Tea turns a new leaf in Middle East

Health conscious consumers across the GCC are increasingly turning to tea as an alternative to coffee and carbonated soft drinks.

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By  Roger Field Published  April 9, 2006

|~|Tea200.jpg|~|Rajeev Samarasinghe, director, Empire.|~|Tea is first thought to have become a popular drink after dried leaves blew into the cup of Chinese Emperor Shen Nung in 2737 BC. The leaves diffused in the hot water, creating a drink that apparently enchanted the Emperor. Some 4,300 years later, tea continues to gain a wider audience and in recent years has experienced strong retail growth in many countries. The Middle East is no exception, with sales in GCC countries growing by about 3% in 2004, reaching a value of US $281 million in 2005, according to analysts ACNielsen. And with this level of growth, tea companies in the region are keen to exploit growing awareness of the drink’s key selling points, such as its health benefits. Fazal Khan, category manager for foods and beverages at Unilever Arabia, which owns Lipton, the UAE’s best selling tea brand, estimates that growth in the tea sector is even stronger than 3%. He puts the figure closer to 5%, and is convinced that the drink’s reputation for being healthy is playing a key role in this growth. “Because of health issues, tea sales are strong,” Khan said. “In terms of share of growth the three main beverages are tea, water and the third, which is gaining ground, is juices. Growth of tea is mainly due to the rise in population and people have now started associating tea with health so it can be said to be a healthier drink than it was earlier thought of.” Khan also points to the demographics of the region. Indeed, local people and many expatriates across the Middle East, but particularly the UAE, are part of a culture that tends to favour tea over other drinks such as coffee. “The Middle East is a tea culture, unlike the coffee culture of the West. Local people, as well as a large number of expatriates from the sub-continent, India, Pakistan, Bangladesh, and a lot of the British people, are all from big tea cultures,” he said. In the GCC, sales of regular black tea can be split into three categories; bags, loose tea in packets, and loose tea in tins. Of these, tea bags are by far the biggest seller in terms of value, accounting for some 59% of the market, compared with 40% for packets and 1% for tins, according to ACNielsen. The tea bag market is dominated by Unilever’s Lipton brand, which is widely thought to have a market share of more than 80% in the GCC. Unilever also has the biggest share of loose-leaf tea sales in the GCC, with its Brooke Bond range. Despite this, other brand owners remain hopeful that they can increase their market share in the mainstream tea sector. For example, Dubai-based food producer and distribution company, Modern General Trading, is hoping to increase Tetley tea’s share of the market in the UAE, according to Saeed Ahmed, sales manager at Modern General Trading. The company originally launched Tetley in the UAE in the early 1990s, but experienced difficulties with sourcing after the Tetley company in the UK was acquired by another firm. This meant that Modern General Trading was no longer able to buy the tea directly from Tetley, making the product more expensive than it should be in the UAE. “Tetley is seen as among the best in the UK and US,” Ahmed said. “The brand has a market potential that needs to be tapped. Tetley could be a product that is able to take some market share from Lipton. In the past few years, we have been offered various brands of tea from countries including Sri Lanka and India, but our observation and experience tells us that many brands of tea were launched during this time and after a couple of years, they failed.” While Lipton looks set to retain its prime position in the GCC tea sector, the company is also keen to tap new trends in the market, such as the growing appeal of green tea, which is thought to account for about 3% of tea sales. To this end, Lipton has already captured about 50% of the green tea market since launching its own product just over a year ago. “We have gone in a big way for green tea recently and have had huge success on that one,” Khan said. “We have taken huge market share from our competitors. We are about 50%-plus nowadays. Green tea is by perception a healthier drink and is essentially a growing sector.” Green tea is not the only alternative type of tea that is making a play for a share of the speciality tea market. Other varieties, such as fruit teas, are also growing in popularity and are thought to account for about 1.5% to 2% of the market. But despite the sudden rise of this category, Khan thinks its growth will be limited. “It’s not growing very fast, but it is definitely growing,” he said. “I think it will grow by another 1% or so because it has got very limited special occasion usage. It is not the cup of tea you would like to have sitting in an office. Fruit teas are something that people drink on certain occasions.” Niche markets Despite the small size of the speciality tea sector, a number of producers and distributors think the sector will become increasingly lucrative. For example, Empire, a tea marketing company based in Sri Lanka, is hoping to tap an increasing market for premium quality tea across the GCC in 2006. The company’s products, which include a range of teas under the Hyson brand, have been available in the Middle East for the past five years, and the company is now looking to increase sales of its latest range; the Hyson Gourmet tea collection. “We have released a new product called Hyson Gourmet tea collection which has about six different flavours,” Rajeev Samarasinghe, director, Empire, told RNME. Flavours in the range include strawberry, apple and cinnamon. Some of the teas in the Hyson range contain flower pieces and this helps differentiate them from other brands in the market. Empire exports about one million kilograms of tea a month from Sri Lanka, 25% of which is sold in the Middle East. The company’s best market is Turkey, although selected lines also sell well in Lebanon, the UAE, Saudi Arabia and Iran. A further 65% of the company’s exports are sold in CIS countries. Samarasinghe is optimistic about Empire’s business in the Middle East and is confident that the company can continue to increase its presence in the region, not least through contacts made at Dubai’s recent Gulfood exhibition, where Hyson had a stand. Another distributor, Vahe Tuysuzian, CEO, Tea Markets, is building his Dubai-based company on speciality tea. “I think it’s starting to boom,” he said of the market. “Every day I am seeing newcomers in the market, mostly they are from Germany but recently some Chinese companies are also starting to introduce more speciality teas, like slimming tea, green tea and different flavours. I think the market is still immature but it’s now developing very rapidly.” One tea supplier Tuysuzian is working with is German agrcultural engineer, Marcus Hastenpflug, who is involved in a tea producing joint venture in Japan. Hastenpflug set up the joint venture with Mr Shimodozono, the director of a Japanese green tea company, in 1997. Almost a decade on, the joint venture, which produces tea under the brand name Keiko, has two green tea gardens in Japan. Hastenpflug, who owns 60% of the company, has his sights set firmly on Middle Eastern markets. “I think our green tea has a lot of potential in the Middle East. It’s very tasty and also it’s very healthy.” While green tea is already widely available in supermarkets across the Middle East, Hastenpflug said that his tea has some important differences that could make it popular in the region. “From our tea gardens in the south of Japan, we use coversheets for a special shaded method of tea growing,” he said. “It gives the same growing conditions as the wild tea plant, so it develops more of an aroma and is stronger in vitamin C than regular green tea.” While Keiko’s products, which include marzipan type sweets made from green tea, are more expensive than other green tea brands, Hastenpflug is confident there is a market for them in the Middle East. ||**||

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