China is the home of tea and produces, consumes and exports more tea than any other country, which probably does not surprise most readers. The thought of selling tea to China could well be seen as folly as the country hardly lacks for domestically produced quality products. However, China imported $187 million of tea in 2019, up from $111 million in 2016.
Looking at the market from a different perspective, you may see that, as the world’s biggest tea consuming market with a long and storied culture of tea drinking, it’s actually not much of a surprise that Chinese people also appreciate high quality tea from all over the world. Many foreign brands have caught onto this fact and seen strong sales selling tea to China.
In recent years the market for tea has increased a lot, with overall retail sales increasing 15.3% from 2014-19. Higher incomes and increased health consciousness have been drivers of this tend, but there are four reasons in particular that have driven the growth in imported teas.
Reason 1: Brandification
Few Chinese tea companies have taken the form of a brand in the modern sense. Many of the big tea companies in China produce the same type of tea at a variety of different qualities from the five-star, premium stuff down to what basically amounts to the scrapings off the factory floor (you can guess what grade you get in your massmarket tea brands in Western supermarkets). The quality of the product depends on a wide variety of factors, but are all sold under the same brand name.
China doesn’t have a standard rating for tea quality and there are large differences between different types of tea sold at different quality levels from various brands. In such circumstances, it’s difficult to have a brand that reflects a certain image and difficult for consumers with low levels of knowledge to know what to buy. Rather than having different teas at various grades, most foreign brands will have consistent quality across their range, meaning less confusion for the consumer and allowing them to put their trust in a particular brand with a guarantee of quality.
Reason 2: Variety
China produces a huge variety of tea domestically, but it does not have a monopoly on either tea types or global tea culture. Young tea lovers in China are eager to expand their horizons beyond traditional teas from China and are looking for new types of teas and new types of experiences from around the world.
In recent years British tea brands have especially benefited from consumers’ quest for novel experiences on the back of cultural exports like Downton Abbey, which has helped popularise aspects of traditional upper class British culture in China. There are many hotels and pop ups throughout China offering the quintessential British afternoon tea experience, complete with ample opportunities for shareable photos.
Reason 3: Safety Concerns
The safety of food & drink is a key concern for Chinese consumers on account of a multitude of contamination scandals damaging consumers’ trust in local products – although this is rapidly changing. There is a perception among many consumers that imported products are safer than local ones; with tea this is because of the amount of pesticides used by local farmers.
As the table below shows, the level of various pesticide residues in food & drink products that is permissible in China is much greater than in Japan and the EU. Even if local tea doesn’t come anywhere near the upper range of that limit, the fact that a brand is sold in the EU acts as a guarantee of low levels of such pesticides. This in part explains why China imports from foreign tea brands that are grown in China; as it’s being sold overseas, its standards must be compliant with those stricter jurisdictions.
Reason 4: Convenience
The Chinese tea ceremony is famous around the world, but the traditions of Chinese tea drinking and how it is actually drunk in the 21st century are two different things. Drinking tea in the traditional Chinese style takes time, which busy professionals in China’s cities don’t necessarily have. Imported brands served in convenient formats suit the hectic lifestyles of China’s urban white-collar workers.
The younger generation are not so interested in being Chinese tea connoisseurs. Older people may have space and time to have a proper tea set and research the best local tea, but younger people generally just want to drink tea and are not so bothered about the culture surrounding it.
Competitors
There are various big and prestigious local tea brands, but overall the market is fragmented with hundreds of brands competing both nationally and regionally. Generally, consumers are more likely to differentiate local products by type of tea and region rather than by brand. Although Lipton is probably the most established foreign player, having been invested heavily in the market and been established there for many years, various foreign brands have also found a niche in the market.
China is a nation of tea lovers who are interested in trying quality products from around the world. Foreign brands can have success by providing a novel tea drinking experience to consumers and as a healthy and convenient way to China’s favourite drink.