The World Bank forecasts a 6 percent overall decline in commodity beverage prices globally as supply outpaces demand but specialty tea continues to defy economic gravity.

The World Bank’s annual Commodity Markets Review places tea, coffee, and cacao in a beverage category where coffee shows the greatest volatility. Tea has experienced very little price fluctuation after spiking in 2014. The average tea prices at auction were $2.64 per kilo in 2016, according to the World Bank. During that same period arabica coffee averaged $3.61 per kilo and cocoa $2.89. The average price for tea auctioned in April was $3.12 per kilo.


Rising labor expense and unpredictable weather are driving prices higher, according to economists.

Tea sold at auction in Colombo, Sri Lanka, continues to lead the world in pricing, averaging $420.90 per metric ton ($4.21 per kilo) for high-grown, according to the International Tea Committee. African teas sold in Mombasa averaged $2.39 with Malawi tea bringing $1.68 at the Limbe auction. Tea auctioned in Jakarta averaged $1.73 per kilo.

The World Bank forecasts an average auction price of $2.80 per kilo in 2017, rising to $2.81 in 2018, $2.83 in 2019 and $2.84 in 2020. In 2017, the global cost of agricultural raw materials (fertilizer etc.) is expected to rise 4 percent.

China Benchmarks

Pricing is much more favorable for growers in China where tea is not auctioned. A cold spring and intermittent rains caused prices to increase on lower volume this year and the cost of employing skilled pluckers is up.

According to a report in Sixth Tone “Five hundred grams of West Lake Long Jing tea, picked during the mid-March first harvest in eastern China’s Zhejiang province, wholesaled at between 1,800 and 2,500 yuan ($260 to $360) this year. After it is repackaged and sold to consumers, West Lake Long Jing will retail domestically at between $870 and $1,150 (6,000 and 8,000) yuan per 500 grams.”

“Even though there was a very early flush, the returning cold pushed harvests as late as two weeks,” explains Austin Hodge, founder of Tucson-based Seven Cups Fine Chinese Teas. “Our Bi Luo Chun producer let one third of his tea go unpicked because he was not willing to pay the price, just out of stubbornness, not economics.”

“One county in southwestern China’s Guizhou province faced a labor shortage of 60,000 tea pickers this year alone,” according to Sixth Tone. “Of course, this has led to higher wages within the industry, with workers in some areas of Zhejiang able to make as much as 180 yuan a day, with housing and meals provided. Labor costs now account for as much as 50 percent of the total cost of unprocessed tea.”

Western chain retailers such as DAVIDsTEA are still offering 2016 Long Jing at $85 for 500 grams. Montreal-based Camellia Sinensis sells 500 grams of organic Long Jing for $92. A pound (453 grams) of Long Jing sells for $119 on the Teavana website. At TeaSource in Minneapolis the price is $34.96 per pound. Many firms that include the harvest date for their teas have not received their first shipments. Tea Trekker’s Weng-Jia Shan Long Jing priced at $176 per pound is enroute. Now out of stock, Seven Cups sold last year’s Shi Feng Long Jing for $538.82 per 500 grams. The Da Fo Long Jing (Big Buddha Dragon Well) sells for $334.68.

The average price per kilo for Chinese green tea shipped to the U.S. is under $5. The average price paid in China for these teas is $100 per kilo

“In the general market over all the price is up,” says Hodge, “for us our prices are pretty much stable.”

African Slump

In 2016, the International Tea Committee (ITC) reported weak auction prices for African teas auctioned in Mombasa. Kenya-based Africa Tea Brokers reported a decline from $2.70 per kilo to an average $2.30 last year. Mombasa is the hub of Africa’s tea trade. Tea from Burundi, the Congo, Madagascar, Mozambique, Rwanda, Tanzania, and Uganda are sold in lots that averaged $2.39 per kilo last year. A clear hierarchy separates teas grown in Burundi, Kenya, Rwanda which earn around $2.50 per kilo from teas from other East African countries where the crush,tea,curl (CTC) grades are mainly used as filler.

In 2017, this pattern will change as Kenya encourages growers and cooperatives to sell their teas direct, a practice previously discouraged. The result is higher prices for teas like JusTea’s Kenyan Purple Leaf Tea (touted for its antioxidant content) and estate teas such as Kericho Gold, which is marketed online by the Maasai Market for $27.54 for 500 grams.

Prices topped $3.70 for the finer grades of black tea this week in Mombasa, reaching as high as $3.92 per kilo for the best teas due to shortages against firm demand. Kenya tea is essential in making popular grocery store brands including PG Tips, Lipton, Tetley, and Twining’s tea. During the period April 2016 through January, prices rose an average 13.5 percent due to shortages caused by a drought that continues.

Sources: International Tea Committee, World Bank, Sixth Tone

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