Reference no: EM133237771

THE TEA INDUSTRY

Since the turn of the century, the global tea industry has seen a noticeable reversal in its fortunes. Between the 1970s and the early 2000s, the tea industry was characterized by oversupply, with a surplus of about 80,000 tonnes a year. However, this trend has now reversed, with demand now outstripping supply. Some reports suggest that global tea consumption has increased by nearly 60% since the early 1990s. This increase has been partially helped by a global shortage of coffee, which has led to price rises.

The surge in the demand for tea has, however, resulted in a number of challenges for growers. The rising price of tea around the world is being driven in part by the impact of adverse weather patterns as a result of climate change which has been damaging crops. Growers have also been affected by the loss of skilled workers who are choosing to leave the industry due to the low wages on offer. Tea estates swallow capital, and the return is not as attractive as in industries such as technology or services.

Many tea-bag manufacturers own their own estates, as well as buying in tea from outside sources. In recent times, there has been an increase in the number of well-known manufacturers working more closely together in a bid to make tea growing more sustainable. Today, China and India are the two largest growers of tea in the world. Experts predict that both countries will lead to a boom in the growth of the global population over the next 100 years, which in turn will put increasing strain on the demand for food and drink. It is predicted that home demand in both countries for tea may reduce the quantities available for export to other tea-drinking nations.

REQUIRED: Carry out a five forces analysis of the tea growing industry