ECONOMICS

Economics

Economics

Part A

Q1: Structure and Operation of Global Tea Market

Ans: The Asian region produces a varied range ofteas and this, together with a reputation in theinternational markets for high quality, has resultedin her enjoying a share of every import-ing marketin the world. Africa and South America alsoproduce tea. Huge populations of Asia, the BritishIsles, Middle Eastern countries, Africa, and all thecountries of the former Soviet Union, take teathroughout the day (www.teauction.com).Tea is a beverage made by steeping leavesin boiling water. The common tea plant is theevergreen shrub Camellia sinensis. There areseveral varieties of this species of plant, a wellknownone being the Indian Assam tea (C.sinensis var. assamica Kitamura).Traditionally, tea is prepared from its driedyoung leaves and leaf buds. Although China iscredited with introducing tea to the world, theevergreen tea plant is native to Southern China,North India, Myanmar and Cambodia.Low-grown teas are produced from 0 to600 m., mid-grown from 600 to 1,200 m, whilethe high-grown teas are cultivated between 1,200-2,000 m. The mid-grown and the high-grown insome areas can be divided into 'western' and'eastern' according to the location of the estates (www.journal.au.edu).

The global tea industry is largely dominated by India - the largest producer and consumer of tea. India is followed by China, Sri Lanka, Kenya and Indonesia in the production hierarchy of countries. The tea industry is peculiar: the soil characteristics, the climate and the rainfall determine the character of the tea and its taste. Tea affects the taste buds; therefore, it is difficult to replace a particular variety with a substitute. This explains why certain types are favored by certain countries : for example, the CIS countries favour Indian and Sri Lankan teas. UK and Pakistan favour Kenyan teas (www.teauction.com).

India accounts for 30 per cent of world's production. While Sri Lanka, Kenya and Indonesia are the other leading producers; their combined production is lower than that of India. What makes India an interesting object of study is that its size is no millstone around its neck; its production growth between 2006 and 2008 at 5.63 per cent was way ahead of the increase in world production of one per cent only.

Next to water, tea is the world's most consumed drink.

Canadians drink almost 9 billion cups of tea each year.

In 2007, the per capita consumption of tea in Canada was 61.4 litres. That equates to 270 cups for each Canadian.

In terms of Litres, Regular still dominates but Specialty Tea is gaining share of the category and driving growth. The dramatic growth in Specialty is fuelled primarily by Green Tea which increased almost 20% versus last year.

In 2007, the Canadian tea market was worth about $388 million.

Approximate provincial breakdowns:

Ontario $161 Million

Quebec $ 57.5 Million

Maritimes $ 25 Million

Man + Sask $ 30 Million

Alberta $ 59 Million

BC $ 55 Million (www.journal.au.edu)

Specialty tea ($92,567,911) now outpaces regular tea ($88,826,995) sales in dollar volume.

At the National and regional level, the Total Tea category has experienced strong growth versus the previous year, which is being driven by Iced Tea Mixes as well as RTD ...