Tea import and export in Ukraine

Yana Yantselovska3rd-year student, 7th group

Faculty of agrarian management

Kyiv - 2013

PART 1.THEORETICAL ASPECTS

OF THE MARKET

Economical characteristics of Ukraine

•Ukraine has a normal economical potential. Important branches include industry and agriculture, both of which form the major part of the national pension rises.

•Ukraine as an independent country meets all requirements of economical development which is supported not only by its natural resources but also by its great geographical position - lying on the trade junction.

Economical characteristics of Ukraine•Ukrainian industry is very complex and

contains all diverse branches characteristic for modern industry.

•Agriculture is in the reform stage at this time.

•Ukraine has a good developed network of all kinds of transportation.

About tea in the world

•Tea is one of the oldest and the world's most popular beverages if not to take water into account. And perhaps it is the best thirst quencher. The birthplace of tea is China. The word "tea", earlier "chaa", comes from the Chinese "ch’a" which means "young leaf".

About tea in the world

Today, tea is grown around 37 countries. The main producers are China, India, Kenya, and Sri Lanka. These four countries account for more than 50% of the total tea production. Although new strong players are emerging in this market: Indonesia, Vietnam and some African countries.

By type of tea plant three types of tea are distinguished:

•The Chinese species (Chinese, Japanese, Vietnamese, Indonesian, Georgian tea, etc.);

•Assamese species (India, Ceylon, Kenyan tea, etc.);

•Cambodian species (it is grown in parts of Indo-China)

Tea suppliers in UA

The main kinds of tea are black tea, green tea, mate and others. The main suppliers of black tea in Ukraine are Sri Lanka, India, Indonesia, of green tea – China and Sri Lanka, of mate – Argentina and Brazil.

Tea market structure in UA• In Ukraine, in the import structure for 2005-2010,

black tea accounts for about 84%. The share of green tea is about 16%. In the structure of exports for 2005-2010 there is a tendency of reduction of the share of black tea and the increase of share of green tea exports by 14%.

• From 2005 to 2010, the price for 1 metric ton of imported tea to the territory of Ukraine increased 2-fold, on average increasing by 15% per year. The largest surge of 35% was observed in 2009. While in 2010, the rise in prices was only 4%.

Tea consumption in the world•According to the Food and Agriculture

Organization of the United Nations (FAO), in 2011, the consumption of tea in the world increased to 3.85 million metric tons (growth rate was 4.8% compared with the data for the previous period), while production increased only by 1.2% – to 3.78 million metric tons.

Cunsumer preferences in UA•The most popular package is the

cardboard and filter bags. Moreover, in 2011, the volume of imported bagged tea in Ukraine significantly increased relative to previous years. (According to the British Standards Institute standard "BS 6008: Method for preparation of a liquor of tea," a bag must contain 2 grams of tea leaves to brew a single cup of tea (200 ml)).

PART 2.STATISTICS OF TEA

MARKETIN UKRAINE

Tea production in UA

•On the territory of Ukraine, tea is not grown. All the tea production in Ukraine is packing and packaging of the imported raw materials.

•From 2005 to 2010, the tea outputs in Ukraine nearly doubled.

Producers of tea in UA

In 2010, 18 producers of tea were present in the Ukrainian market. The largest producer is LLC EximTrade, which accounts for 30% of the total tea outputs in Ukraine in 2010.Second place goes to a joint Ukrainian-British Ahmad Tea Factory Ukraine, with a market share of 21%. The Ukrainian producers of tea with a significant market share include: JV LLC SoloMia, LLC Maisky Tea, LLC Dobrynia-Dar and JSC Monomakh.

Tea imports in UA

•Ukrainian tea market is totally dependent on imports. Generally, the trends in production resound the trends in imports, and are characterized by constant growth. The only exception was crisis after which the consumption of tea in 2009 was lower.

Tea import structure in UA• In all there are about 40 countries supplying

tea to Ukraine. The main share of the imports belongs to Sri Lanka. In 2010, the share of imports of tea from this country amounted to 34% of total shipments of tea to the territory of Ukraine. Second place goes to the Russian Federation. This country does not grow tea, but there is a large packing plant. Also, a significant proportion (5 to 11%) in the amount of tea imported to Ukraine belongs to China, India, USA and Vietnam.

Tea exports in UA• Ukraine is engaged in processing of imported

raw materials and supply of tea abroad. The share of exports is low and amounts to about 1% of the total imports of tea.

• Until 2008, there was a steady growth in exports volumes. The highest rate of increase (48%) was observed in 2008. Then, in 2009, a drop in exports by 60% followed, which is connected with the worldwide market trends of tea. In 2010, tea exports increased and in 2012 reached pre-crisis level.

Ukraine as tea exporter

•The main importers of tea are neighboring countries of Ukraine: Moldova, Russian Federation and Belarus. The main direction of tea exports from Ukraine is Moldova. The share of deliveries to Moldova in 2010 amounted to 73% of total exports volume. The second-largest importer of tea from the Ukraine is the Russian Federation (with a share of 21% of the total exports of tea of all kinds).

Tea consumption statistics in UA• Tea and coffee are interchangeable drinks and

have similar properties. In terms of consumption of these beverages in the regional context, Kyiv takes leadership confidently. Thus, the share of Kyiv in the total amount of tea consumption in Ukraine was 12% (analyzing the consumption of tea for 100 people of the population in the region). Second place goes to Kharkiv region with an index to 9% of total consumption. Third place is shared by Dnipropetrovsk and Odessa regions (7% of the total tea consumption in Ukraine).

The main players on the tea market in Ukraine:1st place•The biggest player in the tea market in

Ukraine is LLC Unilever Ukraine. LLC Unilever Ukraine is the office of transnational Anglo-Dutch Unilever company in Ukraine. In the tea market in Ukraine company is represented by the following brands: Lipton and Brooke Bond.

The main players on the tea market in Ukraine: 2nd place

• The next-largest company in Ukrainian tea market LLC EximTrade is presented by the trademarks Princess Nuri, Princess Java, Princess Kandi and Princess Gita. Also, company is the only representative in Ukraine of Greenfield and TESS premium British brands of tea. LLC EximTrade is the largest Ukrainian producer of tea.

The main players on the tea market in Ukraine: 3rd place•Another producer of tea in the

territory of Ukraine is a joint Ukrainian-British company Ahmad Tea Factory Ukraine. Its exclusive partner in Ukraine is a Ukrainian-Cypriot company Pyramid (distributor Ahmad Tea, Grace!, TET brands). Ahmad Tea is sold in more than 70 countries on five continents.

Other players on the tea market in Ukraine• LLC SoloMia, a member of the

Stoik Group of companies: Batik, Askold and Domashniy tea brands

• Russian company May (Maiskiy Tea, Lisma, CURTIS)

• OJSC Monomakh represents Monomakh, Tri Slona, and Fruits tea trademarks.

PART 3.ANALISYS AND PERSPECTIVES

OF TEA MARKET

World tea market in 2013• High quality tea is grown only in 4 countries: Sri

Lanka, India, Kenya and China. These countries form the price of tea in world markets.

• On the one hand, unfavorable weather conditions, political and economic instability in importing countries could provoke a tea market deficit, and hence increase of tea cost.

• On the other hand, the reduction of supply from one country is compensated by increased imports from other countries (Kenya, Sri Lanka) and allows new players to enter the world market with relative tea prices stability.

Ukrainian tea market in 2013•2013 is characterized by positive

dynamics of production and exports of tea.

•However, the volume of Ukrainian tea market in the past few years have changed quite a bit, which indicates the saturation of the market.

•Besides, the world's major brands are already represented in the Ukrainian market of tea.

Ukrainian tea market in 2013•The crisis has touched on the preferences

of Ukrainians towards cheaper and convenient tea bags, share of which tends to a constant increase (especially in 2011).

•As for the type of tea, the dominance of black tea over green tea remains.

Ukrainian tea market in 2013•Product lines of the five main players in

the tea market in Ukraine immediately react to that. Namely, in this segment there are more new products, including the premium segment.

•These include tea Curtis (May Company) and Grace! (Pyramid Company). Although today the tea bags are mainly included to economy and mid-price segment, in the future, this trend may change.

CONCLUSIONS

Consumption in Ukraine

Tea consumption in UA:•12% - Kyiv•9% - Kharkiv region•7% - Dnipropetrovsk and Odessa regions.Consumers prefer low-cost tea bags.

Import in Ukraine

•Main tea suppliers of UA are Sri Lanka (34%), Russian Federation, China, India, USA and Vietnam.

•Black tea in Ukraine is from Sri Lanka, India, Indonesia, green tea is from China and Sri Lanka, mate is from Argentina and Brazil.

•The share of black tea is about 84% and green tea is about 16%.

Export in Ukraine

Ukraine is engaged in processing of imported raw materials and supply of tea abroad. The main importers of tea are neighboring countries of Ukraine: •Moldova (73%)•Russian Federation (21%) •Belarus (4%).

Main players on the tea market in Ukraine• LLC Unilever Ukraine (Lipton and Brooke Bond)• LLC EximTrade (Princess Nuri/Java/ Kandi/Gita,

Greenfield and TESS)• Ahmad Tea Factory Ukraine (Ahmad Tea,

Grace!, TET)• LLC SoloMia (Batik, Askold and Domashniy

chai), May (Maiskiy Tea, Lisma, CURTIS)• OJSC Monomakh (Monomakh, Tri Slona, and

Fruits tea). Premium tea segment includes tea Curtis (May Company) and Grace! (Pyramid Company).

Sources of information:•State Statistics Committee of Ukraine

•IAA "Soyuz-Inform" data•Ukrainian business press  

THANK YOUFOR ATTENTION!