The global tea industry landscape is undergoing accelerated reshaping amid intertwined hot issues and transformations. Kenya draws Chinese capital for tea processing and boosts added value by taking advantage of zero-tariff policies. Traditional tea sales decline in Russia, while alternative beverages such as matcha see a 57 percent rise against the trend. Japan's matcha exports hit a record high, and a shift in production by tea farmers has resulted in shortages and price hikes for sencha. On the trade front, India once suspended tea imports from Nepal before switching to random inspections, leaving lingering uncertainties. In this edition of Global Tea Watch, we offer a full overview of recent developments in the worldwide tea sector, laying out the challenges and emerging opportunities brought by these shifts.
I. Kenya Attracts Chinese Investors to Develop Its Local Tea Processing Industry Kenya is actively inviting Chinese enterprises to invest in tea processing, packaging and manufacturing, aiming to raise export value and break away from its long-standing model of exporting bulk tea to be blended and packaged overseas. During the China-Africa Agriculture and Industry Cooperation Forum held recently in Nairobi, Willy Mutai, Chief Executive of the Tea Board of Kenya, stated that Kenya is encouraging Chinese firms to set up local processing, packaging and value-adding businesses. The tea sector stands as an important opportunity within Kenya–China trade ties. Four Chinese companies have been approved to conduct tea packaging and export operations in Kenya, and multiple factories have adopted Chinese processing technologies. China offers zero-tariff treatment to African goods. This policy not only boosts Kenya's exports but also is expected to spur manufacturing investments targeting the Chinese market. Moreover, Kenya has included packaging materials and machinery in the scope of encouraged investment and lifted relevant tariffs to cut production costs. As the world's largest exporter of black tea, the country is also promoting specialty teas such as green tea and purple tea. Industry insiders point out that insufficient local processing capacity has caused profit losses. Increased investment in processing and packaging will help boost revenues and create more jobs. Meanwhile, Kenya and China are jointly developing an online tea trading platform to establish direct market connections and reduce transaction costs. The Chinese Ambassador to Kenya remarked that expanded market access creates a golden opportunity for African agricultural exports.
II. Rising Demand for Alternative Drinks Drags Down Sales of Black and Green Tea in Russia Retail tea sales in Russia fell sharply in the first five months of the year amid shifting consumer habits. Sales volumes of black tea, green tea and herbal tea dropped year-on-year by 11%, 9% and 10% respectively. Teabags performed better than loose-leaf tea. Green tea bag sales slipped merely 1 percent, while loose black tea suffered the steepest decline of 15 percent. Price was not the major contributing factor. Tea prices edged up only between 0.2 percent and 1.7 percent over the past year, and the wholesale price of black tea even declined by roughly 10 percent. Industry practitioners attribute this drop largely to the appreciation of the ruble, which allowed importers and retailers to procure goods at lower costs. Alexander Borisov, Chief Executive of tea and coffee producer K-Grand, stated that waning consumer interest in traditional tea mirrors a broader global trend. Brands are now sustaining their sales performance mainly by diversifying their product ranges. Alternative tea products registered robust growth. Over the past twelve months, sales of alternative teas including matcha and pu'er tea surged by 57 percent. The coffee market also faced downward pressure, with sales falling 13 percent year-on-year. Coffee prices rose above the inflation rate, which altered consumers' purchasing decisions. Russian consumers increasingly choose to make coffee at home rather than buying ready-to-drink coffee outside.
III. Japanese Tea Farmers Boost Production of Tencha The global popularity of matcha has driven a sharp rise in Japan's green tea exports and reshaped the structure of its domestic tea industry. In 2025, Japan exported 13,125 tons of green tea, a year-on-year increase of 42%. The export value reached 84.7 billion Japanese Yen (approximately 528 million US dollars), 2.2 times the figure recorded in the previous year. Green tea powder including matcha accounts for roughly 70 percent of total exports, while exports of traditional sencha have declined. Although Japan's overall domestic tea output has been gradually decreasing, the production of tencha - the raw material for matcha - rose for four consecutive years up to 2024. The reduced supply has pushed up prices for sencha. At the new tea auction in Kagoshima Prefecture in April this year, the average price stood at 6,573 Yen per kilogram (1 Yen equals around 0.0062 US dollars), marking a 60 percent increase compared with 2025. The Japanese government offers subsidies for shading cloth and processing machinery. The price of tencha in 2025 was approximately six times that in 2024, encouraging farmers to quickly shift production from sencha to tencha. Nevertheless, the industrial restructuring comes with hardships. Thirteen tea businesses shut down or dissolved in 2025, hitting a record high, mainly caused by the aging population and operational difficulties on mountain plantations. In terms of the domestic market, Japan's beverage market reached 386.8 trillion Yen in 2025. Tea drinks took the largest share at 28 percent, followed by coffee at 23 percent. Sales of green tea and other tea beverages were 4.68 trillion Yen and 5.2 trillion Yen respectively. Ito En holds 37 percent of Japan's green tea market. In the first half of the fiscal year ending in April 2026, its overseas tea beverage sales hit 34.975 billion Yen, growing by 19 percent year-on-year, far exceeding the domestic growth rate of 0.3 percent. Its green tea brand Oi Ocha has achieved remarkable sales growth in ASEAN countries and North America. Bottled green tea rose by 30 percent and 11 percent respectively, while tea bags saw an even higher increase of 49 percent and 36 percent. The United States is the biggest export market for green tea bags. Ito En plans to double its production capacity. It intends to enter the Indian market in mid-2026 and expand into Africa before 2030.
V. India Eases Quality Inspection Rules, Nepal's Tea Export Pressures Expected to Be Alleviated On June 16, India's Minister of Commerce proposed revisions to the inspection system for imported tea. Shortly afterward, on June 23, the Food Safety and Standards Authority of India (FSSAI) formally approved risk-based random sampling for tea products falling under HSN code 0902. Twenty percent of shipments will be selected randomly for inspection, and the measure is enforced at all entry ports with immediate effect. Prior to this adjustment starting from mid-June, India had mandated full mandatory testing for every batch of tea imported from Nepal. The strict measure forced 53 tea factories in Ilam and 30 factories in Jhapa to suspend production. Under the new regulation, only around one-fifth of consignments will be detained for testing, while the rest can be cleared much faster. This will cut down border detention time and warehousing expenses. Nevertheless, some exporters remain skeptical whether this relaxed policy will stay in place long-term. They worry that frequent changes to Indian trade regulations may trigger another export crisis. Nepal produces more than 27,000 tons of tea annually, including roughly 8,000 tons of orthodox tea and 19,000 tons of CTC tea. At present, approximately 1,500 tons of tea are stuck in warehouses inside Nepal and another 300 tons are held in India. Test reports for the goods detained in India will be released shortly, allowing Indian purchasers to take delivery of the cargo.
The global tea industry is currently facing both challenges and opportunities. Tea industries around the world are exploring new avenues for growth through market expansion, production upgrading and cross-border cooperation. Chinese tea enterprises should uphold strict quality standards and optimize their logistics networks. They can take advantage of international cooperation to explore overseas markets, avoid trade risks, and steadily go global by leveraging their strengths.
