Lanka currently account for almost
tea produced worldwide that year.
70 per cent of total global tea production but only 26
per cent of total VSS-compliant tea production (2, 16 According to our analysis, some of these LHDCs show
and 15 per cent, respectively), indicating that there are promising signs of growth in VSS-compliant production.
opportunities for expansion.48 In contrast, and despite For instance, between 2008 and 2016, VSS-compliant
being the third-largest producer in the world, almost all tea production in Tanzania increased at a CAGR of
approximately 79 per cent to almost 27,000 tonnes, If properly implemented as part of broader sustainable
and five additional LHDCs started producing VSS- development strategies, the expansion of VSS-compliant tea
compliant tea during this same time period. The largest production in LHDCs could result in important sustainable
VSS-compliant production volumes from LHDCs came development benefits via improved agricultural practices
from Rainforest Alliance, Fairtrade, UTZ Certified that enable climate resilience and better working conditions
and Organic in 2016. VSSs have also been shown to for tea workers, and could potentially contribute to improved
support more sustainable tea production compared profitability for workers and smallholders. The expansion
to conventionally grown tea in some contexts. For of VSSs can also lead to positive development outcomes in
instance, certified tea farmers and workers earned 5.3
non-LHDCs where tea workers and smallholders continue to
million Euros in Fairtrade premiums in 2017, and
experience poverty.
almost all Rainforest Alliance–certified tea plantations
in Kenya were found to provide their workers with clean In terms of the opportunities to expand VSS-compliant
drinking water while a little more than 50 per cent of tea production in LHDCs and maximize their potential
conventional tea plantations do not.49,50 to deliver sustainable development outcomes, the

South-South Trade Dominated Tea Flows in 2016

Figure 5. Trade flows of the largest tea-producing countries in 2016, in tonnes

China
324,793 [26.06%]
Africa & Middle East
474,322 [38.06%]

India
233,297 [18.72%]

Asia
232,962 [21.10%]

Kenya
Europe
402,179 [32.27%]
212,100 [17.02%]

Latin America &

the Caribbean
10,985 [0.88%]
North America
48,687 [3.91%]
Sri Lanka Oceania
278,987 [22.39%] 11,495 [0.92%]

Turkey South Asia

6,969 [0.56%] 225,460 [18.09%]

Sources: see endnotes 13, 58

These five countries represent 79 percent of total tea production in 2016. The percentage in brackets for each country represents the proportion of the total volume of green
and black tea exported in 2016 by these countries. The percentage in brackets for each region represents the proportion of the total volume of green and black tea imported
in 2016, from the five countries.
countries that show the most potential for growth estates and plantations around the world, particularly in
in light of their share of total tea production, the emerging economies, where more lucrative employment
presence of VSSs and their HDI value are Burundi opportunities can be found.52–54
and Uganda, followed by Mozambique, Tanzania and
Clearly, VSSs must ensure that their interventions
Papua New Guinea, according to our analysis based
lead to a better tea sector where these sustainability
on 2016 figures. For the most part, VSS-compliant tea
challenges are addressed. Expanding VSS-compliant tea
production is new in many LHDCs and its potential
production in LHDCs and the largest tea-producing
benefits are likely yet to be felt. The potential support
countries, China, India and Sri Lanka, offers the
that VSSs can bring in the form of training, extension
potential for tea to become a crop that empowers
services and access to markets should assist both tea
producers, restores natural environments and enables
farmers and plantation workers to improve their living
resilient value chains.55
conditions. For instance, Fairtrade reports that their
350,000 participating tea farmers and workers across 12 Despite the efforts of VSSs in the tea sector, more
countries sold 12,100 tonnes of tea in 2016 and raised sustainable tea consumption and production will
approximately USD 7.5 million in premiums used to require dialogue and a determined and coordinated
pay for beneficial community projects such as access to approach among all tea supply chain stakeholders,
clean water, schools and health centres.49 Nevertheless, trade unions and the public sector to address some of
reports of instances where VSS requirements have these challenges. Examples of efforts to bring together
not been respected on certified tea plantations range stakeholders to grapple with challenges include
from exceeding maximum pesticide residues to Tea 2030 – Forum for the Future, the Ethical Tea
continued incidences of forced and child labour.22,24,51 Partnership and the Intergovernmental Group on Tea
Expanding sustainable tea production in LHDCs may supported by the FAO. Along with VSSs, these multi-
also become subject to more competition as labour stakeholder initiatives and efforts are crucial for the
shortages undermine the economic viability of tea sector to become sustainable in perpetuity.
FIGURE 3 NOTES: BRIEF EXPLANATION OF THE METHODOLOGY USED TO ESTIMATE SOURCING VOLUMES

Unilever: The total sourced volume of VSS-compliant tea for

the company at the global level was estimated as
• Source (*) volume total, 2017 (610,106 MT): This figure
follows:
was estimated by multiplying the company’s tea market
share (10% of world’s tea production in 2017)31 by the Subtract the 49 per cent of Tata Tea sold in India
global tea production in 2017 (6,101,060 MT) as reported as conventional (93,923 Mt) from the company’s
by the FAO Corporate Statistical Database (FAOSTAT).13 total sourced volume at the global level (India,
EMEA and CAA) in 2017 (244,042 Mt), as calculated
• Source volume standard-compliant certified, 2017
above, assuming that 100 per cent of Tetley tea
(494,185 MT): This figure was estimated by comparing
and other brands sold in EMEA and CAA is 100
the company’s report of purchasing 81 per cent VSS-
per cent sustainable, according to the company’s
compliant tea32 to the total sourcing volume in 2017.
reports.33
Tata Global Beverages (minimum values): James Finlay (sourcing volumes refer to their own plantations
• Source volume total, 2017 (244,042 MT): This figure was only, due to the absence of data)
estimated by multiplying the company’s tea market • Source volume total, 2017 (65,700 MT): This figure
share (4 per cent of the world’s tea production in 2010, was obtained by converting total tea production from
extrapolated to 2017)39 by the global tea production in the company’s own plantations in 2017,37 measured in
2017 (6,101,060 MT), as reported by FAOSTAT13 kilograms, into tonnes (65,700,000 kg/1,000).
• Source volume standard-compliant certified, 2017 • Source volume standard-compliant certified, 2017
(150,119 MT): This figure was obtained by estimating (65,700 MT): This figure was estimated by multiplying
the consumed volumes in 2017 as a proxy for sourcing the 100 per cent of VSS-compliant tea reported by the
volumes of VSS-compliant tea for the brands Tetley (sold company37 by the total produced volume in 2017.
in Europe, Middle East and Africa [EMEA] and Canada,
America and Australia [CAA] markets) and Tata Tea (sold Twinings
in India).33 Both brands represent approximately 75% of
total sales for the company in 2017.33 • Source volume total, 2017 (183,031 MT): This figure was
estimated by multiplying the company’s tea market
Tata Tea in India (total, 2017: 191,681 MT): This figure share (3 per cent of the world’s tea production in 2010,
was estimated by multiplying the brand’s market extrapolated to 2017)39 by the global tea production in
share in India (19.7% of India’s tea consumption)39 2017 (6,101,060 MT), as reported by FAOSTAT.13
by the total volume of tea consumed in India in 2017
(973,000 MT), as reported by Statista.41 • Source volume standard-compliant certified, 2017
(146,425 MT): This figure was estimated by multiplying
Tata Tea in India (VSS-compliant, 2017: 97,757.31 MT): the 80 per cent of VSS-compliant sourced tea reported
This figure was obtained by multiplying the 51 per by the company59 by the total purchased volume in 2017.
cent of VSS-compliant tea reported by the brand in
McLeod Russel
India,33 by the total tea sales volume estimated for
the brand in 2017. • Source volume total, 2017 (115,000 MT): This figure was
obtained by converting the total tea production from
Tetley (EMEA and CAA, total, 2017: 41,062 MT):
the company’s own plantations in 2017, measured in
This figure was estimated by converting 45 million
kilograms, into tonnes (115,000,000 kg/1,000).38
daily cups of Tetley tea consumed around the world,
as reported by the company,34 into the number of • Source volume standard-compliant certified, 2017
cups consumed annually. The resulting amount was (92,000 MT): This figure was estimated by multiplying
converted into tonnes using the ratio of 2.5 grams of the 80 per cent of VSS-compliant sourced inputs
tea/cup60 and 1 tonne = 1,000,000 grams (including tea) reported by the company38 by the total
produced volume in 2017.
Tetley (EMEA and CAA, VSS-compliant, 2017: 41,062
MT): This figure was estimated by assuming that (*): Source volume can refer to: produce, purchase or use volume
100 per cent of Tetley tea consumed in 2017 was of tea depending on where the company stands in the value
VSS-compliant, since the company reported that chain.
100 per cent of their tea sold in EMEA and CAA
markets (in which all Tetley Tea is sold) was VSS-
compliant in 2017.33
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 The Sustainable Commodities Marketplace Series provides a market performance overview
and outlook for key agricultural commodities that comply with a number of voluntary
sustainability standards (VSSs), focusing on global sustainable consumption and production.
Each year, the series focuses on a different overarching theme, with individual reports for
that year devoted to providing a market update for a chosen commodity. These reports
are designed to be accessible and relevant for a range of audiences, including supply chain
decision makers, procurement officers, policy-makers and producers. The series builds on The
State of Sustainable Markets 2018: Statistics and Emerging Trends, a joint publication from
IISD, the International Trade Center (ITC), and the Research Institute of Organic Agriculture
(FiBL), which examines over a dozen sustainability standards for various commodities.

This Global Market Report analyzes recent trends in tea production, consumption, trade
flows, and other relevant areas. The report also emphasizes the potential for expanding VSS-
compliant production in Low Human Development Countries (LHDC), given factors such as
share of global tea production, VSS presence and Human Development Index (HDI) value. It
uses 2016 data across all three factors, given that this is the latest year with data available
for VSS-compliant tea when conducting the analysis. By comparing the growth rates and
patterns of standard-compliant versus conventional consumption and production of tea, this
report provides insights on how sustainable and conventional markets are performing at a
global level, along with highlighting which countries have the potential to produce more VSS-
compliant tea.

The State of Sustainability Initiatives (SSI) is an international transparency and capacity-

building project that aims to improve strategic planning and sustainable development
outcomes related to VSSs. It does so by providing in-depth, credible and needs-based
information on VSS characteristics, market performance and potential contributions to
addressing development challenges.

External Peer Reviewer: Sjoerd Panhuysen, HIVOS

©2019 The International Institute for Sustainable Development

Published by the International Institute for Sustainable Development. In collaboration with ITC and Fibl

Head Office
111 Lombard Avenue, Suite 325 Tel: +1 (204) 958-7700
Winnipeg, Manitoba Website: www.iisd.org
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With the support of the Swedish government

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