Investors rush to secure specialty tea licences

A worker at a tea estate in Kericho County. FILE PHOTO | NMG

What you need to know:

  • The Tea Directorate says it has licensed six firms currently putting up processing plants.
  • Six others have applied for permits and the applications are being evaluated.
  • More than three factories are currently processing the purple tea, having received the licences.

Investors are rushing for licences to set up specialty tea factories following surging demand and premium prices, with the volumes produced growing by 34 per cent in the last five years.

The Tea Directorate says it has licensed six firms currently putting up processing plants. Six others have applied for permits and the applications are being evaluated.

More than three factories are currently processing the purple tea, having received the licences. They include Njeru, Gatanga, James Finlay (K) and DL Koisagat.

Data from the directorate indicates volumes of specialty teas have grown from 5.8 million kilogrammes in 2012 to 7.8 million kilogrammes last year.

“There is a growing interest in venturing into specialty teas as told by increasing number of investors who have been licensed and those seeking permits to invest in it,” said head of Tea Directorate Samuel Ogola.

Mr Ogola said an investor requires Sh600 million to set up a specialty tea factory but will require Sh15 million to put up a cottage plant.

Specialty tea is sold directly to international market where it is in high demand with local factories struggling to fulfill orders.

A kilogramme of purple tea is sold at Sh1,957 compared to Sh300 that black CTC is currently fetching at the auction. Kenya is cutting reliance on the black CTC tea by diversifying into other varieties as it seeks to increase earnings from the produce.

Kenyan farmers growing specialty teas received a boost in April after the regulator and the International Tea Importers (ITI), a US-based buying firm, struck a deal to purchase all the volumes produced locally for distribution in America.

Under the deal, ITI will buy tea from growers and store it in its warehouses across the US, where they will distribute to the wholesalers. 

The firm has 25 stores across all the major cities in America. East African Tea Traders Association is set to establish a specialty tea auction in Mombasa.

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