Tea Biz
Tea Biz

Episode · 4 months ago

Tea News and Biz Insights - December 31, 2021

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HEAR THE HEADLINES – Omicron Cancels Restaurant Reservations | Tea Sales in Foodservice Continue to Decline, a TEAIN22 forecast | Sri Lanka Barters $5 Million a Month in Tea to Settle Iranian Oil Debt| GUEST – Research scientists Nigel Melican, founder Teacraft, and President of the European Speciality Tea Association | FEATURES – This week, Tea Biz travels to the Republic of Ireland to visit Teacraft founder and research scientist Nigel Melican. Melican explains the necessity of mechanical tea harvesting and describes an innovation in two-person harvesters that features a rotating head that simulates a “selective” pluck without shearing leaves. Tea Mechanization Must be Well Managed –Nigel Melican is a career research scientist, founder of Teacraft technology consultancy, and President of the European Speciality Tea Association. He has monitored advances in harvesting technology for more than 40 years, from crude shears and reciprocating blades to the next generation “selective” harvesters capable of discerning and plucking (not shearing) only those shoots consisting of two leaves and a bud. Virtually all crops are being mechanically harvested now, explains Melican. Given the cost and shortage of labor and the growing demand for tea, there’s no other way that you can make commodity tea commercially viable, says Melican.

The Tea Biz podcast delivers a recap of the week's major tea news headlines, with commentary and cultural trends. Hosted by Dan Bolton, Te Biz is the voice of origin for tea professionals and enthusiast's world. Plot think of us as a digital caravan of storytellers, bringing authentic, authoritative and exclusive stories to you weekly from the tea lands. Hello everyone. This week's headlines. Amicron cancels restaurant reservations, tea sales and food service continue to decline. The Tea in twenty two forecasts and Sri Lanka barders five million a month in tea to settle Iranian oil debt. More in a minute, but first this important message. What makes a Perfect Cup of Ceylon tea? The Perfect Cup is from the tea businesses that ensure the protection of all the children living within their tea estates. We Salute Kailani Valley, Tellawackie, Bogojan, Thalawa, Harana and Elyptia tea estates support Save the children as we want the fierce onset of a. The cron closed restaurants, cafes and tea shops in the waning hours of the second year of disruption of the once lucrative retail segment. Restaurant cancelations began rising in Europe, the US and Canada the week before Christmas and continued through New Year's Eve and the Netherlands, bars and restaurants, stores and schools were ordered closed through January. Fourteen, France, Italy, Spain and Portugal report infection rates forty percent greater than previous highs. Germany closed its nightclubs and soccer games. The UK's open for business despite infections that number a hundred thousand per day for several days last week, but residents there are cautious open tables. State of the industry report tracks seated diners, both walk INS and reservations in fourteen countries. Data indicated a recent high of four percent growth year over year during Thanksgiving week, but that has since dropped off a cliff globally to negative thirty percent. Year over two years, reservations and walk INS or down by sixty nine percent compared to two thousand and twenty. In the US, Walkins and reservations decline sixty seven percent compared to the same period last year. In the UK, Walk Ins and reservations declined eighty three percent in Canada, eighty two percent in Germany, ninety six percent for the week ending December twenty eight as cancelations grew to forty five percent in New York and Washington DC. Hospitality closures due to staff illnesses sword even before Almacron arrived, the survey of Threezero restaurant owners found that seventy seven percent did not have enough workers to meet demand. According to the National Restaurant Association, US Labor Department Data reported forty four thousand restaurant jobs filled in November, down from an average monthly total of two hundred thousand for the first seven months of the year. Donning will not disappear,...

...but during the past year wholesalers and local t shops supply hotels, tour stops and restaurants suffered repeated setbacks. Now, food inflation weighs heavily on the segment, compounded by increased labor cost and rising debt. Small businesses were forced to close, despite government funds to offset losses. Those still hanging on are raising menu prices thirty to fifty percent. As the almochron wave of infections crests at record highs this winter, the till has run dry. Tea Sales and food service continue to decline. This is the second of a dozen tea forecasts of the New Year. Two years of covid reset tea consumption at restaurants and cafes, initially by reinforcing traditional expectations of comfort and warmth, but evolving to permanently disrupt menu choices. Tea, except for bubble tea, largely missed out on the rapid growth of restaurant quality food delivery, herb side service and take out beverage service in downtown offices and inner city stands and food trucks selling teas and juice lost out to convenient, closer home locations. US Tea imports overall or down in volume, up in value. herbals are up in volume and up in value. In the US. Sales of herbal supplements top ten million for the first time, growing twenty five percent in mass market outlets. According to the American Botanical Council. Events driving trends that appeared in trenched in two thousand and twenty, including lockdowns and the pivot online, evolved in two thousand and twenty one. The pandemic still exerts a heavy hand but adaptations are meeting. The challenge will follows are three of five market moving food service developments shaping two thousand and twenty two. visit the tea Biz blog to discover the rest lockdowns that, for a time, all but eliminated twenty percent of the tea industries revenue continue to depress. Food Service sales globally. Staff from Tri Walla stands and Mumbai to five star restaurants on the river era shuttered their stores during the Alpha waves, shuttered in fear as Delta Ram paged, and now faced Nimble Almacron. As the third year of the pandemic begins, the National Restaurant Association estimated a hundred and Tenzero U as eating establishments closed in two thousand and twenty, eliminating two point five million jobs, as food service sales declined by two hundred and forty billion, below estimates, off twenty four percent your over year, making two thousand and twenty the worst year for restaurants in history. Two Thousand and twenty one had to be better, and it was for a time. The vaccines built confidence and at mid year the Nur a forecast at nineteen percent in food service sales increases to seven hundred and eighty nine billion dollars, but that didn't happen. Diners are eager to return when infections ease, but they already thin margins in the food service secment will worsen. In Two thousand and twenty two business inside tea wholesalers serving hotels, restaurants, cafes and coffee shops, we're in disbelief. In Two thousand and twenty is standing orders simply stopped. Packaged tea blenders meanwhile worked overtime to supply grocery outlets with stores strip...

...bear the top sellers plant based, functional beverages with a reputation for health and wellness, in other words, tea so date center, I'll tea overnight became the fastest moving of the fast moving consumer goods and stores through much of two thousand and twenty. In Two thousand and twenty one, the spotlight shifted to botanicals. Plant based, functional botanical beverages are definitely eating into te sales. But if your first concern is consumer well being, there is no gloom. Rishee tea is now Rishee tea and botanicals, with products sitting on the shelf next to bigelow botannicles and yogi herbal teas. The botanicals market was valued at ninety three point six billion in two thousand and twenty and will achieve six point six percent growth from two thousand and twenty one through two thousand and twenty six. According to modor intelligence, tea only vendors are at a disadvantage competing with broader plant based specialists like Martin Bauer, with a century of tea and botanicals expertise. In Two thousand and twenty. If you can't beat him, join them. botanicles drive innovation, additional drinking occasions and deliver health benefits. Relish the fact that virtually every botanical benefits with tea as its base business. Inside Germans in two thousand and twenty consumed an additional two leaders of tea to average seventy liters per capita. Most of that increase for some drinking botanicals. Pivot to online. Online sales remain a lifeline for t retailers, large and small. Confine consumers appreciate the convenience of doorstep delivery. Selections are global and variety. Delivery costs a reasonable and specialty vendors are driving tea discovery by educating consumers about producers and origin. Producers that launch direct to consumer brands brought in their base and earn far more per kilo than at auction. In Two thousand and twenty every imaginable beverage competed online, forcing marketers to spend a fortune on advertising to generate incremental sales. The standout product in two thousand and twenty one is curated subscription boxes that deliver seventy five to a thousand grams of tea, enough for fifteen to forty five cups, and sell for around twenty five to thirty five dollars per month. Exclusive tea clubs that offer rare and premium teas charge subscribers a hundred and fifty to three hundred dollars per year. Business inside course, sight research notes that growth of single channel online retailers, including market places, now trails their Omni Channel counterparts well. The e commerce boom should have been a heyday for digital first retailers, yet one of the most striking features of this trend has been the general failure of online only or online predominant retailers to seize the opportunity to outperform and the only channel in which they compete. Rights course, sight CEO Deborah Winswig store serve as an online billboard for a retailer's websites, while online only competitors are forced to pour money into advertising. She explains, there were never enough tea shops where US tea drinkers could taste...

...the selection of good teas. There are many fewer now, making tea discovery online but top priority. In Two thousand and twenty two, trelag has agreed to barter five million a month in tea with Iran to settle a long standing two hundred and fifty million oil debt. The barter circumventced, but does not violate US sanctions. The imposition of sanctions in two thousand and twelve restricted Iranian back transfers and stifle the once lively tea trade between the two countries. At that time, she lanca shipped about forty million kilos of tea to Iran. Totals have declined every year since. In two thousand and sixteen, s alaca still supplied about half the tea consumed by URN, one of the world's most valued team markets. Sales of Sri Lankan tea had declined to eighty five million by two thousand and twenty, down from nearly two hundred million in two at two thousand and thirteen, according to the UN contrade database. Business in sign the agreement did not sit well with tx borders, who will receive Sharlowkan rupees from their government instead of US dollars. But the decision conserves foreign currency during a fiscal crisis. For aloc is obligated to make six point nine billion in dead service payments. In Two thousand and twenty two, the country Central Bank has less than two billion in reserves and in sovereign credit rating was recently downgraded to CEC amid growing risk of default. Are Vinda and and thereman in Bengalururu reports on this week's tea auction prices. In yet deep price support for the week ending eighteen December twenty twenty one in markets this week. I'll get that continue to see good demand for all tea types. The Middle East was active Orthodox te when major blenders were active for dusty Dagi links relied on exporters and local buyers. Gohati also saw good demand, with major blend as active for leaf and dusty grads compared to sale forty nine. This week's are marginally lower prices and more outlots in the south, which he saw good demand, especially for CTC leaf. Eighty one percent was sold and up country buyers were active. Kun also low sale of Orthodox leaf at fifty eight percent. Exporters were selective. Of the up country buyers were active. The highlight of the week was the sale of one kilo of Manohuri gold from Assam at the Gohati auctions, selling for ninety nine thousand nine hundred ninety nine rupees. This is the highest price in the auctions the sea for a specialty tea and although man hurry gold is a favorite, yet after year for their unbeatable prices, it appears that they have beat in their earlier records. And now a word from our sponsor. Que Trade understands that a successful tea blend goes beyond the creative fusion of appearance, a Roma and flavor. Our Multi Award winning product development team is passionate about converting natural ingredients into sensory experiences that customers crave. Every recipe is formulated with a commercial backbone of dependable quality sourcing, with a pricing structure that supports us safe, regulated, profitable and scalable bland. Que Trade meets every brand's retail, food service and e commerce need. For more information, visit our website, que trade teascom. This week, Tea Biz travels to the Republic of Ireland to visit teacraft founder and research scientists Nigel Mellikan. Nigel explains the necessity of mechanical tea harvesting and describes an innovation in two man harvesters...

...that features a rotating head that simulates a selective pluck without sharing leaves. Nigel Mellikan as a career research scientists, founder of teacraft technology consultancy and president of the European Speciality Tea Association. He has monitored advances in harvesting technology for more than forty years, from crude shears and reciprocating blades to the next generation selective harvesters capable of discerning and plucking, not shearing, only those shoots consisting of two leaves and Bud. Virtually all agricultural crops are being mechanically harvested now, explains Mellikan, given the cost and shortage of labor in the growing demand for tea, there's no other way that you can make commodity tea commercially biable conserves. Nigel, why is making Nice Tea Harvesting Hugh to stay? I've looked at tea harvesting, mechanical harvesting, for the last forty years I've been in tea, primarily because I was parachuted into a mechanically harvest at the state in one thousand nine hundred and eighty, and it was mother one of the very few in the in the world, and I had knew nothing about tea at that time. I assumed that all the tea was mechanically harvested. It have it. Having completed my work on that on that assignment, they said stop off and shrank on the way home. This was out in pat new, the Guinny, where I was working. Initially they says stop and Trilanka and see some real te being harvested. Like I wonder. I couldn't really understand what they meant and then I realized that t was not and mechanically harvesting crop, like wheat, for instance. So I think now that mechanical harvesting has come into tea, it's certainly here to stay. There's no other way that that you can make it commercially viable anymore. And virtually all over called agriculture, cop crops are being mechanically harvested. Now, wheat, corn, cotton, even grapes being mechanically harvested machinery. It isn't brought into displace had labor. It's becoming in not because people, because the producers want to put people out of job. It's because of labor shortage. Labor shortage is due to urban drift in the bag. pluckers want their children to be doctors and teachers and accountants. They don't want them to go into be field labor, and rightly so. You know they they, as I have, for better for their children. There is a growing lack of labor and recognization is coming into plug that gap. Since two thousand and ten more than fifty percent of the world's population are city dwellers. There was a tipping point in two thousand and ten, and so rule dwelling is becoming less. Team mechanizations recognized as all of those drivers. And the other thing is I'm about the mechanization. Our annual global tea production is six point three million tons a year and that's doubled in twenty years. Twenty years ago it was three million tons and without mechanization you just can't get that sort of scale of production of certainly of Promoditt so that the simple choice is mechanization or empty teacups. That is, in a nut shell, that's why the kind of a harvesting is here to stay does make a nice tea. Harvesting necessarily mean lower quality tea. With the machines...

...that we have nowadays, it's difficult to get a level of harvest that you can get from the skilled pluck up. Having said that, the overall quality of tea being plucked is going down and there's been going down for the last forty years. The iconic too, leaves in the bud. You know, a hundred percent to leaf in the bud is a dream that some planters still have at the back of their mind, or I've sometimes in the trunk of their might. A hundred percent two leaves in the bud. Plucking is possible, but it's slow. It's slow and when you are paying only a dollar a day it was achievable. Now pluckers are still pretty poorly paid, but sal Anka, you're on of at five dollars a day. So you have to pluck faster harder, which means coarser. So hand plucking now is not achieving a hundred percent two leaves in the bud. It's achieving at best about eight percent two leaves in the bud. Typically it's achieving sixty percent. So most of the commodity t is being plucked to the about sixty percent two leaves in a bud and well managed in mechanical reciprocating blade. Mechanical harvesting machine can do about the same as a only and moderately skilled plucker. The chandical harvesting when it is properly managed and can achieve what what is expected of a plucker. Nowadays, mass production of commodity T, sort of tea bag tea, is predicated on the volume production. When you are volume producing you have fat corners and one of the corners of this cut is quality. Virtually all the commodity t goes the supermarkets. The supermarkets have a six price policy. They don't like to see prices of their loss leading commodity ranges going up. So Black Tea is the pricing is pretty inelastic. So when you have your as producers do, steadily increasing cost of production and no ability, or very little ability, to get an increased price their tea. Something has to give and they may trim the margin. They go for volume and volume means less quality. So that's what's happening out there with mechanical harvesting at the moment. Now you should be send saying, well, is it possible to achieve quality with a machine? It's possible to do better. Manufacturers have been innovating and refining to harvesters for a hundred years. Going forward. What additional improvements can we expect? Its first innovation in mechanical harvesting which has occurred in that in the lifetime with kindical harvesting, and that is the Australian machine, the Selective Mechanical Harvester, which is a machine which discriminates between the bud and the immature shoot and the mature shut and only cuts by. It doesn't cut, it plucks. It plucks the mature shoot and ignores the immature shoots. It's a totally new way of looking at to harvesting and it's it can do as well as a skilled plucker. What's a capital investment required to put that machine in the field? Until it gets into real production. It's will be expensive, but currently I think there's selling at round about for fifteen fifteen thousand US dollars for...

...one and a half feet a wide machine. Compared with the two men harvester that you're being used in India or in Africa, it's going to be about ten of fifteen times more expensive. By this machine it can the harvest of the quality which exceeds the average hand plucker. Yeah, and it can do it almost five times as fast and we're about one sixth of the Labor Post. Feel so even though it's an expensive investment, it works for speciality. Now I don't think it's going to work as well yet for commodity ty. A supermarket t blend doesn't justify that sort of level of plucking. Anyway, when I was a child I remember wheep being for foot high and now it's eighteen inches high. Right because the plant breeders got in on the act. The combine harvester manufacturer said a lot of this wheat is lodging. It's we can't get their cutter under it. So the breeders went on and did the short store. Not only was easier to harvest, but the short store meant that more of the plant's energy went into the ear rather than into the stalk. So it was a win win there and I think that the t Bush can be completely restructured the architecture of the Tea Bush. They going to bite the agnomist, all the plant husbandry men took a tall tree, twenty foot tree, and brought it down to a three foot Bush and got it to yield more because it's not it's wasting less energy on the wood of the tree and, of course, the deep roots as well. So yes, there will be improvements in the machines, there would be improvements in the Bush architecture and they will be improvements in the management. Intrigued by what you've heard in today's podcast, would you like to learn more from our global network of Tebas journalists and t experts? Remember to visit the t Biz website for more comprehensive coverage. That's wwwt Biz Biz dolcom. Thanks for listening for a well till next week.

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