The impact of the war on shipping, the differentiation of export volume and price, the development of overseas markets, and cross-border investment negotiations... Recently, the global tea market has been full of highlights! On one hand, there is the trade pressure brought about by geopolitical conflicts, and on the other hand, there are new actions taken by various countries' tea industries to break through the situation.
1, The Middle East War has impacted the tea trade between Kenya and Iran
The escalation of the Middle East conflict has disrupted air and sea routes in the Gulf region, leading to rising costs of freight, insurance, and fuel, and threatening the competitiveness of Kenyan tea exports to Iran and other Gulf markets.
Iran and Gulf countries are important tea export markets for Kenya after Pakistan. In 2024, Kenya will export approximately 13 million kilograms of tea worth 4.26 billion Kenyan shillings to Iran.
Prior to the escalation of the conflict, Kenya and Iran had been negotiating to expand agricultural trade by 2025-2026, including meat and horticultural products, indicating the possibility of further diversification between the two countries. But with the ongoing conflict and the implementation of airspace restrictions, these plans may be postponed.
At present, the main threats are increased uncertainty and rising operating costs, rather than immediate loss of market access. Exporters need to cope with fluctuating sea and air logistics, high insurance costs, and energy price pressures, while also maintaining their position in the Gulf market.
2, Kenya strengthens promotion of traditional black tea exports to the European market
Kenya is strengthening its export promotion to the European market by developing a high-quality traditional tea value chain, with a focus on expanding into the German market. The Kenyan Embassy in Berlin facilitated 23 representatives from the German Tea and Herbal Tea Association to visit tea gardens and factories in Kenya, deepening trade cooperation.
The German representative highly recognizes the quality and diversity of Kenyan tea. The Kenyan government stated that strengthening tea exports to Germany remains a priority and will continue to support relevant cooperation to promote practical commercial results of traditional tea in the European market.
3, The escalation of conflicts in the Middle East poses a risk to Indian tea exports
The escalation of conflicts in the Middle East is threatening India's tea exports. About 45% to 50% of India's tea is sold to the Middle East region. Shipping and air freight restrictions have disrupted normal shipments, and if the Strait of Hormuz is closed, it will directly affect exports to related markets.
Last year, India's export volume to major Middle Eastern markets was strong: 52.59 million kilograms to Iraq, 52.71 million kilograms to the United Arab Emirates, and 7.94 million kilograms to Saudi Arabia, highlighting the strategic importance of the region's tea trade with India. The exporter stated that there is currently no contact with Iran, and most exporters to Iran still have outstanding payments. If the conflict persists for more than a month, it will affect exports and prices. Combined with the current instability of maritime routes, it may further delay shipments and exacerbate supply chain pressure.
4, Pakistan's tea import expenditure for the first seven months of this fiscal year (July 1, 2025- June 30, 2026) reached INR 106 billion, with an overall increase in food imports
In the first seven months of this fiscal year, Pakistan's tea import expenditure was approximately INR 106 billion (approximately USD 38 million), reflecting the important role of tea in the daily lives of the Pakistani people.
In addition to tea, the import volume of other foods (including dairy products, nuts, spices, and edible oils) has also significantly increased. This trend highlights the shift in domestic consumption patterns in Pakistan and the continued dependence of the domestic market on imported food products.
Economists typically view such import data as indicators of consumer demand, purchasing trends, and broader economic behavior. Although tea still holds significant cultural importance, the continuously increasing import volume will also have an impact on trade balance and foreign exchange management.
5, Bangladesh seeks UK investment in Sylhet tea industry
On March 2nd, the Bangladeshi Minister of Commerce held talks with the British High Commissioner to Bangladesh. During the talks, the Bangladeshi Minister of Commerce expressed that Bangladesh hopes that the UK will invest in the Sylhet tea industry to promote industrial modernization and increase production.
Meng Fang stated that the tea gardens in the region have enormous investment potential, and the UK already has investment experience in the tea industry in Bangladesh. Expanding investment will help create employment opportunities and promote the development of tourism in Bangladesh. The British side has shown special interest in investing in the Sylhet tea plantation and believes that British investors are willing to cooperate in the industry.
6, Kenya's tea exports will increase in 2025, but income will decrease due to price decline
According to data from the Kenyan National Bureau of Statistics, in 2025, Kenya's tea exports will reach 652792 tons, a year-on-year increase of 4.35%; However, due to the average auction price in Mombasa dropping from $2.19/kg in 2024 to $2.15/kg in 2025, export revenue decreased by 1% year-on-year to 186.9 billion shillings ($1.44 billion).
Kenya's current exports are almost entirely dominated by CTC black tea, accounting for 99% of total production and export volume, while specialty tea only accounts for 1% of shipments. The Kenyan government plans to increase traditional tea processing capacity from 15000 tons in 2025 to 200000 tons by 2030. Last September, the government included traditional tea in the auction system (previously only applicable to CTC black tea) to ensure higher prices and stimulate stronger market interest.
The current global tea industry is in a stage of development where challenges and opportunities coexist. Trade disruptions caused by geopolitical conflicts are still ongoing, and tea industries in various countries are constantly exploring new growth paths through market expansion, capacity upgrading, and cross-border cooperation. Chinese tea companies can adhere to the bottom line of quality, optimize logistics layout, leverage international cooperation opportunities to expand overseas markets, avoid trade risks, and rely on their own advantages to steadily go global.
