Demand for tea rises, opens new opportunities

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 exploitation of the opportunities by importers.

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 exploitation of the opportunities by importers.

Annual per capita consumption of tea in 2009 was 23 grammes. With a population of 160 million, this amount to 3.68 million kg.

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Per capita consumption of tea rose to 28 grammes in 2013, with a population of 165 million, this amounts to total tea consumption of 4.62 million kg last year.

If consumption annual growth rate continues at five percent in 2014, per capital tea consumption would be 29.3 grammes. With a population of 170 million, this would amount to annual tea consumption of five million kg at year-end.

With most locally produced conventional tea brands usually in 50 gramme packs which are the highest in supply, costing about N200, tea consumption estimated to reach five million kg this year would hit N20 billion by year-end.

Imported, medicinal and flavoured teas cost much higher than N200, so the market-size is bigger than that.

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.

The 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 tea, 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, affirms that opportunities exist along the value chain.

Inelo says, “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.”

September 20, 2014; http://businessdayonline.com/2014/09/demand-for-tea-rises-opens-new-opportunities/#.VBu67RaE71U

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