Low purchasing power, ignorance affecting tea demand
Though industry researchers have forecasted that tea consumption will grow in Nigeria by five percent annually from 2009 for almost 10 years, low purchasing power and ignorance of the health benefits is affecting tea sales.
Apart from the fact that there is currently a cash squeeze in the country, Patrick Inelo, chief executive, Noble Icon Nigeria Company notes that the cost of production has gone up even for locally produced teas because of the increasing cost of imported raw materials.
According to Inelo, whose company produces herbal teas locally, the prices of the food-grade tea bags and foil papers imported from Asian countries have increased due to the exchange rate.
“The major problem is the exchange rate of the dollar, the price of the materials are still the same in China, even the very large manufacturing companies producing beverage import most of these raw materials,” stated Inelo.
On reasons investors are not seizing the opportunity of producing these raw materials since they are in demand, Inelo says, “The cost of local production is very high. In Asian countries, manufacturers enjoy tax holidays, they can access loans at interest rate of 2.5 percent per annum for 10 years and three years moratorium. For example, an agro-based company in Nigeria wants a loan of N120 million to expand its production, the commercial bank is asking for interest rate of 28 percent per annum and wants collateral that is worth N150 million which can be liquidated in 48 hours.”
Speaking further, Inelo states that he has made a proposal to the Federal Ministry of Science and Technology for the Federal Government to launch an intervention fund of N200billion for the tea industry. He says that many Nigerians still do not know the immense health benefits of tea. Inelo adds that tea can address most of the health issues such as hypertension and diabetes that Nigerians have.
According to him, already, due to government regulations, hospitals in Ghana prescribe such herbal solutions as remedy to ailments when needed to reduce the use of chemical-based drugs.
Up until 2014, tea consumption in Nigeria has been growing by five percent annually since 2008 creating a bigger market not yet fully tapped by local investors and steady tapping of the opportunities by importers.
According to Euromonitor, an international research organisation, which studies markets by categories in countries, tea sales are growing steadily in Nigeria, due to an increase in the formal working culture, westernisation, health reasons and the marketing activities of domestic key players. These key players dominating the market are Unilever, producer of Lipton Yellow Label tea which had a share of 35 percent of the market in 2013, according to Euromonitor and Promasidor Nigeria Limited producing Top tea.
Imported teas especially those that are health-related such as anti-hypertension tea, anti-malaria tea, cough-sputum removing tea, and Moringa tea from Asian countries particularly China are also flooding the market. Fruit -flavoured teas mainly from the United States and Britain also have strong market share.
The market has also seen the entry of medium and small-sized indigenous producers of tea such as Moringa Herbal Tea by Noble Icon Nigeria Company and Master Tea by Ruchin Limited in the last five years.
OLUYINKA ALAWODE