Unsold tea is piling up in Kenya’s depots leaving in its wake suffering farmers. Hit by falling consumer demand and rising production, the country’s tea industry is now at a critical juncture.
A shift from quantity to quality, not only in the tea itself but also in how it is grown and harvested, is critical to ensure Kenya becomes globally recognised as an origin of distinction for tea. The challenge presents an opportunity for transforming the sector.
Tea farming in recent decades has focused on maximising yields to improve financial returns, often at the expense of quality.
Kenya is now one of the world's top exporters of black tea contributing about 22 per cent of the global supply and around Sh180 billion to the national economy each year.
However, while green leaf production by Kenya Tea Development Agency (KTDA) affilitated farmers increased by 15 per cent in the second half of 2023, many of its main destinations face persistent economic instability.
As much as 30 per cent of Kenyan tea has remained unsold in recent auctions, in addition to the 50 million kilogrammes from last year, even with prices near record lows.
It becomes apparent that tea produced with a focus on volume over quality will suffer most during market downturns.
High-quality tea is better equipped to withstand challenging market conditions and will always be in demand, even if subject to price adjustments.
The KTDA has recognised the urgent need to refocus on quality and is mulling minimum growing and harvesting standards.
The government’s ambition to have Kenyan-produced tea display its origins to consumers on packs is an important way to turn around the fortunes of the industry.
Quality, however, goes beyond simply the taste in the cup. For "Kenya Origin" to be a mark of distinction around the world, it must symbolise both the unique geographic characteristics of Kenyan tea and the good practices by which it is made.
Today's consumers – in all countries – are increasingly discerning and seek products that adhere to responsible sourcing practices.
According to Nielsen research, 73 per cent of global consumers say they would probably change their consumption habits to reduce their environmental impact.
Moreover, 66 per cent are willing to pay more for sustainable brands. The flip side is also true; human rights abuse or environmental harm turns consumers away.
Our experience is that consumers used to years of “cheap” tea are willing to pay more provided they recognise the greater value that comes from improved quality.
By raising standards in how tea is produced, protecting workers and nature, the industry can meet these demands and secure better prices for Kenyan tea.
In conclusion, the prospects for Kenya's tea industry can be transformed through quality products and improvement of social and environmental standards.
This is both a commercial and a moral imperative. By addressing the current challenges caused by overproduction and focusing instead on quality – in every sense of the word – we can ensure that "Kenya Origin" tea becomes sought after and valued in the global market.
To support farmers, LIPTON Teas and Infusions is investing in education programmes. The recently inaugurated Lipton Tea Innovation & Technology Academy together with the University of Kabianga is a prime example of this commitment.
Through vocational training and higher education courses, the Academy will help farmers achieve the highest standards of tea cultivation, harvesting, and processing.
This will ensure that there is the right talent to drive industry-wide development and improvement, such that Kenyan tea can lead the world.
A collective responsibility
Our transfer of ownership of the Lipton Tea Estates in Kericho and Bomet to Browns Investments was not a decision taken lightly.
We carefully chose a long-term partner with the experience and capabilities to look after large estates and the tens of thousands of people who depend on them, as well as a partner who shares our vision of creating value for all.
Consequently, 15 per cent of the business is set to be offered to local people at a substantial discount, providing a guaranteed annual dividend payout and shared economic participation in the future success of the tea industry.
Additionally, a community welfare trust with an initial endowment of KSh 1 billion and additional annual contributions from Browns Investments will address critical local and neighbouring community needs, ensuring that the benefits of this partnership are felt broadly on the ground.
The proceeds of the transfer of ownership of Lipton Tea Estates in Kericho and Bomet will be reinvested into Kenya’s tea industry to drive national progress.
For instance, we are now exploring how to develop self-sustaining local low-carbon fertilizer production.
Imported fertiliser is typically one of the largest costs of growing tea and, by changing this, we can significantly improve the financial stability of farmers, create new highly skilled jobs, and dramatically reduce greenhouse gas emissions at the same time.
Browns Investments, the world’s leading tea exporter, has also committed to invest further into all their Kenyan estates to raise standards.
Our partnership is a significant step towards elevating the industry as a whole, to live up to the expectations of a “Kenya Origin” tea and ensuring a positive impact on the livelihoods of the communities we serve.
Dr Oleg Piletsky is head of Global External Affairs at LIPTON Teas and Infusions.
