Tea bag demand rises 5% annually, creates untapped opportunities

Tea consumption in Nigeria has been growing by 5 percent annually since 2008, creating a bigger market not yet fully tapped by local investors and steady tapping of the opportunities by importers.

Annual per capita consumption of tea in 2009 was 23 grams, with a population of 160 million, this amounted to 3.68 million kg. Per capita consumption of tea rose to 28 grams in 2013, with a population of 165 million, this amounted to total tea consumption of 4.62 million kg last year.

With consumption annual growth rate continuing at 5 percent in 2014, per capital tea consumption was about 29.3 grammes. At a population of 170 million, this amounted to annual tea consumption of about 5 million kg at 2014 year-end. Most locally produced conventional tea brands are usually in 50 grams packs and they are the highest in supply and they cost an average of about N200.

Tea consumption, which was estimated to have reached 5 million kg in 2014, reached at least N20 billion by ending of last year. Medicinal and flavoured teas, whether imported or locally produced cost much higher than N200 for the same quantity, so the market-size is much bigger than this estimated value of N20 billion annually.

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.

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 in the last five years.

Teju Bolujoko, managing director, Ruchin Limited, producer of Master Tea bags and Moringa Herbal Tea, says there are many opportunities for investors along the value chain in large-scale production of tea leaves, sales or leasing of the production equipment, servicing of equipment, production of the packages and in distribution.

Patrick Inelo, managing director of Noble Icon, another tea bag production company, also attest to the fact that opportunities exist along the value chain, saying “the tea bags, the thread and the paper we use are food grade papers, so we have to ensure we use high quality so that they would not dissolve in the water when being consumed and this is usually scarce and often not available locally. So, about 80 percent of these food grade papers are imported, due to the exchange rate, they are relatively expensive and the prices fluctuate.”

OLUYINKA ALAWODE