UAE residents are tea not coffee drinkers: study

High population growth boosts tea demand… and prices

The UAE is mainly a tea not coffee drinker. Because of this and the high growth in its population, tea demand has remained strong in the Gulf nation and this has boosted its prices by nearly 50 per cent over the past few years.

“Black tea is the leader by a wide margin among hot beverages in UAE. The country’s population comprises of ethnicities which are largely tea rather than coffee consuming. Globally, demand for hot beverages is strongly divided by ethnic lines. UAE has a very mixed population but is predominantly tea drinking,” the government-controlled Emirates Industrial Bank (EIB) said in a study.

“Its Arab, Iranian, Indian sub-continent and British populations are all tea drinking, as also the Chinese. The only major coffee drinking group in UAE is from Philippines, and Arabs who drink both tea and coffee.”

The report showed demand is mostly for black tea, with almost negligible amounts of green tea sold in the market-not exceeding three per cent.

Within black tea, the demand is predominantly for loose tea (also called pack tea, as opposed to teabags), according to the Dubai-based EIB.

“Loose/pack tea accounts for almost four-fifth of the demand by weight. In value terms, the share of teabags is considerably higher because of their higher price, whose share by value is more than double by weight.”

The repot showed tea business volume has steadily grown because of a rapidly increasing population and not only because of high consumption.

It said the “population effect” is further reinforced because of the “floating” population of tourists, adding that tourists have been steadily increasing, as tourism has not been affected by the economic downturn since 2008.

While there has been a mere 16 per cent growth in last five year (2005-2010) in volume, there has been a huge 80 per cent increase in value terms, it said.

“This indicates a more than 50 per cent rise in price in five years. The increase in value is partly explained by the growing demand for premium teas (including teabags replacing cheaper loose tea), and partly by a rise in prices.”

The study noted that in keeping with general consumer trends in the country, the tea market too, has been moving towards improved and upscale products, whether in content or in packaging and image.

“As a result the market has seen the introduction of more and more fruit and herbal teas. However, the global downturn and its consequent affect on the UAE economy impacted the tea market as well, slowing down the growth of premium products. In any case, the role of these teas is still rather small.”

Turning to tea manufacturing in the UAE, EIB said the Jebel Ali Free Trade Zone now has a large teabags factory. It said this is multinational company, a global leader in both teabags and black tea¸ making UAE a leading global producer of teabags as this company not only feeds the domestic market but also the wider Gulf region and the international markets.

The report said the UAE has also emerged as a key tea exporter, with nearly 17,000 tonnes of tea re-exported in 2010 worth around Dh200 million.

Iran is the predominant destination by a wide margin, accounting for more than 90 per cent or the UAE’s tea re-exports, it said.

“Whereas, once re-exports to Iran were of loose tea, they are now overwhelmingly of tea bags. The southern CIS countries are emerging as significant buyers, of which Uzbekistan is a key destination.”

The report showed India and Sri Lanka are the top tea exporters to the UAE,  largely because of the demand for black tea.

“These two countries are the leading global producers of black fermented tea. Teabags which were once almost entirely sourced from the United Kingdom are now produced domestically in Jebel Ali,” it said.

“Though attempts by coffee producers have made to dislodge tea, they have not much succeeded. Tea is too strongly entrenched among the consumers in UAE and is drunk several times a day. It also has an edge over coffee insofar it is cheaper. Its consumption is only likely to grow.”

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