The tea market is experiencing unprecedented shifts in supply and demand due to COVID-19. “What COVID has done is accelerate our existing plans to grow out of grocery and into e-commerce. But we are more concerned now than ever about our inventory,” says Raj Vable, CEO of Young Mountain Tea. Vable sources directly from tea estates in India and Nepal. “Due to our direct-trade model, we have information on what is happening at the tea estates and can monitor the situation closely in a way that others with longer supply chains aren’t able to.”
Vable has been in regular contact with his supplier Indi Khanna, founder of The Tea Studio in southern India and a 45 year industry veteran. India is the world’s second largest producer of tea. Some surmise that India’s exports are estimated to be hit by 6-7% this year, while industry veterans like Khanna estimate up to a 20% decline in exports. The lockdown in early March impacted access to India’s prized tea fields in the north, where two-thirds of its tea is grown.
Khanna explains that the timing was particularly impactful in Assam and Darjeeling. “Lockdown started just when the first flush was supposed to come. Pickers couldn’t access fields. Tea leaf growth is very rapid and the leaves need to be picked within 7 days.” Estates have been operating at 50% capacity in northern India where the prizes teas originate. Pickers simply could not access the tea trees for pruning in March during a 21 day total lockdown. Maria Uspenski, CEO of The Tea Spot, is worried. “We’ve been sitting on pins and needles awaiting the production of our Assam tea this spring. Tea manufacturing estates in India are more crowded. All of these factors have compromised tea production there. Reopening has been delayed several times now….In the meantime, the tea plants don’t wait, so I’m also concerned about how the quality and yield will be.”
The recent boom in e-commerce for specialty, high-end teas is impacting both producers and purveyors. While commodity tea has bulk stocks that it can fall back on to weather supply and demand shifts, specialty tea is often processed to order. For the “super premium specialty sector, there is a new fascination with freshness. The finest teas are produced on demand, in small quantities, couriered via Fedex FDX. By the time this fall rolls around, if tea cannot move out of India and Sri Lanka we will see severe shortages in U.S. grocery and food service,” says Mo Sardella of the G.S. Haly Company.
However, the shut down of food service and retail outlets could be offsetting the impact of increased e-commerce for tea producers like Khanna. He shares, “For the first time in over 45 years I really don’t know what’s coming, because we have never had a situation like this. For 3 months we have not received a single order for our specialty teas.”
Khanna is concerned that, “in India, high end tea businesses have not been able to restart [producing tea]. We do not produce and stock up these teas, they are picked and processed on demand. We haven’t seen any orders come in for our high end, specialty teas which come from small farmers. These teas are ordered and within a week we pick the leaves and process them. This has been halted for us.”
In addition, for those that are producing tea, the logistics have been particularly challenging.
Vable says, “All transport lines were completely shut down, with no trucks moving to ports. With the lockdown in March going into effect overnight, trucks were abandoned in the middle of the road, and truck drivers sought out ways to go home. People were walking hundreds if not thousands of miles from the cities to the countryside. The response to go back to the village which from a public health perspective is pretty terrifying. The northern state of Uttarakhand has just two coronavirus testing facilities, and our partners’ processing facilities are seven hours away from the nearest one.”
Some tea estates and processors are continuing to pay their workers. Khanna has committed to paying his staff for at least the next 6 months, however he worries about the longer-term impact of the crisis on the relationships he has relied on to build his business. “There is an impact, it will hit in one way or another. People say in the future we will do business by zoom. I need to sit with people, drink their tea, and talk to them about their children. My business is relationship-based.”