They posted articles entitled: China’s New Obsession: Coffee, and Infographic: The Coffee Industry. On the sidebar of each article is a big juicy banner ad reminding you that “every day, T. Rowe Price analysts are uncovering opportunities in the global economy.” Whatever could they be implying?
The real opportunity is for U.S. tea drinkers. Here’s why:
– While the U.S. is currently the largest market for coffee, it will soon be surpassed by Brazil.
– As for consumption per capita, the U.S. is not that big. In fact, Mintel market reports indicate more Americans are moving away from coffee to teas, waters, and other “healthier” alternatives.
The 2 reports also emphasize China. Starbucks is growing rapidly in the Middle Kingdom. Coffee is Western, modern, and probably most importantly, more convenient than tea.
These conditions create potentially wonderful, near-term opportunities for American tea drinkers
– If China moves more to coffee, its tea producers will be looking to replace lost domestic consumers.
– Many of the producers of good-to-excellent loose teas in China seem unable to effectively market their teas. They don’t know how to find new consumers, and are waiting for someone to find them.
– Many of the processors and laborers of tea are older. Few young people are staying in the rural tea areas to learn the skills of hand crafted tea.
The results? Get some good teas while you can.
– Tea processors will have to invest in machinery and marketing. They will raise prices until they recoup these costs.
– Higher salaries and improved living conditions will be required to entice young workers to stay and learn the tea biz. More cost.
– The Chinese consumer is unlikely to quickly revert to tea. Most 20 – 40 year olds in China don’t know their dan cong from their da hong pao.
– A trip through Beijing’s largest tea market area confirms this. Ma Lian Dao is full of vendors selling a few kinds of tea (e.g. dragonwell, da hong pao, pu’er, etc) of mediocre quality.
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