Ikumbi Tea Factory partners with Chinese investor to set up orthodox tea processing plant
KENYA – Ikumbi Tea Factory based in Murang’a County has signed a deal with Poly Intercontinental Trading Limited (Poly), a Chinese company active in the imports and exports business, to set up an orthodox tea processing plant whilst guaranteeing the purchase of all specialty teas produced for sale in the Chinese market.
The KES57 million (US$0.39m) plant installed with the new orthodox line will churn out 2,000 bags of specialty tea daily, primarily dedicated to the Chinese market.
The Chinese company has guaranteed the farmers that it will buy all the tea processed through the plant at a minimum price of US$8 (KES1,164), far exceeding the current price for conventional tea which stands at US$2.50 (KES363.75).
The partnership will last for an initial renewable period of five years and is set to be a game changer for tea farmers as it will provide an alternative market for their produce.
The factory chairperson Onesmus Kibuna said the factory which produces an average of 50,000 kilos of tea daily during the low season will see a significant reduction in the amount of tea being sold through the Mombasa auction.
He said the deal will provide a ready market while boosting farmers’ returns, adding that the vast Chinese population has an insatiable demand for tea.
According to Kibuna, Kenyan tea has for years depended on a limited market in the United Kingdom, Pakistan, Egypt, Sudan, and Afghanistan, with farmers suffering when it is destabilized.
“Like in Sudan, we have been unable to sell our tea there since June when the civil war started,” Kibuna told farmers and advised them to maintain a high quality of their produce by ensuring they harvest two leaves and a bud so as not to compromise the standards set for the deal.
Bai Junsheng, who represented the Chinese company, noted: “Once we are able to market your tea and your brand becomes popular in China, the prices will increase. We will continue to walk together in partnership.”
He pointed out that Poly already processes and sells more than 100,000 tonnes of tea to the Chinese population annually.
There has been a growing demand for specialty tea over recent years as consumers are continuously seeking changes in their lifestyles and food habits and experimenting with cuisines and beverages.
Moreover, the rising at-home consumption of tea is expected to grow at a steady rate owing to increasing urbanization and the changing eating habits of consumers across the world.
Technavio Reports show that the global specialty tea market is set to grow by US$5.50 billion from 2021 to 2026, and the market’s growth momentum will accelerate at a CAGR of 6.04%.
Kenya Tea Development Agency Holdings (KTDA) Board’s acting CEO, Peris Mudida, said the tea board is focusing on the promotion of value-added tea, expansion of the market, and diversification into specialty tea.
She said the board has sanctioned a marketing consultancy to develop a five-year tea global market expansion strategy targeting 13 priority markets including the USA, Canada, Germany, Poland, Saudi Arabia, UAE, Iran, Turkey, Japan, China, South Africa, and Ghana.
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