World Bank Predicts Recovery of Tea Prices in 2020

November 18, 2019 No Comments Data Dan Bolton

According to World Bank projections, the Beverage Price Index is expected to increase 2% in 2020, following a 5% decline in 2019. This month the World Bank revised its economic forecast of beverage prices upward and predicted the downward trend will stabilize in 2020.

World Bank Beverage Index shows a downward trend in beverage pricing overall. (Chart courtesy of the World Bank)

Prices for commodities used to make beverages including tea, cocoa and coffee spiraled downward the past two years, profiting retailers but putting pressure on producers at origin. Surpluses of coffee and tea compounded the impact of dampened demand in major markets including the European Union, China, Russia and the Middle East.

The World Bank’s Commodity Markets Outlook reports tea prices declined globally 1% in the third quarter of 2019 and remain 6% below the same period last year, mainly in response to lower prices at the Colombo and Mombasa tea auctions. The composite price at auction is down 11%, with individual auctions reporting multi-year lows according to the World Bank. The composite is calculated as the average price at the three major tea auctions in Colombo, Kolkata and Mombasa.


Tea prices in Kolkata plunged 23% during the first quarter of 2019 and remain 7% lower than one year ago, dropping to an 11-year low. Prices in Mombasa fell 7% early in the year and never recovered. East African tea prices are now 25% below those of last year.

Auction prices for tea fell steeply in early 2019 largely due to oversupply. Prices are expected to stabilize in 2020 according to the World Bank. (Chart courtesy of the World Bank)

Gary Hemphill, managing director of research at Beverage Marketing Corp., also noted a decline in tea retail sales through the first half of the year. Speaking at a webinar hosted by the National Coffee Association, Hemphill observed that sales of bottled tea declined 1.2% during the first half of the year. This follows a 0.3% decline in 2018. RTD Tea has outperformed every other tea segment during the past ten years, increasing 485 million gallons in volume and growing at a compound annual rate of 3.4%.

Hemphill reports that RTD Tea now accounts for a 47.3% share of the tea market, surpassing teabags at 42.9%. Loose leaf accounts for 0.7% of total sales, trailing tea in single-serve capsules at 0.9%. Iced tea mixes claim the remaining 8.2% of the tea market, according to BMC’s database.

“The large traditional beverage categories have been trending downward,” he said, noting the share of tea by volume (less RTD) fell 2.5% in 2018 and is down another 3.6% during the first of 2019.

Considering the entire US beverage market in 2018, including beer and spirits, tea (all formats) accounted for 5.8% of the total compared to coffee at 11.1%. Carbonated soda retains 19.4% share but continues to slide. Beer, milk and fruit beverages are also losing market share. Coffee has experienced a modest share gain over 10 years, Hemphill said, while bottle water, at 22% share, grew 5.5% since 2013 and to become the biggest share gainer. He expects the trend to continue.

In coffee, global prices for arabica were up 4% during the quarter ending September and are now 5% ahead of last year. In contrast, robusta prices are down 11% compared to third quarter 2018. Coffee prices are also expected to stabilize in 2020, rising 2-3% following a projected decline of 13% in 2019.

Cocoa prices rose 3% during the first part of the year and have been relatively stable during the past 16 months, according to the World Bank.Source,

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