Kenya plans to roll out a strategy to win new tea markets and cut reliance on a few markets. The move is aimed at rescuing farmers from low prices.
Tea Board of Kenya (TBK) says Kenya’s tea exports are destined for over 70 markets but Pakistan accounts for more than a third (36 per cent) of the export volume.
TBK says 10 markets — Pakistan, Egypt, UK, UAE, Sudan, Russia, Yemen, Afghanistan, Kazakhstan and Saudi Arabia currently take up 85 per cent of Kenya’s tea exports, exposing farmers to concentration risk.
“One of the key contributory factors to lower earnings is over-reliance on a few export markets. Kenyan tea has a narrow market base as almost 85 per cent of the exports are destined to these 10 markets,” says TBK.
Tea is Kenya’s top foreign exchange earner after diaspora remittances and accounts for 26 per cent of the country’s value of exports.
But the average export price of tea had stagnated at between $2.50 and $3 (Sh285 and Sh342) per kilogramme between 2011 and 2018 before suffering a decline to average between $2 and $2.20 (Sh228 and Sh285) between 2019 and 2021.
“The main reason for lower earnings from tea exports by Kenya is less export value attributed to selling in bulk as opposed to value-added form,” says TBK.
TBK, an agency that regulates, develops and promotes the tea industry, has now opened the search for a consultant to develop a global market expansion strategy to address this.
The agency says priority markets will be US and Canada in North America and Germany and Poland in Europe.
In Asia, Kenya will be targeting Saudi Arabia, United Arab Emirates, Iran, Iraq, Turkey, Japan and China. Ghana and DRC Congo will be the priority in Africa.
“There is a need to develop a global market strategy for Kenyan tea, which will be responsible for driving promotional activities geared towards increasing the number of markets and enhancing the market share of Kenya tea in the global markets,” says TBK.
TBK wants to reduce risks associated with lower returns, over-reliance on a few markets and low awareness of Kenyan tea amongst the consumers. But Kenya will face challenges breaking into these new markets without adding value to the tea it exports.
Kenya’s tea market share, outside the top 10 markets, is low and mostly dominated by competitors mainly Sri Lanka, India and China.
While these markets mainly prefer the orthodox and green teas, the market penetration of the Kenyan orthodox and green teas is low.
Kenya produces over 450 million kilogrammes of tea annually, out of which 91 per cent is exported and nine per cent is consumed in the local market. The cut, tear and curl (CTC) is the most dominant method of tea processing in Kenya.
Depending on the fermentation process, CTC teas are categorised as black, oolong or green.
Kenya’s production of Oolong and Green teas is very small, with CTC black tea accounting for 99 per cent of the speciality teas.