Business Daily (Nairobi)
Dominique Patton
24 March 2008
A growing consumption of tea due to health benefits is driving up a global trade in extracts, with Kenya well positioned to become one of the top beneficiaries.
Fat-burning, immune-boosting, and age defying are just a few of the labels that have appeared on tea drinks in Europe and the US in recent months, mainly with the backing of heavyweight brands such as Nestlé's Nestea.
These sales pitches are grounded in recent research findings that natural chemicals in tea, catechins, are powerful antioxidants, compounds believed to fight off disease like cancer and heart disease.
Nestle says it has scientific evidence proving that the catechins in its Enviga drink help to burn calories. Content analysis has shown that Kenyan tea contains high levels of catechins because it is grown at altitude.
This opens a new avenue for the country that is one of the world's top exporters of tea to reposition itself as a producer of tea with high medicinal value.
"Catechin demand is huge. The whole market is moving towards tea beverages for health benefits," said Mr Tony Barcroft, the managing director of Finlay's Tea Extracts.
Finlays is one of the leaders in the global tea extract business, with two extract facilities in Kenya, one in Chile and a joint venture in China. It produces a range of 200-300 blends and recipes.
"People in America were making cold tea drinks at home 30 years ago. Then they started bottling what they were making in jugs and eventually it became a commercial product," said Mr Barcroft.
Most tea extracts are still used to add flavour to cold and hot drinks rather than support any functional claims but as the association between tea and health grows in consumer consciousness, all bottled teas have benefited.
An estimated 25 billion litres of these tea drinks are sold each year, well below the volumes of traditional tea, but with a much more rapid growth at up to 15 per cent annually in markets like China.
"Leaf tea is a very mature market that has penetrated every part of the world. Volume is static, if not slightly declining. But tea extracts are growing at 11-17 per cent each year," says Mr Barcroft.
He says Finlays is looking at options for the firm's expansion. "It is viewed as a very important core business with long-term growth potential. We will build more factories and enter partnerships."
Use of green tea in beverages grew by 100 per cent from 2005 to 2007, according to market researchers Mintel. Tea extracts are also being added to confectionery, bakery products and even some dairy foods. "Green tea has been a very popular way of lending "soft" health positioning to a brand," says Mr David Jago, a research analyst at the firm.
That has helped create a European tea extracts market worth $44 million, according to market researchers Frost & Sullivan.
Health concerns are also driving strong demand for tea drinks in Asia. The region with the longest established tea culture accounts for an estimated 80 per cent of global sales. The Chinese consumed 7.6 billion litres of ready-to-drink bottled teas in 2007, spending more than $6 billion, according to researchers at Euromonitor.
"As consumers become more concerned with dental health and losing weight, the demand for carbonated drinks has weakened and shifted to tea products," said analyst Yang Fan.
a
The market is served by its own supply of tea extracts but they tend to be lower in catechins than Kenyan tea and of lower quality because of the high pesticide use by Chinese farmers, says Mr Barcroft.
Kenyan green tea extracts contain up to 30 per cent catechin content. "In China you would be lucky to get in the high teens," he said.
It is not easy for new companies to enter the tea extracts market however. The capital investment in an extract facility is around $20 million, and technical knowledge on formulation is also important.
Be the first to Write a Comment!
Copyright © 2008 Business Daily. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.
AllAfrica aggregates and indexes content from over 125 African news organizations, plus more than 200 other sources, who are responsible for their own reporting and views. Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica.
