Low quality, lack of brand names remain biggest barriers to tea exports

Vietnam’s tea export dropped both volume and value in the first four months of 2018 despite price hike. Low quality and lack of internationally-known brand names remain the biggest barriers for Vietnamese tea to gain strong foothold in foreign markets.

low quality, lack of brand names remain biggest barriers to tea exports hinh 0
Harvesting tea in Thai Nguyen
Vietnam exported 34,000 tonnes of tea for US$54 million during January – April, a decrease of 10.2% and 3.6%, respectively, from the same period of 2017.

Prices of exported tea in the first quarter averaged at US$1,546 per tonne, up 7.5% year on year. The biggest buyers of Vietnamese tea during the reviewed period included Russia, Pakistan, Taiwan (China), Indonesia, the US, China and Malaysia. 

Pakistan continued to be Vietnam’s largest tea importer in terms of turnover. The country purchased 4,060 tonnes or 16% of Vietnam’s total tea exports, for US$8.45 million, down 28.9% in volume and 19.2% in value. The decline was a result of a stricter rule of Pakistan which requires an aflatoxin certificate for tea imports.

The similar situation happened to tea shipments to China and Taiwan where stricter regulations were also applied.

Pakistan was followed by Russia who imported over 4,170 tonnes of tea for US$6.49 million, down 8.4% in volume but up 6.5% in value thanks to a 16.2% increase in tea prices that averaged US$1,556 per tonne.

According to experts, lower demand might have played a part in the fall of tea exports but the biggest problems were that domestic exporters paid a little attention to improving the tea quality alongside an absence of Vietnamese tea brands known internationally.

Japan is among countries with large consumption of tea as it is not only good for health but it is part of a hundred-year tea culture in Japan. This leaves huge potential for Vietnamese tea producers to unleash but it will be not easy. 

Though Vietnamese tea has made inroads into Japanese market but it only accounts for about 0.5% of the market share. It is largely due to the fact that the Vietnamese tea has not satisfied the local consumer taste. Plus, the majority of the exports were in the raw form with lower quality and value.

Last year, Vietnam’s tea exports to the EU saw surges of 24.55% in volume and 40% in value with those to Germany posting the strongest growth, 82.9% in volume and 169% in value.

It is a positive signal for the tea industry in Vietnam, particularly since the 500-million-strong EU market comprises of a number of high-income economies where consumers want more than just low prices. Therefore, to boost exports to the EU, Vietnamese producers will need to shift focus on improving their products’ quality, design and convenience.

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