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US end-market analysis for Kenyan tea

East Africa Trade and Investment Hub
Publication Date
07 December 2017

The tea market in the United States (U.S.) is growing, with Americans consuming larger quantities of tea each year. In 2016, the U.S. imported nearly $760 million in tea (excluding herbal tea), making it the world’s third largest tea importer.1 According to the Tea Association of the USA, the sector projects compound annual growth rates of 3 to 5 percent over the coming years. This has been driven by an increase in volume, but especially value, of tea imports.

Approximately four out of five Americans drink tea. For Millennials, tea consumption reaches an estimated 87 percent. This population, in particular, is driving the upward trend in tea consumption and price. Consumers are becoming more health-conscious and are therefore willing to pay for better quality tea and innovations in flavors, packaging, and convenience.

Black tea, specialty teas, and Ready-to-Drink (RTD) tea are experiencing the highest rates of growth. Black tea, which accounts for 85 percent of U.S. tea consumption, achieved 2.3 percent growth in imports between 2015 and 2016. Sales of specialty teas, comprised of loose-leaf teas, single-estate teas, Fairtrade, organic, or rare teas, are increasing about 10 percent per year. Further, RTD tea is expected to grow 4 to 6 percent over the next five years.

The U.S. market is highly competitive. It is comprised of a handful of U.S. growers and numerous importers that are supplied by exporters from almost every tea producing country. In 2016, the U.S. imported approximately $26 million in tea products from Kenya, making it the eleventh greatest importer to the U.S. market.

Despite market competition and a lack of a duty advantage in tea exports, Kenya has an opportunity to capitalize on the U.S. market’s growth. Kenya distinguishes itself from other tea producing nations by hand- picking over 90 percent of its tea, giving the tea a higher quality. The country mainly exports black tea. This is the most popular type of tea in the U.S. The country also offers herbal teas and a unique purple tea variety that could appeal to consumers’ growing interest in specialty teas. Kenya’s tea plantations also provide an opening for developing specialized tea tourism and marketing stories.

In addition to offering an overview of U.S. export requirements, this report provides four recommendations and an action plan for Kenya to increase tea exports to the U.S. The report specifically recommends that Kenya pursue the following:

  1.   Develop new tea products for the U.S. market that builds off of Kenya’s success with black teas to include more purple, herbal, and medicinal teas and agri-tourism.
  2.   Do effective trade promotion and marketing in the U.S. that could include the introduction of all-Kenyan tea product lines and an agri-tourism promotion campaign.
  3.   Further improve trade logistics to reduce domestic and international transport costs, potentially using the services of a fulfilment house.
  4.   Become more competitive in the U.S. market through improvements to product quality and condition, cost at the port of entry, delivery time, service, financing, and promotion.
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